Punjab Commun. Management Discussions



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.


• 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.


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.


• 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.


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)


Sale Amount Percentage Sale


65.81 6.22 %


672.15 63.48%

Power Plant & Others

28.49 2.69%

Traded items

29.02 2.74%


262.65 24.80%

Training Income & Scrap Sale

0.75 0.07%


1058.87 100 %

Customer wise sales

Amount (in Lacs)


Sale Amount Percentage Sale

Power sector

100.92 9.53%


384.67 36.33%

Other customers*

573.28 54.14%


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


Amount written back against payables


Total amount written back in the year 2022-23


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.


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.


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)


Engineers (B.E/ B.Tech /M.E./M.Tech /AMIE/MSC/MCA)


Diploma Holders


Technical ITIs




Contractual / Res. Representatives




* 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


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.