ANNEXURE-2
INDUSTRY STRUCTURE AND DEVELOPMENTS
Punjab Communications Limited, 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. Despite high premium, the issue was
heavily oversubscribed. The company achieved a record turnover of Rs157cr during the year
2001-2002, when its net worth was Rs 181 cr.
Thereafter the turnover of the company was adversely affected due to industry wide
shift from landline based narrowband communication to wireless and broadband. 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
and technology transfer of POWER PLANT from RTP Australia. Simultaneously, for improving
bottom line, the company went about development its core markets of railways and power
sector with own products. Line Matching Unit was developed for power sector market and
CCEO system for railways for communication between control office and way stations and
executing projects with Multiplexer and SDH. The company is on lookout for additional
partners for new products and services for new markets. The company has empanelled OEMs of
IP-MPLS for projects in railways and power sector. OPPORTUNITIES AND THREATS Opportunities
• Continuing 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.
• Growth of telecom and IT is prompting related growth in niche markets of power,
railways, defence, government etc. for telecom, EV and EV infrastructure and IT equipment.
• Newer areas of security, new & renewable energy, Digital India, Digital
villages, Smart cities, Green and clean technologies, etc. 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 optimized high tech products in telecom and IT domains. This is providing new
opportunities and markets for domestic industry.
• Puncom is also exploring potential business from government in those emerging
areas.
Threats
• Continuously evolving market place increases product churn and reduces time
lines. This increase business risks and puts pressure on companies to continuously
innovate and explore investments into new markets and products.
• Fast changing technologies
• Prolonged chip shortage and price rise
• Policy framework and perceived purchase bias in India results in skewed playing
field in favour of MNCs which Indian telecom manufacturers find difficult to match.
• Lack of skilled tech talent has been issue for a long time and continuing
uncertainty of disinvestment is affecting functioning of the company.
Segment Reporting
Puncom is engaged in the business of manufacturing of telecom products and these
activities are covered by same set of risk and returns. Sales have been grouped as single
segment in the accounts as per Ind AS 108- Operating Segments as issued by Ministry of
Corporate Affairs.
FINANCIAL POSITION
a) Reserves and Surplus
The Reserves of the company as on 31st March, 2023 are Rs. 659.36 Lacs
(previous year Rs. 2235.93 lacs). Due to losses in the current financial year, reserves
have been utilized to the extent of Rs 1576.56 Lacs.
b) Secured / Unsecured Loans
Company has not taken any long term loans and enjoys the status of being Zero - Debt
Company. However, during the year, the company has been sanctioned working capital limits
/ BG Limits from banks in excess of Rupees 5 (Five) Crores against 100% margin towards
FDRs of the company. The company has availed bank guarantees, overdraft and LC limits
against the pledged FDRs to the tune of Rs.1603.62 Lacs as on 31st March, 2023.
c) Property Plant and Equipment & Investment Property
The Gross Block of Fixed Assets of the company as on 31st March, 2023 are
Rs. 5551.54 lacs (previous year at Rs.5570.79 Lacs). Decrease during the FY 2022-23 is
mainly due to sale of old vehicles having Gross Block value of Rs. 18.70 lacs. Please
refer note 2 of Balance Sheet.
d) Investments
Non-Current Investments as on 31st March, 2023 are Rs. 698.74 Lacs, being
investment in bonds of U P Co-operative Spinning Mills Federation Ltd. (UPCSFL) in year
1998. Principal amount of fixed deposits of the company as on 31st March, 2023
are Rs.4624.86 Lacs (previous year at Rs. 6191.45 Lacs). Fixed deposits includes Rs.
3010.21 Lacs (previous year at Rs. 3010.21 lacs) received by Company through encashment of
backup Bank Guarantees submitted by VMC Systems Ltd. Fixed deposits having maturity period
of more than one year from Balance Sheet date are classified as Non - Current Financial
Assets. Fixed deposits having original maturity of 3 months or less are classified as Cash
& cash equivalents. Decrease in Fixed deposits is due to losses during the year.
e) Inventories
Total Inventory (Net of provisions for non moving Inventory) as on 31st
March, 2023 is Rs. 204.08 lacs (Previous year Rs. 425.50 Lacs). The decrease is due to use
of old Inventories during the year under review.
f) Receivables
Net Trade Receivables as on 31st March, 2023 are Rs.1022.22 Lacs (Previous
year at Rs 1042.63 Lacs). The debtors are considered to be good and provision to the tune
of Rs. 52.87 Lacs has been reversed during the financial year 2022-23. The decrease in
trade receivables during the year is nominal.
g) Loans and Advances
Long term and short term loans and advances as on 31st March, 2023 are Rs.
17.67 lacs (previous year at Rs. 26.26 Lacs).
h) Current Liabilities and Provisions
Total current liabilities as on 31st March, 2023 are Rs.5608.38 lacs
(previous year at Rs. 5617.65 Lacs). No major change took place during the year.
i) Other Current Financial Assets
Other Current Financial Assets consist of security deposits, accrued interest on fixed
deposits having maturity within one year and money held in Escrow account on behalf of VMC
and its Associate Companies.
Other Current Financial Assets as on 31st March, 2023 are Rs. 471.07 lacs
(Previous year at Rs.451.26 Lacs) i.e. Nominal increase during the year.
OUTLOOK Industrial Outlook
There are huge changes in telecom sector from carrier of voice and data to newer
e-based services for growth of business. The country is projected to witness extensive
penetration of internet, broadband and mobile subscribers and IT based digital services in
deepest corners of country with the nationwide programmes like Digital India, digital
empowerment, e-service delivery ,mobile banking and e-commerce etc.
Govt. of India has enhanced the ease of doing business in the country by streamlining
controls, taxation and increasing FDI limits .This is helping joint ventures between MNCs
and domestic companies so as to make India manufacturing hub after becoming software hub.
Major national projects and market segments where demand is expected to grow are:
• Make in India programs for all business segments especially railways, defense,
energy, telecom, networking, health, security, automation.
• Digital India, Diggings and related services
• Renewable and clean energy technologies
• E-Commerce and e-governance
• Smart cities, smart grid and smart metering
• Wireless broadband and cloud
• Network and Information security
• Water management and agriculture
• Automation using IoT
• EV charging infrastructure.
War between Russia and Ukraine and Chinas dominance in Pacific Ocean is changing the
opinion of West and USA about India. Business Outlook
Major portion of Puncoms revenue is from the manufacturing of its products, rest is
from repair, installation and maintenance of products / turnkey projects. Overall higher
value addition is from manufacturing. Puncom is doing cost reduction of the product which
still has a market and developing some inexpensive products for railways like VF
Transformer etc. Puncom is strengthening its value added service activities like turnkey
projects and customer support etc.
RISKS AND CONCERNS
• Products manufactured by PUNCOM are in its last stage/fag end of their
commercial viability.
• Higher Lead time of semiconductors
• Old designs of products and components obsolescence making manufacturing
difficult, demands redesign.
• Rise in component cost after COVID period and Ukraine war.
• Being a PSU, it is not able to employ the level of flexibility in highly
competitive high tech segment.
• Lack of technical manpower.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Puncom has a proper and adequate system of internal controls to ensure that all assets
are safeguarded and protected against loss from unauthorized use or disposition and those
transactions are authorized, recorded and reported correctly. The company has an extensive
system of internal controls which ensures optimal utilization 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.
FINANCIAL REVIEW Operating Results i) Sales
During the financial year 2022-23, the sales of the company have decreased to Rs.
1058.87 Lacs from Rs. 1075.90 lacs in previous year. There is a nominal decrease during
the year. The break-up of the sales during the year on the basis of product and customer
is as follows:
Amount (in Lacs)
Particulars |
Sale Amount |
Percentage Sale |
PLCC |
65.81 |
6.22 % |
MUX |
672.15 |
63.48% |
Power Plant & Others |
28.49 |
2.69% |
Traded items |
29.02 |
2.74% |
Services |
262.65 |
24.80% |
Training Income & Scrap Sale |
0.75 |
0.07% |
TOTAL |
1058.87 |
100 % |
Customer wise sales
Amount (in Lacs)
Particulars |
Sale Amount |
Percentage Sale |
Power sector |
100.92 |
9.53% |
Railways |
384.67 |
36.33% |
Other customers* |
573.28 |
54.14% |
TOTAL |
1058.87 |
100 % |
*Other customers include Telecom Sector, SSSB Mohali etc. ii) Expenditure Analysis
a) Material Consumed
Material consumed during the year is Rs. 423.17 Lacs as against Rs 329.60 Lacs in the
previous year. Material consumption consists of consumption of traded goods also.
b) Manufacturing, Administrative & Selling expenses
Manufacturing expenses comprising of stores and spares, power and fuel, freight and
installation expenses etc. decreased from Rs. 108.78 Lacs to Rs. 89.76 Lacs in the current
year. As a percentage of sales, these decreased from 15.57 % in the previous year to 11.71
% in the current year. Decrease in manufacturing expense is due to cost reduction during
the year.
Administrative expenses mainly comprising of travelling and conveyance, repair and
maintenance, office electricity & water, rent and auditors expenses decreased from Rs.
221.43 Lacs to Rs. 192.96 Lacs. However as a percentage of sales these decreased from
20.58 % in the previous year to 18.22 % in the current year. Administrative expenses
mainly of fixed nature and reduction in Administrative expenses is due to Cost savings
during the year.
Selling and Distribution expenses comprising of advertisement and publicity, sales
promotion expenses, packing & forwarding expenses and customer claims and recoveries
have increased from Rs. 11.73 Lacs to Rs. 14.08 Lacs in the current year. As a percentage
of sales these increased from 1.09% in the previous year to 1.33 % in the current year.
c) Amount written back
During the current financial year following amounts have been written back to present
the accounts at the fair value
Rs. (in Lacs)
Provision for Doubtful debts and advances written back |
52.87 |
Amount written back against payables |
23.58 |
Total amount written back in the year 2022-23 |
76.45 |
Thus the overall amount written back during the financial year 2022-23 is Rs.76.45 lacs
against net write off of Rs. 21.48 lacs in the previous year.
d) Personnel Cost
The personnel cost decreased from Rs. 2471.97 Lacs to Rs. 1940.62 Lacs. Decrease in
personal cost is due to decrease in number of employees on account of 22 employees opted
for VRS in June 2022 and further retirement/resignation during the year. The Company has
paid Ex gratia of Rs. 693.85 lacs to employees opted for VRS and Ex gratia paid has been
shown under exceptional items in Profit and loss account pertaining to financial year
2022-23.
e) Finance costs and Depreciation
The financial charges increased from Rs. 2.25 Lacs in the previous year to Rs. 3.56
Lacs in the current year. Depreciation decreased from Rs. 28.93 Lacs to Rs. 23.14 Lacs
during FY 2022-23. Further, an addition in the capital expenditure was booked to the tune
of Rs. 1.16 Lacs during the current financial year.
f) Net Profit/Loss and Total Comprehensive Income
During the current financial year, the company has incurred Net Loss of Rs. 1562.46
Lacs as against Net Loss of Rs. 1321.94 Lacs during the previous year. Loss during the
year is higher Vis a Vis previous year due to ex -gratia of Rs. 693.85 lacs paid to 22
employees opted for VRS and ex gratia paid has been shown under exceptional items in
Profit and loss account of financial year 2022-23. Loss during the Current year excluding
the exceptional items is at Rs. 868.61 lacs (Previous year Rs. 1248.79 lacs).
Total Comprehensive Loss for the current financial year is Rs. 1576.56 Lacs (Previous
year Rs. 1271.88 Lacs after considering impact of Other Comprehensive loss of Rs. 14.10
Lacs (Previous year Rs. 23.09 Lacs).
g) Dividend
Owing to losses during the FY 2022-23, the Directors of the company do not recommend
any dividend for the Financial Year 2022-23.
ISO- 9001:2015 CERTIFICATION
Making quality equipment and services available to its customers is the motto of Puncom
. In pursuit of providing quality equipment and services, Puncom processes and procedures
conform to the ISO 9001:2015 standard. These procedures and processes are audited once in
three years for the recertification of the standard, followed by yearly Surveillance audit
and half yearly internal audits. Puncom has successfully completed surveillance audit of
ISO in May 2023.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS 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 and discipline. All the policies concerning the employees
are made with an objective of motivating the manpower and considering it as a significant
resource for the company. Puncom is relatively renowned company with highly experienced
and hardworking employees with an average age of 51 years.
Break- up of work force |
As on 31.03.23 |
Professionals (MBA, CA, ICWA, CS, LLB) |
03 |
Engineers (B.E/ B.Tech /M.E./M.Tech /AMIE/MSC/MCA) |
17 |
Diploma Holders |
29 |
Technical ITIs |
72 |
Non-Technical |
34 |
Contractual / Res. Representatives |
18 |
Total |
173* |
* Including Employees on Deputation to Punjab Govt. Departments
PUNCOM is equipped with qualified and professional staff. The employees are groomed
through effective system of assessment, performance appraisal, training, including sharing
of knowledge through training files and on line testing in a structured manner.
In addition to above, PUNCOM offers numerous facilities to its human resources in the
form of in-house Library, Air-
conditioned environment, canteen facilities, Leased accommodation in Engineer Campus,
ATM, Leave/Home travel concessions, Internet facility, recreational activities, natural
environment in the premises, parking facilities etc. Further, other benefits like medical
allowance, etc. are also available to employees. 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.
Safety and security of the personnel, assets, and the environment 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 the safety
measures and taking steps to improve them.
PUNCOM is conscious of its responsibility towards creating, maintain 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 also formed the various
committees for effective disposal of scrap and waste. Disposal of scrap when handled in an
imaginative manner can result in handsome returns to the company.
Annual Report 2022-2023
50
Therefore, the PUNCOM ensures the involvement of employees of the company in this
process as they are naturally the best people to suggest improvements is materials,
processes, and new end users for scrap. PUNCOM believes that it is they who can minimize
the accumulation of scrap through coordination. Being in telecom sector, PUNCOM is
motivated towards e-waste management through coordinated efforts with various authorised
agencies.
The company has also taken tasks of planting trees and maintain lawns to make the
factory dust free. Being an electronic industry, through it does not emit any air, water,
or noise pollutants yet the company to control noise pollution by putting canopy on power
generator.
Industrial Relations
Puncom firmly believes in the power of esprit de corps 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 2022-23, the
employee management relations remained cordial and positive.
Significant Changes in Key Ratios
There is a decrease of 92.30% and 27.13 % in Return on Equity ratio and Net Profit
ratio respectively due to payment of ex-gratia amount of Rs. 6.94 crores to 22 employees
who have opted for VRS along with dues paid on VRS. There is an increase of 30.49 % in
Inventory turnover ratio due to reduction in inventory on account of use of old inventory
during the year. Further, there is an increase of 36.65 % in Trade receivables turnover
ratio on account of better payment realisation from customers during the year.
Change in Net Worth
During the year, there is a decrease of 118.16 % in return on net worth for the
financial year 2022-23, due to payment of ex-gratia amount of Rs. 6.94 crores to 22
employees who have opted for VRS along with dues paid on VRS.
Disclosure of Accounting Treatment:
The Company has prepared financial statements in accordance with applicable Indian
Accounting Standards. Further, there is no qualification in Independent Auditors Report.
The disclosure w.r.t Auditors opinion and matter emphasized in Independent Auditors
Report is detailed in the Boards Report and the same has been done as per the past
practice.
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