Punj Lloyd to take over Spectranet's ISP unit

Punj Lloyd Ltd, after trying hard for years to divest its over 90 per cent stake in internet service provider (ISP) Spectranet, is now taking over the ISP business.

According to plans drawn up to rehabilitate the ISP business, the division will be hived off from Spectranet and then merged into Punj Lloyd.

Punj Lloyd chairman Atul Punj told Business Standard that this was being done to improve the financial viability of the ISP business.

"As an independent entity, it was not going where it should have gone. Once it becomes a division of Punj Lloyd Ltd, it will get the right financial inputs. We have lost some opportunities in this business," he said.

Punj Lloyd Ltd had been trying for a while to sell Spectranet but talks with more than one prospective buyer fell through over the valuation of the company.

Sources indicated that there is also a tax angle to the deal: the ISP division has run up accumulated losses of over Rs 75 crore. Once it becomes a part of Punj Lloyd Ltd, the company can set off the losses to claim tax benefits.

Punj Lloyd will take over the ISP business at a nominal cost as it will also be taking over its liabilities. According to Punj, the business is no longer bleeding and has, in fact, achieved a financial breakeven.

Once the ISP business is taken over, Spectranet will be left with its relatively smaller cable business, since the ISP division accounted for a substantial part of its turnover.

The closely-held Punj Lloyd Ltd is in the business of laying oil and gas pipelines.

The company derives a chunk of its business from overseas contracts and is known to be profitable.