LUNCH WITH BS: Atul Punj

Lose some, win more

Atul Punj

Punj Lloyd's CMD talks about his company's comeback after the Spectranet debacle over some Chinese greens and fried prawns.

When in distress, fly business class. It might be an old trick, but it is known to work well on bankers as well as prospective business partners. With no succour in sight, Atul Punj, chairman and managing director of Punj Lloyd, decided to try it as well, writes Business Standard.

Just out of the 1989 family settlement, Punj found himself straddled with a Rs 2-crore engineering business and liabilities of Rs 5 crore. He was borrowing at over 25 per cent just to roll over the debts. Desperate for orders, Punj decided the best way to impress his customers was to travel in style "" they would think he was loaded with contracts. "It was all about perception management. And the travel agent was willing to give me credit," says Punj with a hearty laugh.

We are at Taipan, the Chinese restaurant at The Oberoi, and the spread on the table is truly sumptuous: Chinese greens, fried prawns, chicken in barbecue sauce and steamed rice. In a sparkling white shirt with an Audemars Piguet Royal Oak on his wrist, Punj no longer looks in need of any credit from his travel agent.

Between Punj Lloyd and its subsidiary companies, he has an order backlog of Rs 14,500 crore waiting to be executed over the next three years or so. He hopes to close the current financial year with a turnover in excess of a billion dollars. Punj Lloyd's market capitalisation stands at Rs 4,000 crore and 40 per cent of it, or Rs 1,600 crore, belongs to him.

Punj is short but compactly built. A crew cut adds to the aura of energy round him. In his school days, Punj was a pugilist. Now, he is a regular swimmer. At 49, he looks at least a couple of decades younger, his peripatetic lifestyle notwithstanding. But today, he is down with a cold and blows loudly into a white handkerchief frequently.

More than the business class tickets, it was a three-minute meeting with Narayanan Vaghul of ICICI Bank (ICICI at that time) in 1993 that turned the tide in his favour, Punj says. He was chasing a $13-million project in Indonesia and no banker was willing to give any guarantee on his behalf.

But Vaghul, after listening to Punj's passionate but short speech, decided to go ahead with the deal. After that, there was no looking back for Punj; orders came pouring in: the Kandla-Bhatinda pipeline, Reliance Industries' Jamnagar refinery, and Enron's power plant at Dabhol, to name a few.

And then, Spectranet happened. Having laid fibre optic networks for several companies, Punj, in 1999, decided to wire up Delhi. But Spectranet went belly up. "How come," I ask. "Greed," he answers, without looking up from the prawns on his plate.

In January 2000, Punj elaborates, Spectranet was valued at $350 million. But his advisors told him if he were to wait for a few more months, he could get still better money. In August, Nomura Securities had agreed to buy a stake in Spectranet at a valuation of $550 million. But before Punj could sign on the dotted line, the dotcom boom went phut. All of a sudden, there were no takers for Spectranet.

"How much money did you lose," I ask. "We had invested Rs 200 crore, which included a debt of Rs 50 crore, at a time when Punj Lloyd had orders of Rs 200 crore," Punj replies. Subsequently, Punj merged Spectranet with Punj Lloyd to take advantage of the losses on its books. "Some times, it is important to fail," he adds philosophically.

Punj's recent moves have been smarter. He has taken 18 per cent in Naresh Trehan's upcoming Medicity in Gurgaon. In return, he has the first right of refusal for the construction contracts for the Rs 1,200-crore project.

Punj has also formed a 51:49 joint venture with Prince Khalid Bin Bandar Bin Sultan of Saudi Arabia. The prince, along with Emaar, is building a $31-billion city in the kingdom. With the joint venture in place, Punj hopes to get a fair share of the contracts.

But the deal that Punj is most excited about is his recent acquisition of Sembawang Engineers & Constructors in Singapore for a little over Rs 100 crore. Apart from orders worth Rs 2,000 crore, Punj has also got control over Simon Carves, a 125-year-old engineering company in the UK, through this acquisition. "Simon-Carves has capabilities in the field of nuclear power," Punj says, leaving the unsaid impact to sink in on its own.

Sembawang is a steal, I tell him: "How did you get it for just Rs 100 crore?" Punj replies: "We had offered more initially. But those people wanted to sell it to Essar. At the last moment, that deal fell through and we bought it at half the price we had originally quoted." The broad grin on his face says it all.

Punj's appetite for food doesn't match his appetite for new business. Most of the stuff we ordered lies unused as he straightens the cutlery, though he decides to make a concession for a mango pudding.

Punj travels abroad on the lookout for business up to three weeks a month. Little surprise, India represents only about a fifth of his business. That might be a good de-risking strategy, but doesn't his hunt for oil pipeline orders take him to some troubled "hotspots"? Punj says he doesn't go to such countries at all, though he readily recounts a string of adventures his boys have had to face across the globe.

"In Georgia, the tyres of our vehicles would be removed at night and then sold back to use down the road," he says. That, I tell him, is the country that gave us Stalin and Beria.

As we make our way out of the hotel, I am curious about the Lloyd in his company's name: "Some vilayati connection?" Actually, there is none. "At that time, it was fashionable to have an English name," Punj says, adding: "We had a company called Sandersen named after my uncle Sudarshan."