Indian firms' 2007 intl M&A deals "may top $35 bln"

NEW DELHI (Reuters) - Indian firms flush with funds are expected to spend more than $35 billion this year on buying or merging with foreign companies, a report said on Sunday.

Indian businesses seemed to have an increasing appetite for risk and this was driving global merger and acquisition deals, according to the report from Ernst & Young (E&Y) and the Federation of Indian Chambers of Commerce and Industry (FICCI).

Indian firms spent $4.3 billion on international mergers and acquisitions in 2005 and this went above $15 billion in 2006, the report said.

"In 2007, it could breach the $35 billion level," it said.

"Corporates are not only scaling up the size of their overseas acquisitions, but there have been several instances of Indian firms buying out companies abroad that are far larger in size compared to them," it said.

"Acquisitions by Indian firms are continuing in Europe and the U.S. More deals are expected in energy, auto components, industrial products and service sectors," said Gaurav Taneja, a partner in E&Y.

This year, Tata Steel (TISC.BO) acquired Anglo-Dutch group Corus for $12.2 billion and aluminium firm Hindalco (HALC.BO) bought Canada's Novelis Inc NVL.N for $5.9 billion.

"Indian companies are cash-rich and want to go for acquisitions," Taneja said. "Moreover, building brands is not easy. So, when it comes to branded products, Indian companies have to go for acquisitions."