PUNJAB COMMUNICATIONS LIMITED
ANNUAL REPORT 2011-2012
Your Directors have pleasure in presenting the Thirty First Annual Report
of your Company together with the Audited Statement of Accounts for the
Financial Year ended 31st March 2012.
Financial Results (Rs. in Lacs)
Particulars 2011-12 2010-11
Gross Income 3480.72 2782.93
Total expenditure 3221.11 2640.21
Profit before tax 101.54 19.73
Profit/Loss after tax 73.58 (0.46)
Dividend Nil Nil
Paid up equity 1202.36 1202.36
Profit/Loss appropriated to
General Reserve 73.58 (0.46)
Capital Reserves) 9723.99 9650.59
Net fixed assets 544.11 598.63
Capital employed 10928.79 10855.39
Earning/Loss per share (in Rs.) 0.61 -
Cash earning/loss per share
(in Rs.) 1.49 0.84
Book value per share (in Rs.) 90.44 89.80
Review of Operations
During the year due to aggressive efforts, the company could improve sales
of its own products i.e. Primary Drop/Insert Multiplexer as well as PLCC
(Power Line Carrier Communication equipment). The company is also looking
for tie ups with national and international companies to enhance its
product line. Further due to aggressive marketing tie-ups, the company
achieved a healthy turnover of approx. 2312.99 Lacs in financial year 2011-
12 besides income of 1167.72 Lacs from other activities.
The book value of share held by you is around 90.44/- per share and the
Reserves stood at approx. 97.24 Crores. The Company has invested an amount
of 15.49 lacs during the year in acquiring fixed assets. We are thankful
for continuous support of our esteemed customers all through & also
continuous support of shareholders, bankers and stakeholders, including the
business associates as they reposed undoubting faith in the Company. Puncom
offered value-added products and services to the customers on the basis of
strategic and effective use of technology aided by aggressive market and
Due to inappropriate profits in the current year, the Board of Directors of
your Company has not recommended any dividend for the year 2011-12.
Change in Directorship
th Following changes, in the constitution of Board of Directors, happened
during the period under review upto 25 September, 2012.
As per the provision of the Companies Act, 1956, Punjab Information and
Communication Technology Corporation Ltd vide their letter No.
PICTC/SEC/2012/1981dated 16th March, 2012 re-appointed Sh Anurag Verma, IAS
after completion of the term of 5 years as Managing Director of the
Company. Accordingly the BOD of Puncom has re-appointed th Sh Anurag Verma,
IAS as Managing Director of the Company w.e.f. 20 March, 2012 vide
Resolution by Circulation dated 16th March, 2012.
S.No. Name of the Name of the Reason
Outgoing Director Incoming
1. Sh. S.S.Channy, IAS Sh. A.R. Talwar, IAS As per the Order of Govt
of Punjab vide order No.
dated 16th March, 2012
and further nomination
by Punjab Information and
Corporation Ltd (Punjab
Infotech Ltd) vide their
letter No. PICTC/SEC/
2012/2463 dated 29.3.2012
appointing Sh A R Talwar,
IAS as Director &
Chairman in place of
Sh S S Channy, IAS, the
BOD has appointed Sh A R
Talwar, IAS as Director
& Chairman in place of
Sh S S Channy, IAS vide
Resolution by Circulation
dated 2nd April, 2012.
Directors' Responsibility Statement
Pursuant to the requirement under section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, it is hereby
i) That in the preparation of accounts for the financial year ended 31st
March, 2012, the applicable Accounting Standards have been followed along
with proper explanation relating to material departures;
ii) That the Directors have selected such accounting policies and applied
them consistently and made judgment and estimates that were reasonable and
prudent so as to give a true and fair view of the state of affairs of the
company at the end of the financial year and of the profit or loss of the
company for the year under review;
iii) That the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provision
of the Companies Act, 1956 for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularity;
iv) That the Directors have prepared the accounts for the financial year
ended 31st March 2012 on a going concern basis.
Your company has two subsidiaries namely M/s PCL Telecom Limited and M/s
Punjab Digital Industrial Systems Limited. The former one is not in
operations since 1997-98 and an application for winding-up was filed before
the Hon'ble th Punjab & Haryana High Court at Chandigarh. The Court on 20
October, 2005 has passed the order of its winding-up. Subsequently the
Statement of Affairs has been filed with the Official Liquidator attached
with the said Court. The Hon'ble Court is yet to issue the dissolution
M/s Punjab Digital Industrial Systems Limited, the other subsidiary is also
not in operation since long. Accordingly, a winding-up petition was filed
with the Hon'ble Punjab & Haryana High Court at Chandigarh for winding-up
of the th company. The Court on 20 February 2009 has passed the order of
its winding-up. Subsequent to that, the Statement of Affairs has been filed
with the Official Liquidator attached with the said Court. The records are
being compiled for onward submission to the Official Liquidator office.
Puncom's shares on the Bourses
The Shares of your Company are listed with The Stock Exchange, Mumbai (BSE)
only. Presently about 95% of the company's shares have been dematerialized.
During the year under report, the share price of the company ranged
between the low of 49.20/- (1st April, 2011) to the high of 213/-(23rd
Puncom is making best efforts to increase its market share of its existing
product range. While there is no appreciable change in the manufacturing
trend of telecom equipment in India, yet Puncom has been able to hold its
ground. The manufacturing activities have been supplemented by other value-
added services like turnkey projects, annual maintenance contracts,
trainings etc. The company has been able to perform well in the current
competitive scenario and squeezing margins.
Puncom is making good inroads in getting contracts for turn-key projects of
V-Mux equipment from Railways. The company is not only focusing on indoor
installation activities but has also collected orders for outdoor work
linked to the indoor installations of V-Mux equipment. This would help in
improving Puncom share in Railways with a wider scope of work. The company
is offering this equipment to private parties/contractors who have
collected orders from Railways for turn-key projects of V-Mux and
associated items. This is also helping to increase the share of this
equipment in Railways.
Puncom has increased the market share of PLCC equipment by capturing new
markets in more state electricity boards. Puncom is also picking up orders
for the turn-key projects of this product. The company has also explored
the market of this product in private sector which is getting turn-key
projects for sub-stations.
Puncom has established a reasonably good market in Railways for its Power
Plant despite very stiff competition from other vendors. The power plants
are being offered as a part of turn-key solution to Railways along with V-
Mux and also as stand alone against various tenders of Railways. This
equipment is also being offered to private parties/contractors of Railways.
The telecom markets in India have seen rapid changes in the recent years
where the focus has been more on 2G and 3G networks and associated value
added services than on landline and manufacturing. Puncom is making all
possible efforts to make its presence felt in the areas of its strength
i.e. manufacturing and is catering to some niche markets. The existing
products viz, V-Mux, PLCC, Power Plant and spares of old products though
are in the advanced stages of their product life cycles but yet are giving
reasonably good turnovers. Efforts are being made to consolidate the
position for these products in the existing markets and add new products
for niche segments.
Besides this, Puncom is active in value added services like turnkey
projects, repair and maintenance. With the recent developments in the
telecom sector regarding the security concerns of Indian Government, most
of the telecom companies are making efforts to set up manufacturing bases
in India to Indianise their operations. The Company is also making
continuous efforts to add more new products to its kitty by way of techno-
commercial tie-ups with a view to increasing the revenues.
Puncom has recently introduced some new training programs and is
formulating strategies to increase the strengths of students in this area
of activity by pursuing aggressive marketing techniques.
* For several years now India has seen an exponential growth of telecom
network in India leading to an increase in subscriber density to an
impressive 80% and a sizeable broadband penetration. Liberal government
policies and fierce competition between operators have ensured that India
got latest and best equipments and technologies from largest equipment MNCs
at lowest prices. Unfortunately, what is also now widely believed is that
this technology upgrade, largely by-passed Indian telecom manufacturers, as
majority of the equipment was simply imported fully finished into India and
did not lead to policy mandated technology import which normally happens
when imports of this magnitude are involved. Unable to compete against
MNCs, most of the Indian telecom companies either resorted to trading of
MNC equipment or shifted to project work and related new segments. Lately,
Government of India has become aware of the policy level mismatch and
resultant security concerns of having a telecom network of mostly foreign
origin has led to formulation of new telecom policy which encourages
domestic manufacturing of telecom equipment.
* Fortunately large scale upgrade of main telecom network and IT in general
is also changing the work environment and catalysing other segments like
power, railways, defence, government, security, education etc to upgrade
their networks and work processes and are generating new business
opportunities. New areas of network and information security, renewable
energy, green and clean technologies, information access and automation etc
are becoming increasingly important and emerging as new growth segments.
Apart from this, defence with its unique domestic focus remains a major
potential growth segment.
* It is also expected that with the maturing of Indian telecom segment, and
with suitable Government policy push, larger proportion of telecom
equipment manufacture shall shift to India and will lead to increased share
of indigenous equipments and higher contract manufacturing opportunities.
* Historically, Puncom has been deriving its largest revenue from BSNL
segment though Railway and Power have also been significant contributors.
Unfolding telecom and industrial scenario however foresees increased role
of new revenue streams from emerging growth segments. Puncom is monitoring
these emerging trends and is on look out for appropriate opportunities for
itself for sustenance and growth and preparing itself to meet the merging
challenges in the changing environment.
Managements Reply to Auditors Remarks
M/s Raj Gupta & Co. Chartered Accountants, was appointed as Statutory
Auditors of the Company for the year 2011-2012. Notes to Accounts forming
part of Annual accounts are self-explanatory and exhaustive to the remarks
of Auditors in their report dated.
i) As regards non-recognition of the accrued interest amounting to 968.43
lacs (up to 12.07.2005 i.e date of deposit of 735.63 lacs by UP Government)
from UPCSMFL as per decree awarded by the court, we are of the opinion that
there being contingency in realisation of interest in near future and as
the execution of the same is pending before the lower court the same has
not been recognized. Matter being sub-judice will be decided as per the
legal procedure. The same has been in accordance with AS-9 on Revenue
Recognition. [Refer Audit Report Para 4(vi)(a)]
ii) As regards observation made by the Auditors regarding recognition of
revenue on sales amounting to 73.71 lacs which has not been in accordance
with Accounting Standard (AS-9) issued by Institute of Chartered
Accountants of India (ICAI), the same have been accounted for as per past
practice. [Refer Audit Report Para 4(vi)(b)]
iii) Regarding accounting of certain income and expenditure on cash basis,
the same has been accounted for as per disclosures made in Significant
Accounting Policy.[(Refer Audit Report Para 4(vi)(c)]
iv) The excise and custom duty demand of 30.20 lacs is disputed with the
excise and custom department. In this, Puncom had submitted the
reply/necessary documents but no further communications have been received
till date [(Refer Annexure to Audit Report Para 9(b)(i)]
v) As regards Sale Tax demand including interest aggregating to 14.85 Lacs
(net of pre deposit), which is disputed, we are to inform that company has
filled an appeal and the same is pending at the office of Sales Tax
Appellate Tribunal, Andhra Pradesh. [(Refer Annexure to Audit Report Para
9(b)(ii)] Explanation for variation in Published results vis-a-vis Audited
results for the year ended 31st March, 2012
The Board of Directors adopted the Un-audited Annual Financial Results for
the financial year 2011-12 in its Board Meeting held on 13th August, 2012,
which were subsequently published as well as sent to stock exchanges vide
our letter dated 14th August, 2012, pursuant to clause 41 of the listing
agreement. The sum total of the published Quarterly Unst audited results
for the first, second, third and fourth quarter for the year ended 31
March, 2012 and the audited results as on that date along with variation is
Particulars A B C
1 Sales/Income from Operations 2312.99 2312.99 0.00
Other Operating Income - - -
Total Income 2312.99 2312.99 0.00
2 Total Expenditure
a) Cost of materials consumed* 954.45 862.27 (10.69)
b) Purchases of Stock-in-Trade* 331.88 327.96 (1.19)
c) Changes in inventories of
Finished -44.38 -6.49 (583.62)
d) Employee benefits expenses 1422.00 1422.02 0.00
e) Depreciation and amortization
expenses 69.08 69.94 1.22
f) Other expenses(including
Excise Duty)** 471.04 685.79 31.31
Total Expenditure 3204.07 3361.48 4.68
3 Profit before Operations
before other income, (1049.20) (1048.49) (0.07)
interest & exceptional items
4 Other Income 1171.32 1167.72 (0.31)
Profit before Interest &
Exceptional Items 122.12 119.24 (2.42)
5 Interest 16.32 17.70 7.79
Profit after interest
but before 105.80 101.54 (4.20)
6 Exceptional Items - - -
7 Profit (+)/loss (-)
Before Tax 105.80 101.54 (4.20)
8 Tax Expense*** 22.18 27.95 20.65
Profit from ordinary
activities after tax**** 83.62 73.58 (13.64)
Extraordinary Items - - -
9 Net Profit (+)/ Loss(-) 83.62 73.58 (13.64)
A = Published (Unaudited) Result for the year ended on 31st March, 2012
B = Audited Results for the year ended on 31st March, 2012
C = Percentage of Variation
* Variation in Increase/Decrease in stock is due to the final valuation of
stock at the time of finalization of Accounts. However, overall variation
in Consumption of RM, Stock in Trade and Changes in inventories is (4.92%).
** Variation in Other Expenses is due to year end provisions provided for
at the time of Finalisation of accounts.
*** Variation in tax expense is due to increase in provision of MAT and
adjustments for Deferred tax made at the time of finalization of accounts.
The same are duly verified by the Auditors.
**** Variation in profit after tax is due to variations in expenses and
provision in MAT as explained above.
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988
As required by the Companies (Disclosure of particulars in the report of
the Board of Directors) Rules, 1988, the particulars in respect to
Conservation of Energy, Research & Development & Foreign Exchange Earning
and Outgo are as follows:
A. CONSERVATION OF ENERGY
a) Energy conservation measures taken:
We have continued with the practice of switching off the supply to the
areas where the lights are not required or where the production work is not
b) Additional Investments and Proposals if any being implemented for
reduction of consumption of energy:
No Investment and no proposals at present.
c) Impact of measures at (a) & (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods:
The consumption has reduced due to the above measures taken.
d) Total energy consumption and energy consumption per unit of production
is annexed at Form A and forms part of this report.
B. TECHNOLOGY ABSORPTION
a) Efforts made in technology absorption are annexed herewith as Form B and
forms part of this report.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
a) Activities relating to exports; initiatives taken to increase exports;
development of new export markets for products and services and export
b) Total Foreign Exchange Used and Earned is given as a part of Form B,
which forms part of this report.
Companies (Particulars of Employees) Rules, 1975
As per Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975, the Company is required to give the
list of employees who have been paid annual remuneration of 24,00,000/- or
above and a monthly remuneration of 2,00,000/- and above in case the
employee worked for less than a year. Since there is no employee drawing
salary exceeding the limit, hence the same is not applicable.
The employee-employer relationship remained cordial and harmonious through
out the year. The Board of Directors of your Company place on record their
satisfaction for the dedicated services rendered by the employees of the
The Board places on record its gratitude to the BSNL, and Department of
Railways, Ministry of Defence, VSNL, MTNL, PGCIL, PSEB and other esteemed
customers in India and abroad, State Bank of India, Union Bank of India,
IndusInd Bank & Allahabad Bank for their keen interest in the affairs of
the company, continuous help and co-operation for successful working of the
Company. The Board also places on record its gratitude to the Punjab
Information Communications and Technology Corporation Limited (PICTCL), the
Holding Company, for its guidance and support.
The Board also places on record its appreciation for the dedication,
commitment and hard work of staff at all levels. The Board in particular
acknowledges the co-operation of esteemed shareholders for their constant
support and for the confidence reposed in the Management of the Company.
(A R TALWAR)
Place: S.A.S. Nagar
Date : November 09, 2012
(FORMING PART OF DIRECTORS' REPORT)
PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
Current Year Previous year
A. POWER & FUEL CONSUMPTION
a) PURCHASED Unit (KWH) 903290 966485
Total Amount (Rs.) 6003330 4773632
Rate/Unit (Rs.) 6.646 4.94
b) OWN GENERATION
i) Through Diesel generator 23046 13224
Units per Ltr. of diesel oil (KW) 0.20 0.20
Cost/Unit (Rs.) 8.9646 7.52
Total amount (Rs.) 206600 99534
ii) Through steam turbine/Generator N.A. N.A.
Units (Ltr.) N.A. N.A.
Units per Ltr. of Fuel Oil/Gas N.A. N.A.
Cost/Unit (Rs.) N.A. N.A.
2. COAL (Specify quantity
and where used)
Quantity (Tonnes) N.A. N.A.
Total amount N.A. N.A.
Average rate N.A. N.A.
3. FURNACE OIL
Quantity (Tonnes) N.A. N.A.
Total amount N.A. N.A.
Average Rate N.A. N.A.
4. OTHERS/INTERNAL GENERATION
(Please give details)
Quantity (Tonnes) N.A. N.A.
Total cost N.A. N.A.
Rate/Unit N.A. N.A.
B. CONSUMPTION PER UNIT OF PRODUCTION
PRODUCT UNIT STANDARDS
DTL CHANNEL N.A. N.A. N.A.
PCM CHANNEL N.A. N.A. N.A.
TMUX TERMINALS N.A. N.A. N.A.
EPABX/RAX/SBM LINES N.A. N.A. N.A.
RADIO SYSTEMS N.A. N.A. N.A.
ii) Furnace Oil N.A. N.A.
(Specify qty.) N.A. N.A.
(specify) N.A. N.A.
(FORMING PART OF DIRECTORS' REPORT)
PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION, RESEARCH & DEVELOPMENT
A) RESEARCH & DEVELOPMENT (R&D)
1. SPECIFIC AREAS
Development of new features in VMUX for different markets.
2. BENEFITS DERIVED AS A RESULT OF ABOVE R&D
Company shall be able to achieve significant cost reduction and improvement
in the product and generate new markets; and as a result shall be able to
strengthen its position in its market segments.
3. FUTURE PLANS OF ACTION
The Company has plans to develop low cost equipments based on new
4. EXPENDITURE ON R&D
Amount (Rs.in Lacs)
Capital NIL NIL
Recurring NIL NIL
Total R&D expenditure as a %age NIL NIL
of total turnover.
B) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
Efforts in brief made towards technology absorption, adoption and
1. The Company has derived benefits as a result of above efforts e.g.
product improvement, cost reduction, substitution etc.
2. Technology imported during last 5 years: NIL
C) FOREIGN EXCHANGE EARNINGS AND OUTGO
Amount (in Lacs)
Current Year Previous Year
F.O.B. value of export: NIL NIL
CIF value of import of raw material: 198.46 117.84
Components & spares: 0.13 0.96
Capital goods: 8.99 2.74
Foreign travel & others: NIL NIL
MANAGEMENT DISCUSSION & ANALYSIS REPORT
Punjab Communications Limited (Puncom), a premier Telecom and IT company
was incorporated in the year 1981 by the Punjab Govt. for giving fillip to
the Electronics and Telecommunication industry in the region. The company
passed through a very good phase from 1981 to 1993, and came up with a
public issue in October, 1994. Besides high premium, the issue was highly
oversubscribed. The company achieved a record Turnover of 157.32 Cr during
the year 2001-2002, when its net worth was 181.77 Cr. Thereafter the
turnover of the company was adversely affected due to industry wide shift
from landline based narrowband communication to wireless and broadband
technologies promoted by major MNCs. Realising this, the company made
attempts to broaden its customer and product base through tie-ups with
foreign companies including Huawei Technologies of China for supply of DWDM
equipment to BSNL/MTNL and achieved a healthy turnover of 129.70 Cr. and
110.86 Cr. for the years 2008-2009 and 2009-10 respectively. For improving
the bottom line, the company went about developing its core markets of
railways and power sector with own products. Simultaneously the company is
on look out for additional partners for new products and services for new
The Indian Telecom industry has been on its growth trajectory with Telecom
network growth rate exceeding 25-30% for past several years now. The
subscriber population has already reached 900 million and is still growing
at a healthy rate. With urban tele-densities already reaching 100%, rural
and semi-urban along with broadband are new growth segments.
Progressive reforms such as the removal of restrictions on foreign
investments allowing 74% FDI in Telecom sectors and industrial de-licensing
are the driving force behind the growth registered by the industry.
Liberalising the EXIM policy to promote exports and aligning the import
duties to meet WTO commitments is further expected to contribute to the
overall development. The opening up of Indian Economy has also enabled the
MNC's to shift their manufacturing and operational bases to India.
The Indian telecommunication is today the second largest in the world and
is among the fastest growing markets. Presently, the Indian Telecom
Industry is slated to an estimated contribution of more than 5% to India's
GDP. India today is the fastest growing market in the world and represents
unique opportunity for companies' worldwide in an otherwise stagnant global
BSNL, MTNL, Railways, PGCIL, Defence, SEBs are the major customers of
Puncom. The shift in demand from voice to data and from wireline to
wireless, has revolutionized the very nature of telecom networks and have
prompted most telecom companies to evolve into fully integrated
The future of the industry lies in the broadband and cellular segments and
constant technological innovations such as 3G, Wimax, IPTV & NGN based
services are changing the market place. Broadband base has reached Fourteen
Million and is also expected to grow exponentially. Cut throat competition
in telecom market is however requiring indigenous manufacturers of telecom
equipment to have a re-look at the niche segments of power sector, defence,
railways etc for growth. Service sectors including IT is another growth
segment relevant to the company.
Major national projects under development and whose demand is expected to
- Nationwide Transmission and tactical communication networks for defence.
- 3G and Video Capable Mobile Networks.
- Renewable and clean energy technologies.
- Triple play Broad Band services and IPTV.
- Wireless Broadband- Wi Fi, Wimax.
- E-Commerce and e-governance.
- Network and Information Security.
Puncom has a diversified customer base. Though historically BSNL accounted
for a major portion of our Sales, however Railways and power sector
contribute significantly towards revenues and bottom line. Considering the
severe competition and dominance of MNCs in telecom, the Company is
continuously looking for diversification of its customers base as well as
products. The same is being done by exploring emerging business segments or
by introducing new products or by acquiring new technologies.
Simultaneously, company is strengthening its project execution strengths
and generating significant revenue from the same.
The company is exploring thrust areas like defence, green energies etc and
making efforts to generate higher revenue from these segments. Your company
has been able to curtail cash loss due to change in product mix and taking
further necessary steps in administrative and financial policies. Your
company has discontinued non- profitable products and has slowed down on
low/negligible value addition products thereby concentrating on high value
Puncom being a telecom equipment manufacturing company has to stay updated
on technology front as the rate of obsolescence in this field is quite
high. To keep pace with this requirement, Puncom has adopted two-pronged
approach i.e., firstly through tie-ups and secondly through stepped up
product engineering efforts. This helps in infusion of newer versions of
products/new technology in the existing range of company's products. Puncom
provides very large spectrum of telecom solutions covering Transmission,
Radio, Switching, Multiplexing, Software etc. under one roof. The product
base is wide which provides the company with the requisite strengths to
handle composite projects effectively.
b) ISO- 9001:2008 Certification
Making quality equipment & services available to its customers is the motto
of Puncom. In pursuit of providing quality equipment & services, Puncom's
processes and procedures conform to the requirements of the ISO 9001:2008
standard. Further, the quality standards in Puncom are tuned to TEC/QA/CACT
wings of BSNL and RDSO of Railways. Puncom has invested heavily in creating
various testing facilities, which include Environmental Chambers, Vibration
Test Facilities, Thermal Shock Chambers, Bump Test machines etc.
To bring about transparency in the working of the company at all levels, to
attain smooth operations and effective co-ordination amongst various
departments, your company has successfully established Enterprise Resource
Planning (ERP) System. The ERP system, which is in place in the company,
facilitates proper co-ordination of all activities in the divisions to give
improved results. Due to this, the company is able to maintain absolute
control over all the activities resulting in the optimum utilisation of its
financial resources. Puncom being a Govt. company is subject to various
audits, which reinforce 100% transparency in the working of the company
including the Accounting Systems.
The Company has implemented code on Insider Trading under SEBI Regulations.
Through this code, Company is able to keep check on the transactions
pertaining to sales and purchases of Puncom's shares by the Designated
employees/connected person. This Code ensures that no insider either on his
behalf or on behalf of other person, deal in securities of a company listed
on any Stock exchange on the basis of unpublished price sensitive
information, which is not generally known or published by Company for
general information. The Company has formulated a Memorandum of Right to
Information under the Right to Information Act and anybody can access the
non-confidential information under the Act. This further adds to the
transparency of company affairs.
The company has also adopted a Code of Conduct for Board and Senior
Management of Company as desired under Clause 49 of the Listing Agreement
which ensures the high ethical standards of the company and transparency of
important decision at higher level.
d) Adequacy of Internal Controls
Puncom has a proper and adequate system of internal controls to ensure that
all assets are safeguarded and protected against loss from unauthorised use
or disposition and those transactions are authorised, recorded and reported
The company has an extensive system of internal controls which ensures
optimal utilisation and protection of resources, IT security, accurate
reporting of financial transaction and compliance with applicable laws and
regulations as also internal policies and procedures.
The internal control system is supplemented by extensive internal audits,
regular reviews by management, and well-documented policies and guidelines
to ensure reliability of financial and all other records to prepare
financial statements and other data.
a) Operating Results - Sales
During the financial year 2011-12, the sales have increased from 18.17 Cr
to 23.13 Cr. The Break up of the Sales on the basis of Product & Customer
is as follows:
b) Expenditure Analysis
i) Materials consumed
Raw Material cost during the year under review was 11.91 Cr as against 7.90
Cr in the previous year. Raw material consumption consists of consumption
of traded goods also.
ii) Manufacturing, Administrative & Selling Expenses
Manufacturing expenses comprises of stores and spares, power and fuel,
freight and installation expenses etc., increased from 1.82 Cr to 2.47 Cr
in the current year. As a percentage of sales, these increased from 10.02%
in the previous year to 10.68% in the current year.
Administrative expenses mainly comprising of travelling and conveyance,
repair and maintenance, office electricity & water, rent and auditors'
expenses increased from 2.16 Cr to 2.19 Cr. However, as a percentage of
sales, these decreased from 11.89% in the previous year to 9.47% in the
Selling & distribution expenses comprising of advertisement and publicity,
sales promotion expenses, packing & forwarding expenses and customers
claims and recoveries have increased from 0.43 Cr to 0.61Cr in the current
year. As a percentage of sales these increased from 2.37% in the previous
year to 2.64% in the current year.
iii) Amount written off/Provisioning
During the current financial year following amounts have been provided
for/written off to present the accounts at a fair value.
(Rs. in lacs)
Provision for Excise Demand 9.81
Know-how fee amortised 0.82
Amount written off 8.17
Provision for Doubtful
Debts and Advances 23.05
Thus, the overall amount written off/provided for in the accounts during
the financial year 2011-12 is to the tune of 41.85 lacs.
iv) Personnel cost
The personnel cost increased from 13.38 Cr to 14.22 Cr which is in line
with the cost inflation index.
v) Interest & Depreciation
The Financial Charges increased from 5.62 lacs in the previous year to
17.70 lacs in the current year. Increase in interest cost is due to
restructuring of FDR and loan to take benefit of arbitrage in interest
rates. Depreciation decreased from 75.98 lacs to 69.93 lacs during 2011-12.
The reduction in depreciation is on account of WDV method followed by the
company. Further, addition in the capital expenditure was booked to the
extent of 15.48 lacs during the current year.
vi) Net Profit
During the current financial year, the Company has earned a Net profit
before tax of 1.02 Cr as against Net Profit before tax of 0.19 Cr during
the last year.
Owing to inadequate profit, during the previous year, the Directors of your
Company do not recommend any dividend for the financial year 2011-12.
c) Segment reporting
Puncom is engaged in the business of manufacturing of telecom products and
these activities are covered by same sets of risks and returns. Sales have
been grouped as single segment in the accounts as per AS-17 issued by ICAI.
However, interest income has been considered as a separate segment. Out of
total revenue of 3322.65 lacs, 2265.76 lacs pertains to Sales Service
Income and 910.30 lacs pertains to interest segment and 146.59 lacs
pertains to Rental Segment.
a) Reserves & Surplus
The Reserves of the Company stands at 9723.99 lacs as on March 31, 2012.
b) Secured/Unsecured Loans
The working capital limits for meeting the working capital requirements of
the company are availed intermittently to the extent of 1.89 lacs from its
Bankers. Further loans have been taken for restructuring FDRs for taking
benefit of arbitrage.
c) Fixed Assets
The gross block of the company increased marginally from 54.00 Cr to 54.15
Cr in the current year. Technical know how has been considered as
Intangible asset and reclassified accordingly with retrospective effect.
The fixed deposits of the company have increased to 102.26 Cr against
100.06 Cr in the previous year.
Total inventory has increased from 3.76 Cr as at 31.3.2011 to 4.74 Cr as at
31.3.2012 due to increase in turnover of own products.
Receivables were 15.69 Cr as at 31.3.2012 as compared to 21.00 Cr as at
31.3.2011. These debtors are considered to be good but there being some
doubtful debts, provision to the tune of 23.05 lacs have been made this
g) Loans and Advances
These consists of both long term and short term loans and advances and have
decreased from 4.91Cr as at 31.3.2011 to 3.01Cr as at 31.3.2012.
h) Current Liabilities & Provisions
Total current liabilities have been increased from 123.65 Cr as at
31.3.2011 to 124.18 Cr as at 31.3.2012.
FOREIGN EXCHANGE EARNINGS AND OUTGO
(Rs. in lacs)
F.O.B. value of export : NIL
CIF value of import of raw material : 198.46
Components & Spares, Capital good : 9.12
Foreign travel & others : NIL
* Continuing exponential growth rate in mobile and broadband networks and
its deeper penetration into rural and other tertiary areas continues to
provide business opportunities in telecom segment.
* Even though, most of telecom growth in India has been based on imported
MNC equipment, the policy makers and industry itself is maturing and a
greater proportion of locally manufactured equipment is expected.
* Growth of telecom and IT is prompting related growth in niche markets of
power, railways, defence, government etc for telecom and IT equipments.
* Newer areas of security, renewable energy, green and clean technologies
provide new business opportunities to penetrate/invest into new segments.
* India, with its vast and vibrant economy and deeper integration with
global markets, is moving up the value chain and is in the process throwing
up large requirements of cost optimised high tech products in telecom and
IT domains. This is providing new opportunities and markets for domestic
* M&A continues to be the norm in the growing Indian economy providing
necessary impetus to the change management.
l Continuously evolving market place increases product churn and reduces
timelines. This increases business risks and puts pressure on companies to
continuously innovate and explore investments into new markets and
* Policy framework and a perceived purchaser bias in India results in
skewed playing field in favour of MNCs which Indian telecom manufacturers
find difficult to match.
* Puncom operates in a highly competitive high-tech segment. However, being
a PSU, it is not able to employ the level of flexibility in business
operations as enjoyed by its competitors from private sector.
HUMAN RESOURCE DEVELOPMENT
The employees of Puncom are the backbone and this resource is very
efficiently utilised. The company nurtures its employees through greater
knowledge, opportunity, responsibility, accountability, innovation and
discipline. Puncom is dextrous in motivating its employees to stretch out
the hand of effort and hard work towards attainment of its objectives. All
the policies concerning the employees are made keeping in view the fact
that manpower is the most precious resource for the company. Puncom is
relatively renowned company with young employees having an average age of
a) Break-up of work force As on 31.03.12
i) Professionals (MBA, CA, ICWA, CS, LLB) : 05
ii) Engineers (B.E/ B.Tech/M.Tech/AMIE/MSC/MCA) : 33
iii) Diploma Holders : 42
iv) ITIs : 91
v) Non-Technical : 71
vi) Contractual : 36
Total : 278
Puncom is equipped with qualified and professional staff. The employees are
groomed through effective system of assessment, performance appraisal,
training, including sharing of lectures/ knowledge base through the local
area network, training files and on line testing structured manner.
In addition to above, Puncom offers numerous facilities to its human
resources in the form of in-house Library, Airconditioned environment,
Canteen facilities, Leased accommodation, Bill paying facility, ATM,
Leave/Home travel concessions, Internet facility etc. Further, other
benefits like medical allowance, conveyance loan etc. are also available to
Puncom frames its HR policies keeping in mind that human resource is core
strength of the company. Good HR policies not only lead to contentment of
employees by providing them with equal opportunities to grow but also help
in achieving the laid down objectives effectively. Puncom encourages its
employees to go beyond the scope of their work, undertake voluntary
projects that enable them to learn and contribute innovative ideas in
meeting goals of company.
b) Industrial Relations
Puncom firmly believes in the power of esprit de corpse and thus, provides
its employees with congenial atmosphere to work as a cohesive team. The
efforts of all the employees are synchronized and coordinated towards
achieving common objectives. Further all employees are encouraged to
participate in the decision making process. During the year 2011-12 the
employee management relations remained cordial and positive.
Safety and security of the personnel, assets, and the environmental
protection are on top of the agenda at Puncom. The safety procedure of
Puncom includes electrical safety, inherent process safety, control of
substances hazardous to health, vehicle integrity check and loading and
unloading operations. Puncom is consistently reviewing its safety measures
and taking steps to improve them.
Puncom is conscious of its responsibility towards creating, maintaining and
ensuring a safe and clean environment. Strict adherence to all regulatory
requirements and guidelines is maintained at all times. The company has
adopted approach to create pollution free environment by adopting required
measures. The company has taken tasks of planting trees and maintaining
lawns to make the factory dust free. Being an electronic industry, though
it does not emits any air, water or noise pollutants yet the company is
committed to make the environment healthy and pollution free.