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Directors Report of Punjab Communications Ltd.

Mar 31, 2016

- BOARDS’ REPORT -

The Board hereby presents the Thirty Fifth Annual Report of your Company together with the Audited Statement of Accounts for the Financial Year ended 31st March, 2016 along with Independent Auditors’ Report thereon and Secretarial Audit Report for the financial year under report.

Financial Results ('' In lacs)

Particulars

2015-16

2014-15

Gross Income

3112.44

3255.69

Total expenditure

3956.39

3963.20

Profit before tax

(1047.58)

(1026.16)

Profit/Loss after tax

(1047.58)

(1026.16)

Dividend

Nil

Nil

Paid up equity

1202.36

1202.36

Profit/Loss appropriated to General Reserve

0.00

(1026.16)

Profit/Loss Account

(1047.58)

0.00

Reserves (Including Capital Reserves)

7159.01

8206.66

Net fixed assets

566.23

418.85

Capital employed

8565.17

9575.93

Earning/Loss per share (in '')

(8.71)

(8.53)

Cash earning/loss per share (in '')

(8.10)

(7.02)

Book value per share (in '')

69.56

78.28

Extract of Annual Return

The extract of Annual Return pursuant to the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 in the prescribed form MGT-9 is enclosed as Annexure 1 and is an integral part of this Report.

Meetings

During the year, four Board meetings were duly convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the provisions of Companies Act, 2013, Listing Regulations and SS-1 on Meetings of Board of Directors.

Directors'' Responsibility Statement

Pursuant to the requirement under section 134(5) of the Companies Act, 2013, with respect to Directors’ Responsibility

Statement, it is hereby confirmed:

i) That in the preparation of accounts for the financial year ended 31st March, 2016, 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 judgments 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 provisions of the Companies Act, 2013, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) That the Directors have prepared the annual accounts for the financial year ended 31st March 2016 on a going concern basis.

v) That the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

vi) That the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Frauds reported by Auditors u/s 143(12)

Your company has complied with all the provisions of Section 143 of the Companies Act, 2013. Hence, there are no frauds reported by the Auditors other than those which are reportable to the Central Government. Further, no fraud has been reported to the Central Government.

Declaration by Independent Director(s)

All the Independent Directors on the Board of Puncom have given their respective declaration that they meet the criteria of independence, as per the provisions of sub-section (6) of section 149 of Companies Act, 2013. The term of Appointment of Independent Directors has been fixed for 5 years, in accordance with the provisions of the Companies Act, 2013, and none of the Independent Directors have been reappointed for more than 5 years.

Nomination and Remuneration Committee

The details of the Nomination and Remuneration Committee & its Policy in accordance with Section 178(2) of the Companies Act, 2013 and Regulation 17(10) of Listing Regulations are mentioned in the Corporate Governance Report annexed herewith.

Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made

Management''s Reply to Statutory Auditors Remarks:

M/s Grewal & Singh, Chartered Accountants, was appointed as Statutory Auditors of the Company for the financial year 2015-16. Notes to accounts forming part of Annual Accounts are self- explanatory and exhaustive to the remarks of Auditors in their report dated 27th May, 2016.

1. Regarding the investment of Rs. 698.74 lacs (Face value Rs. 700 lacs) in the Bonds of UP Co-operative Spinning Mills Federation Ltd (UPCSMFL) duly guaranteed by the UP State Govt. for the tenure of 18 months. The company invoked the government guarantee consequent to the bonds not being redeemed on the due date of redemption viz

20.12.1999. The suit was filed for recovery of Rs. 993.44 lacs (Principal of Rs. 700 lacs and interest Rs. 293.44 lacs). The suit was decided ex-parte in favour of the company on 31.01.2004 by Civil Judge, Junior Division, Chandigarh. In compliance of the orders of the Hon’ble Punjab and Haryana High Court, Chandigarh, the UP State Government (Guarantor) had deposited Rs. 735.63 lacs and a Govt. guarantee of equivalent amount in the Civil Court, Lucknow. Further an amount of Rs. 735.63 lacs deposited with the Executing Court was released to the Company (decree holder) on 24.04.2006 against furnishing bank guarantee of the equivalent amount with the Court.

Later on 19.01.2015, Hon’ble Supreme Court had decided against the ex-parte decree earlier made in favour of the Company and directed the Civil Court, Lucknow to refund the amount to UP State Government. The execution of the said order is pending at District Court, Lucknow. In view of the SC Decision, the company has accounted for the same and a liability of Rs. 735.63 lacs has been reflected under Note-7 of Balance Sheet. Above mentioned Bank guarantee of Rs. 735.63 lacs can be invoked by the Court any time. Since the decree was issued against UPCSMFL and State of UP and Hon’ble SC considered that the State of UP was Ex- parte, the company has filed the execution of earlier decree issued in favour of Puncom against the UPCSMFL on 30.01.2016 and has also filed fresh suit against the State of UP through Special Secretary, Industrial Development on 11.03.2016.

The company had earlier recognized and received interest income to the extent of Rs. 156.45 lacs (@ 14.90% on Principal) for a tenure of 18 months. In view of the protracted litigation and uncertainty of the amount realizable, pending settlement of the case, the company has provisioned the already recognized interest income of Rs. 152.52 lacs up to 31st March, 2001 of which Rs. 115.63 lacs was provisioned in FY 2014-15 and remaining Rs. 36.89 lacs in current financial year.

The Company has not recognized accrued interest, keeping in view uncertainty involved in the matter of realization of interest due to litigation. This is also in conformity with the AS-9 issued by ICAI. Also refer note: 10 & 13 of Balance Sheet. [Refer Emphasis of Matter Para (a) of Independent Auditors’ Report]

2. Regarding the matter of balance confirmations, we are to inform that the company has sent balance confirmation letter to all parties requesting them to confirm the balances within 15 days of the receipt of the letter, failing which the balance will be presumed to be correct. The company has no other means of confirming the balances for which no response has been received except presuming them to be correct as per terms of letter. [Refer Emphasis of Matter Para (b) of Independent Auditors’ Report]

3. Regarding accounting of certain income and expenditure that has been accounted for as and when incurred, ascertained or settled, we are to inform that the same has been accounted for as per disclosures made in Note 1 Significant Accounting Policy Point I(b) being followed consistently. [Refer Emphasis of Matter Para (c) of Independent Auditors’ Report]

4. Regarding selection of Company for disinvestment by Cabinet Committee on Disinvestment, Government of Punjab in 2003, we are to inform that till date, the company has not received any final decision in respect of mode of Disinvestment during FY 2015-16. [Refer Emphasis of Matter Para (d) of Independent Auditors’ Report]

5. Regarding the excise and custom duty demand of Rs. 30.20 lacs, which is disputed with Deputy Commissioner of Customs, Excise and Custom Department, New Delhi, we are to inform that the company has submitted the reply/ necessary documents but no further communication has been received till date. [Refer Point 7(b)(1) Report on other legal and regulatory requirements in the Annexure Ato Independent Auditors’ Report]

6. Regarding Sales Tax demand including interest aggregating to Rs. 14.85 lacs (net of pre deposit), which is disputed, we are to inform that the company has filed an appeal and the same is pending at the office of Sales Tax Appellate Tribunal, Andhra Pradesh. [Refer Point 7(b)(2) Report on other legal and regulatory requirements in the Annexure A to Independent Auditors’ Report]

7. Regarding Sales Tax demand including interest aggregating to Rs. 16.77 lacs, which is disputed, we are to inform that the company has filed an appeal and the same is pending at the office of Ld. Senior Joint Commissioner, Salt Lake Taxation Appellate Office, Kolkata, West Bengal. [Refer Point 7(b)(3) Report on other legal and regulatory requirements in the Annexure Ato Independent Auditors’ Report]

8. As regards Sales Tax demand including interest aggregating to Rs. 12.47 lacs (net of pre deposit), which is disputed, we are to inform that the company has filed an appeal and the same is pending at the office of Ld. Senior Joint Commissioner, Salt Lake Taxation Appellate Office, Kolkata, West Bengal. [Refer Point 7(b)(3) Report on other legal and regulatory requirements in the Annexure A to Independent Auditors’ Report]

Management''s reply to Secretarial Auditors'' Report

Secretarial Auditors have reported that the Company is not complying with the desired ratio of Independent Directors in their report for the financial year 2015-2016. Efforts to comply with the desired ratio were made and are being made and the company is hoping of complying with the same shortly. They have also reported that an Independent Director has been made to retire by rotation which otherwise was not required to retire by rotation. In this regard, it is to inform that as the Independent Director was reappointed and thus continued to be Independent Director, the non compliance gets rectified.

They have also reported that the Nomination and Remuneration Committee is not constituted as per the provisions of Section 178 of the Companies Act, 2013 as an Executive Director cannot be a member of Nomination and Remuneration Committee. In this regard, the same stands corrected in the 186th Board Meeting of the Company held on 27th May, 2016.

Particulars of Loans and Guarantees under Section 186 of the Companies Act, 2013

The particulars with respect to Loans and Guarantees under section 186 of the Companies Act, 2013 : NIL.

Particulars of Related Party Transactions

Under Companies Act, 2013: Puncom has not entered into any Related Party Transaction as per the provisions of section 188(1) of the Companies Act, 2013 during the financial year under report. The required form AOC-2 has been appended as Annexure 2 to this report.

Under Listing Regulations: Puncom has not entered into any Related Party Transaction in the form of providing Loans and advances in the nature of loans to Subsidiaries, Associates or to firms/companies in which Directors are interested. Moreover, Puncom has also not accepted any amount in the form of Loans and advances in the nature of loans from its Holding Company.

State of the company''s affairs

During the year, the company continued its efforts to 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 to enhance its product line. As part of the new initiatives company successfully entered into SPV solar power plant business and also looking for opportunities emerging around digital networking.

Further due to aggressive marketing tie-ups, the company achieved a healthy turnover of approx. Rs. 2182.74 lacs in financial year 2015-16 besides income of Rs. 929.70 lacs from other activities.

The book value of share held by you is around Rs. 69.56 per share and the Reserves stood at approx. Rs. 7159.01 lacs. The Company has invested an amount of Rs. 1.81 crores during the year in acquiring fixed assets. 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 product initiatives.

Corporate Plan/ Market Scenario of our product

Puncom has made substantial efforts to successfully increase the market share of its PLCC product in last 2 years. After re-engineering its V-Mux product and making it suitable for power sector telecom network, Puncom has been successful in introducing its V-Mux in PGCIL by winning the tender for this product for execution of project in J&K State. Efforts are being made to keep up the market share of V-Mux in Railways.

Puncom is executing some prestigious OFC and PLCC turnkey projects for railways and power sector. Puncom has the strength of executing indoor OFC works. Since most of the railway tenders now are being floated by clubbing both indoor and outdoor OFC projects, Puncom is making efforts to strengthen its resources for executing such works. This would help Puncom in improving its market share in Railways besides the sales turnover. Though there is lot of stiff competition in power plant market in power sector, Puncom is making efforts to get orders for the same.

To further increase the market share of its products in railway and power sector networks, Puncom is offering its products to other equipment installers for executing their turnkey projects. This helps in improving sales turnover and also increase in Puncom make equipment in these networks.

Puncom has also undertaken annual maintenance/repair contracts for PLCC, V-Mux and Power Plants from various customers. Undertaking such value added services not only contribute towards sales turnover but also helps in strengthening the performance of Puncom equipment in various networks of Railways, power utility sector etc.

With lot of emphasis on the "Make in India" policy of Govt. of India, Puncom is making continuous efforts to add new products to increase its product mix by way of tie-ups with other companies and through in house re-engineering of existing products/new developments. Puncom is also looking for opportunities to provide services through tie-up with other companies involving installation, erection and commissioning work.

Telecom Scenario in India and Puncom''s approach

India has seen an exponential growth of telecom network in India for several years now, 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 received latest and best equipments and technologies from largest equipment MNCs at lowest prices. Unfortunately, this technology upgrade, by-passed Indian telecom manufacturers, as majority of the equipment was simply imported fully finished into India. Government of India has now become sensitive to the huge current account deficit caused by unbridled import of MNC equipment, and is creating policy frame work, including preference for increased domestic manufacturing in telecom and IT. Driven by these imperatives, and by the gradual maturing of industry, domestic manufacturing by MNCs directly or in tie ups is likely to increase with increased localization and IP content.

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 are emerging as new growth segments. Apart from this, defence with its unique domestic focus remains a major potential growth segment.

Historically, Puncom has been deriving its revenue mainly from Power, Railway and BSNL segments. 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 emerging challenges in the changing environment.

Reserves

Due to losses in the current year, no amount was carried over to Reserves and Surplus. Instead, the reserves have been utilized to the extent of Rs. 1047.58 lacs.

Dividend

Due to losses in the current year, the Board of Directors of your Company have not recommended any dividend for the Financial Year 2015-16.

Material changes and Commitments after the close of the financial year

The particulars with respect to Material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year i.e. 31st March, 2016 till the date of this report i.e. 12th August, 2016 under Section 134(3)(l) of the Companies Act, 2013 are: NIL.

Conservation of energy, technology absorption and Foreign Exchange Earnings and Outgo:

a) Conservation of Energy

i) Steps taken & impact on conservation of energy:

Steps 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 taking place.

Impact:

The consumption has reduced due to the above measures taken.

ii) Steps taken for utilizing alternate sources of energy:

The system is in place for alternate sources of energy.

iii) Capital investment on energy conservation equipments : NIL

b) Technology Absorption

i) Efforts made towards technology absorption:

Desired efforts are made from time to time towards technology absorption, adoption and innovation.

ii) Benefits derived:

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.

iii) Technology imported (during the last three years) :

Details of technology imported : NIL

Year of Import : N/A

Whether the technology has been fully absorbed : NIL

If not absorbed, areas where absorption has not taken place and reasons thereof : N/A

iv) Expenditure incurred on Research and Development

('' in lacs)

Current Year

Previous Year

Capital

NIL

NIL

Recurring

NIL

NIL

Total R&D expenditure as a %age of total turnover

NIL

NIL

c) Foreign Exchange Earnings and Outgo

The foreign exchange earnings and outgo during the Financial year 2015-2016 in terms of actual inflows and actual outflows is given as follows :

('' in lacs)

Current Year

Previous Year

EARNINGS

F.O.B. value of Export

NIL

NIL

OUTGO

i) CIF value of import of raw material

125.63

168.67

ii) Components & Spares

0.00

1.94

iii) Capital goods

170.59

0.00

iv) Repair & Maintenance (P&M) Imports

0.26

0.33

v) Foreign travel & others

NIL

NIL

Risk Management Policy

The Risk Management structure conforms to the requirements of Regulation 21 of Listing Regulations. An integrated risk management system identifies, monitors and manages Puncom’s risks. The Audit Committee of the Board provides the overall policy guidelines. The requirement of establishing Risk Management Committee is not applicable to our company. Hence, the committee was dissolved by the Board of Directors in their 186th Meeting held on 27th May, 2016. However, the Risk Management Policy is still in place and was amended to incorporate the provisions of SEBI Listing Regulations. Periodic reviews of Puncom’s Risk Management Policy are conducted and the Board monitors and manages Puncom’s risk management through quarterly risk reports to achieve above objectives.

Corporate Social Responsibility

As the Company is not covered under the provisions of section 135 of the Companies Act, 2013, hence the Company has not formed any Corporate Social Responsibility Committee to carry on CSR programs and activities.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17(10) of Listing Regulations and subsequent government notification G.S.R. 463 (E) dated 5th June, 2015, however there is a system in place for evaluation of performance of the Board, its committees and individual directors.

The performance of all the directors except Independent Directors was evaluated by the Nomination and Remuneration Committee in their 1st Meeting held on 30th March, 2016 and the performance of Independent Directors was evaluated by the entire Board (except by the Director being evaluated) in their 186th Meeting held on 27th May, 2016.

Moreover, the Nomination and Remuneration Committee decided upon the exemption provided to Government Companies and decided to undertake evaluation of performance of members of Senior Management in their next meeting.

Change in the nature of business

During the year 2015-2016, there was no significant change in the nature of Business of the Company. The company only expanded its operations as per the amended Objects Clause of the Memorandum of Association of the Company.

Directors and Key Managerial Personnel

Following changes, in the constitution of Board of Directors and Key Managerial Personnel, took place during the period under review upto 12th August, 2016.

Sh. Anirudh Tewari, IAS has been appointed as Additional Director in the Capacity of Chairman vide Resolution by Circulation dated 13th May, 2015 in the place of Sh. D.P. Reddy, IAS w.e.f. 13th May, 2015 on the Board of Puncom as per the Order of Govt. of Punjab vide Order No. 6/1/2015-IAS(3)/1146 dated 11th May, 2015 and further nominated by Punjab Information and Communication Technology Corporation Ltd. vide their letter No. PICTC/SECTL/576 dated 13th May, 2015 appointing Sh. Anirudh Tewari, IAS as Additional Director in the Capacity of Chairman vide Resolution by Circulation dated 13th May, 2015 in the place of Sh. D.P. Reddy, IAS w.e.f. 13th May, 2015. Further, the appointment of Sh. Anirudh Tewari, IAS as Director in the capacity of Chairperson of the Company was regularized in the 34th AGM of the Company held on 29th September, 2015.

CA. R.K. Nangia resigned from the Board of Puncom w.e.f. 2nd July, 2015 owing to withdrawal of nomination by the holding company, i.e. Punjab Infotech.

Sh. Asish K Bhattacharyya resigned from the Board of Puncom w.e.f. 21st September, 2015 owing to his academic commitments and professionally busy schedule.

Sh. R.K. Chaudhuri resigned from the board of Puncom w.e.f. 15th June, 2016 owing to withdrawal of nomination by the holding company, i.e. Punjab Infotech.

Further, Smt. Shruti Singh, IAS has been appointed as Additional Director in the capacity of Sr. Vice Chairperson w.e.f. 9th August, 2016. Punjab Information and Communication Technology Corporation Ltd. vide their letter No. PICT/SECTL/2043 dated 9th August, 2016 appointed Smt. Shruti Singh, IAS as Sr. Vice Chairperson-cum-Director. Further, Puncom vide Resolution by Circulation dated 11th August, 2016 formalized the above said appointment as Additional Director in the capacity of Sr. Vice Chairperson of Puncom.

Details of Puncom''s Subsidiaries

Companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the financial year : NIL

Details of present Subsidiaries: Puncom has no material subsidiary. However, the Company has two subsidiaries namely M/s PCL Telecom Limited and M/s Punjab Digital Industrial Systems Limited and these subsidiaries have been ordered by the Hon’ble Punjab and Haryana High Court to be wound up on 20th October, 2005 and 20th February 2009, respectively. All the formalities in this regard for both the companies have been completed. The Hon’ble Court is yet to issue the dissolution order for them.

Deposits

The particulars with respect to Deposits under Section 73 of the Companies Act, 2013 are: NIL.

Details of significant and material orders passed

During the financial year under report, following significant order(s) was/were passed by Courts, Tribunals affecting the going concern status and operations in future of the company:

In the matter of Punjab Communications Limited v/s State of UP, an application under Order 9 Rule 13 of the Civil Procedure Code was filed by the State of UP for setting aside the order being ex-party, which was decided in favour of Puncom in all the Courts viz., Lower Court and High Court. However, an appeal was filed by the State of UP before the Hon’ble Supreme Court of India, where the decision of Punjab and Haryana High Court was reversed. The Company then filed a Review Petition in the Supreme Court which was again decided against the company on 21st April, 2015. The Company then filed a Curative Petition in the Supreme Court which was also decided against the company on 2nd September, 2015.

Presently, the company has filed a suit at Lower Court, Chandigarh against the State of UP through Special Secretary. The Company then filed an execution against the UP Cooperative Spinning Mills Federation Limited to Lucknow Court on 30th January, 2016. The Company then filed claim against the UP Cooperative Spinning Mills Federation Limited to the Official liquidator on 23rd May, 2016.

Disclosures relating to Remuneration of Directors and KMP:

A. Disclosure under Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

a) Ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year:

S. No.

Name of the Director

Median Remuneration

Ratio

1.

Sh. Vikas Pratap, IAS

833482

NIL

2.

Er. A.K. Pathak

833482

3.79

b) Percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

S. No.

Name of Director/CFO/CEO/CS

Designation

Percentage increase

1.

Er. A.K. Pathak

Whole-Time Director

5.66%

2.

Sh. Jagdeep Singh Bhatia

CFO

5.69%

3.

Sh. Madhur Bain Singh

CS

4.83%

c) Percentage increase in the median remuneration of employees in the financial year : 5.54%

d) Number of permanent employees on rolls of the Company : 230

e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration : NIL

f) affirmation that the remuneration is as per the remuneration policy of the company : Yes

B. Disclosure under Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel)

Rules, 2014 & Companies (Particulars of Employees) Rules, 1975

The list of the top ten employees in terms of remuneration drawn is as follows:

Sr.

No.

Name

Desig

nation

Remuneration received (approx.) (in lacs)

Nature of employment (whether contractual/ otherwise)

Qualifications

and

Experience

Date of commencement of employment

Completed Age (in yrs)

Last employ ment held

Percent age of equity shares held

Whether relative of any director or manager (if so, name of such director / manager)

1

Sh. A.K. Pathak

DVP

26.46

Regular

BE & MTech; Over 37 yrs

06.09.91

59y

UPTRON

Nil

He himself is an Executive Director

2

Sh. Jagdeep Singh Bhatia

DVP

25.26

Regular

BCOM, ICWAI; Over 33 yrs

01.07.88

51y

CDIL

Nil

No

3

Sh. Jasmeet Singh Ghumar

DVP

25.03

Regular

MBA and BE; Over 27 yrs

21.01.91

49y

Hindustan Lever & Godrej

Nil

No

4

Sh. Rupinder S Mainee

AVP

20.96

Regular

BSc & MBA; Over 30 yrs

09.03.89

50y

Delta Hamlin Ltd.

Nil

No

5

Ms. Namita Sharma

GM

18.66

Regular

BE;

Over 22 yrs

17.11.93

44y

Nil

Nil

No

6

Sh. B.C. Chowdhary

GM

17.71

Regular

BA, LLB; Over 35 yrs

30.09.92

59y

Punjab ElectroOptics Systems Ltd.

Nil

No

7

Ms. Raminder Kaur

Addl.

GM

16.11

Regular

BE(Electronics) and PGDOM Over 22 yrs

08.07.93

43y

Nil

Nil

No

8

Sh. Sanjay Garg

DGM

14.85

Regular

MSc(Physics); Over 26 yrs

23.09.91

50y

''The Oriental

Apparatus

Workshops''.

Nil

No

9

Ms. Amardeep Kaur

DGM

14.87

Regular

BE(Electronics); Over 22 yrs

05.10.93

46y

Nil

Nil

No

10

Sh. Raman

Kumar

Sharma

AGM

13.71

Regular

BE(CS) & MBA (Marketing); Over 19 yrs

02.09.96

41y

Nil

Nil

No

Name(s) of every employee who have been paid annual remuneration of Rs. 1,02,00,000/- or above and a monthly remuneration of Rs. 8,50,000/- and above in case the employee worked for less than a year : NIL

Management Discussion and Analysis Report

The Management Discussion and analysis Report for the year under review as stipulated under the Listing Agreement with the Stock Exchange(s) and Regulation 34(2)(e) of Listing Regulations is appended as Annexure 3 and is an integral part of this report.

Corporate Governance Report

The Corporate Governance Report for the year under review as stipulated under the Listing Agreement with the Stock Exchange(s) and Schedule V of Listing Regulations is appended as Annexure 4 and is an integral part of this report.

Secretarial Audit Report

During the year, Secretarial Audit was carried out by M/s. S. K. Sikka & Associates, Company Secretaries, the Secretarial Auditors of the Company for the financial year 2015-16. The detailed report on the Secretarial Audit is appended as Annexure 5 to this Report. The Secretarial Auditors have also carried out an independent assessment of the compliance of Corporate Governance Code by the Company.

Sexual Harassment of Women at Workplace: Internal Committee

In compliance with the provisions of Section 21 read with Rule 14 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (’Act’) and Rules made thereunder, the Company has constituted Internal Complaints Committee (ICC). During the year, 1 complaint with allegations of sexual harassment was filed with the Company and the same on being investigated was found to be fake and case was closed after the enquiry. Moreover, 2 workshops or awareness programme against sexual harassment were carried out during the financial year under report.

Cautionary Statement

Certain statements in the Boards’ Report describing the Company’s objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable laws, rules and regulations. Actual results might differ from those express or implied.

Important factors that could make a difference to the Company’s operations include labour and material availability, and prices, cyclical demand and pricing in the Company’s principal markets, changes in government regulations, tax regimes, economic development within India and other incidental factors.

The Company is not under any obligation to publicly amend, modify or revise any such forward looking statements on the basis of any subsequent developments, information or events.

Acknowledgement

The Board places on record its gratitude to the BSNL, Punjab Energy Development Agency (PEDA), Department of Railways, Ministry of Defence, VSNL, MTNL, PGCIL, PSEB and other esteemed customers in India and abroad. The Board also places on record its gratitude to 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 continuous support and amicable relations with various government authorities viz. MCA (ROC, Chandigarh), Income Tax Department, Sales Tax Department, Excise and Customs Department, Service Tax Department.

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.

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.

For and on behalf of the Board of Directors

Place : S.A.S. Nagar (ANIRUDH TEWARI)

Date : August 12, 2016 CHAIRMAN

List of Annexures to the Boards'' Report

1) MGT 9

2) AOC 2

3) Management Discussion and Analysis Report

4) Corporate Governance Report

5) Secretarial Audit Report

6) Auditors’ Certificate on Corporate Governance


Mar 31, 2015

Dear Members,

The Board hereby presents the Thirty Fourth Annual Report of your Company together with the Audited Statement of Accounts for the Financial Year ended 31st March, 2015 alongwith Independent Auditors' Report thereon and Secretarial Audit Report for the financial year 2014-2015.

Financial Results (Rs. In lacs)

Particulars 2014-15 2013-14

Gross Income 3256.99 3226.77

Total expenditure 3964.50 3725.88

Profit before tax (1026.16)* (630.78)

Profit/Loss after tax (1026.16) (684.64)

Dividend Nil Nil

Paid up equity 1202.36 1202.36

Profit/Loss appropriated to General Reserve (1026.16) (684.64)

Reserves (Including Capital Reserves) 8206.66 9233.28

Net fixed assets 418.85 449.53

Capital employed 9575.93 10570.59

Earning/Loss per share (in Rs.) (8.53) (5.69)

Cash earning/loss per share (in Rs.) (6.40) (4.92)

Book value per share (in Rs.) 78.28 86.81

*includes exceptional item of Rs.167.98 lacs.

Review of Operations

During the year, the company continued its efforts to 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 to enhance its product line. As part of the new initiatives company successfully entered into SPV solar power plant business and also looking for opportunities emerging around smart city project. Further due to aggressive marketing tie- ups, the company achieved a healthy turnover of approx. Rs.2251.77 lacs in financial year 2014-15 besides income of Rs.1005.22 lacs from other activities.

The book value of share held by you is around Rs.78.28 per share and the Reserves stood at approx. Rs.8206.66 lacs. The Company has invested an amount of Rs.8.17 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 product initiatives.

Corporate Plan/ Operations

With lot of hard work and best efforts Puncom has been able to increase its market share of its PLCC product. This has been well supplemented by its V-Mux Product. Though the Government did not make any appreciable change in its policy to promote manufacturing in India, yet Puncom has done reasonably well keeping in mind the stiff competition in Telecom field and squeezing margins.

Puncom is executing some prestigious OFC turnkey projects for railways. Puncom is focusing on outdoor projects in addition to the indoor turnkey projects. This would help Puncom in improving its market share in Railways. Puncom is also offering its V-Mux and Power Plant equipment to other contractors who are executing turnkey projects for Railways. This not only helps in improving the sales but also increase in Puncom make equipment in Railway network.

Puncom has established itself very well in the power utility sector by improving its share of PLCC in various state electricity boards, PGCIL etc. To further increase its market share in this sector Puncom is offering and supplying PLCC equipment to private parties which are undertaking turnkey projects of sub-stations for various state electricity boards. While Puncom has made good inroads in turnkey projects it is also undertaking repair and maintenance contracts for V-Mux, power plant and PLCC equipment. Undertaking such value added activities would not only help in improving the sales but also help in strengthening the performance of Puncom equipment in various networks of railways, power utility sector etc.

In the recent industrial policy of Govt of India, lots of efforts are being made to strengthen and promote manufacturing sector in India. Puncom is making continuous efforts to add new products to its kitty by having tie-ups with other potential companies. Puncom is also in continuous search of companies which are looking for a tie-up from services point of view involving installation, erection and commissioning work.

The Future

- India has seen an exponential growth of telecom network in India for several years now, 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 received latest and best equipments and technologies from largest equipment MNCs at lowest prices. Unfortunately, this technology upgrade, by-passed Indian telecom manufacturers, as majority of the equipment was simply imported fully finished into India. Government of India has now become sensitive to the huge current account deficit caused by unbridled import of MNC equipment, and is creating policy frame work, including preference for increased domestic manufacturing in telecom and IT. Driven by these imperatives, and by the gradual maturing of industry, domestic manufacturing by MNCs directly or in tie ups is likely to increase with increased localization and IP content.

- 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.

- Historically, Puncom has been deriving its revenue mainly from Power, Railway and BSNL segments. 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 emerging challenges in the changing environment.

Change in the nature of business

During the year 2014-2015, there was no change in the nature of Business of the Company.

Dividend

Due to inappropriate profit/loss in the current year, the Board of Directors of your Company have not recommended any dividend for the Financial Year 2014-15.

Reserves

Due to inappropriate profit/loss in the current year, no amount was carried over to Reserves and Surplus. Instead, the reserves have been utilized to the extent of Rs.1026.61 Lacs.

Share Capital

During the year, there was no change in the Share Capital of Puncom. The Company neither issued further shares nor shares with differential rights or sweat equity shares. Moreover, none of the ESOPs were offered to any of the employees.

Directors and Key Managerial Personnel

Following changes, in the constitution of Board of Directors and Key Managerial Personnel, took place during the period under review upto 12th August, 2015.

Sh. Karan Avtar Singh, IAS was appointed as an Alternate Director to Sh. D.P. Reddy, IAS on 28th October, 2014. However, he ceased as Alternate Director on 8th December, 2014.

Sh. Vikas Pratap, IAS has been appointed as Vice Chairman and Managing Director replacing Sh. D.K. Tiwari, IAS w.e.f. 20th November, 2014.

Smt. Neena Singh has been appointed as an Independent Director w.e.f. 31st March, 2015.

Further, Sh. Anirudh Tewari, IAS has been appointed as an Additional Director in the capacity of Chairman w.e.f. 13th May, 2015 replacing Sh. D.P. Reddy, IAS.

Also, CA R.K. Nangia has resigned from the Board of Puncom w.e.f. 2nd July, 2015 owing to withdrawal of Nomination by the holding Company, i.e. Punjab Infotech.

Moreover, none of the Key Managerial Personnel have been appointed during the Financial year other than Sh. Vikas Pratap, IAS as Managing Director on the Board of Puncom. However, the existing Head (Finance) was re-designated as CFO of the Company.

Meetings

During the year, five Board meetings and four Audit Committee meetings were duly convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the provisions of Companies Act, 2013 and Listing Agreement.

Directors' Responsibility Statement

Pursuant to the requirement under section 134(5) of the Companies Act, 2013, with respect to Directors' Responsibility

Statement, it is hereby confirmed:

i) That in the preparation of accounts for the financial year ended 31st March, 2015, 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 provisions of the Companies Act, 2013 and the Companies Act, 1956, wherever applicable, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) That the Directors have prepared the accounts for the financial year ended 31st March 2015 on a going concern basis.

v) That the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and were operating effectively.

vi) That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, and subsequent Government Notification G.S.R. 463(E) dated 5th June, 2015, the Board evaluation is not applicable. However, there is a system in place for evaluation of the Board, its committees and individual directors and the company is complying with the same.

Declaration by Independent Director(s)

All the Independent Directors on the Board of Puncom have given their respective declaration that they meet the criteria of independence, as per the provisions of sub-section (6) section 149 of Companies Act, 2013. The term of Appointment of Independent Directors has been fixed for 5 years, in accordance with the provisions of the Companies Act, 2013, and none of the Independent Directors have been reappointed for more than 5 years.

Frauds reported by Auditors u/s 143(12)

Your company has complied with all the provisions of Section 143 of the Companies Act, 2013. Hence, there are no frauds reported by the Auditors other than those which are reportable to the Central Government. Further, no fraud has been reported to the Central Government.

Nomination and Remuneration Committee

The details of the Nomination and Remuneration Policy in accordance with Section 178(2) are mentioned in the Report on Corporate Governance. There is a Nomination and Remuneration Committee of the Company and there is a policy in place. The same is exempted to our Company as referred to in Govt. Notification No G.S.R. 463(E) dated 5th June, 2015 to the extent it is applicable to Directors. However, it is applicable to Senior Management and the same is being duly complied with.

Vigil Mechanism

In accordance with the provisions of section 177(9) & (10) of the Companies act, 2013, and Clause 49 of the Listing Agreement, a Vigil Mechanism (Whistle Blower Policy) has been adopted and the same is complying with the provisions of the Act and Clause 49 of the Listing Agreement.

Risk Management Policy

The Risk Management structure conforms to the requirements of clause 49 of Listing Agreement and is formed to ensure the harmonious growth of the company and to maximize the net worth of the shareholders.

An integrated risk management system continuously identifies monitors and manages Puncom's risks. The Audit Committee of the Board provides the overall policy guidelines. The committee also conducts periodic reviews of Puncom's Risk Management Policy, while the Board monitors and manages Puncom's risk management through quarterly risk reports to achieve above objectives.

Details of Puncom's Subsidiaries

Puncom has no material subsidiary. However, the 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 Punjab & Haryana High Court at Chandigarh. The Court on 20th 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 order.

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 company. The Court on 20th 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 have been handed over to the 'Liquidator's Office'.

Management's Reply to Statutory Auditors Remarks

M/s B. Rattan & Associates, Chartered Accountants, was appointed as Statutory Auditors of the Company for the financial year 2014-15. Notes to accounts forming part of Annual Accounts are self- explanatory and exhaustive to the remarks of Auditors in their report dated 28th May, 2015.

Though there is no qualification in Independent Auditor's Report, the reply to some observations/remarks are as follows :

a) As regards non- recognition of the accrued interest amounting to Rs.968.43 lacs (up to 12.07.2005 i.e. date of deposit of Rs.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 realization of interest in near future and as the execution of the same is pending before the lower court, the same has not been recognized to comply with AS-9 on Revenue Recognition.

All the courts below the Hon'ble Supreme Court had decided in favour of Puncom but unfortunately the Hon'ble Supreme Court on 19.01.2015 had decided against the ex-parte decree earlier made in favour of the Company. Accordingly, now in view of protracted litigation and uncertainty of the amount realizable, pending settlement of the case, the accrued interest standing at the beginning of the year amounting to Rs.115.63 lacs has also been provisioned by the company. The same has also been dealt in accordance with applicable AS -29 "Provisions, Contingent Liabilities and Contingent Assets". [Refer Matter of Emphasis Para (a) of Independent Auditor's Report]

b) Regarding accounting of certain income and expenditure on cash basis, the same has been accounted for as per disclosures made in Significant Accounting Policy I(b). [Refer Matter of Emphasis Para (b) of Independent Auditor's Report]

c) Regarding provision of Rs.52.35 lacs for 30% back wages of Sh. A.S. Gill, the same has been correctly provided for in books of accounts in compliance with applicable Accounting standards and order of Hon'ble Supreme Court. [Refer Matter of Emphasis Para (c) of Independent Auditor's Report]

d) Regarding selection of Company for disinvestment by Cabinet Committee on Disinvestment in 2003, we are to inform that there is no final decision in respect of mode of Disinvestment during FY 2014-15. Relevant developments in this matter have already been informed and explained to Auditors for which reference can be made to Point 1 of Report on Directions u/s 143(5) of Companies Act 2013, [Refer Matter of Emphasis Para (d) of Independent Auditor's Report]

e) The excise and custom duty demand of Rs.30.20 lacs is disputed with Deputy Commissioner of Customs, New Delhi, Excise and Custom department. In this regard Puncom had submitted the reply/ necessary documents but no further communication has been received till date. [Refer Annexure to the Independent Auditor's Report Point VII (b)(i)]

f) As regards Sales Tax demand including interest aggregating to Rs.14.85 lacs (net of pre deposit), which is disputed, we are to inform that company has filed an appeal and the same is pending at the office of Sales Tax Appellate Tribunal, Andhra Pradesh. [Refer Annexure to the Independent Auditor's Report Para VII (b)(ii)]

g) Regarding Sales Tax demand including interest aggregating to Rs.16.77 lacs, which is disputed, we are to inform that company has filed an appeal and the same is pending at the office of Ld. Senior Joint Commissioner, Salt Lake Taxation appellate office (South 24 Parganas), Kolkata, West Bengal. [Refer Annexure to the Independent Auditor's Report Para VII (b)(iii)]

Management's reply to Secretarial Auditor's Report

Secretarial Auditors have reported that the Company is not complying with the desired ratio of Independent Directors in their report for the financial year 2014-2015. Efforts to comply with the desired ratio were made. However, as on the date of this report, the Company is maintaining the desired ratio.

Internal Audit & Controls

Puncom, being a Government owned undertaking, is subject to various internal Audits and Controls. M/s Rakesh Krishan & Associates, Chartered Accountants, were engaged as Internal Auditors during the Financial year 2014-2015. During the year, Puncom continued to implement their suggestions and recommendations to improve the control environment. Internal Auditors findings were discussed with the product owners and suitable corrective actions have been taken as per the directions of the Audit Committee on an ongoing basis to improve efficiency in operations. Thus, there were adequate internal controls w.r.t. the Financial Statements.

Particulars of Deposits under Section 73 of the Companies Act, 2013

The particulars with respect to Deposits under section 73 of the Companies Act, 2013 are NIL.

Particulars of Loans and Guarantees under Section 186 of the Companies Act, 2013

The particulars with respect to Loans and Guarantees under section 186 of the Companies Act, 2013 are NIL.

Particulars of Related Party Transactions Under Section 188 of the Companies Act, 2013

Puncom has not entered into any Related Party Transaction except with its Holding Company Punjab Infotech which is at arm's length price and governed by the provisions of section 188 of the Companies Act, 2013. The details of the same are given in the prescribed form AOC 2 and is annexed herewith.

Disclosures relating to Remuneration of Directors and KMP:

A. Disclosure under Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 :

a) Ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year :

b) Percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year :

c) Percentage increase in the median remuneration of employees in the financial year : 16%

d) Number of permanent employees on rolls of the Company : 232

e) Relationship between average increase in remuneration and company performance: Average increase in remuneration is equivalent to rate of inflation declared by state for the purpose of DA. The company being an undertaking of Punjab Government follows applicable pay-scales uniformly for all its employees as per the respective designation and tenure of employee with the company.

f) Comparison of the remuneration of the Key Managerial Personnel against the performance of the company: There are no performance linked hikes, variable pay or special monetary benefits for Directors/KMPs.

g) Market Capitalisation of the Company, Price earning ratio

The Company came out with its Initial Public Offer in October 1994 @ Rs.250 per share (including Rs.240 as share premium). Market quotations of the shares of the company have decreased by 79.64% and have come down to Rs.50.90 (Closing Price at 31st March, 2015).

h) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration : NIL

i) Comparison of the each remuneration of the Key Managerial Personnel against the performance of the company: The Company being an undertaking of Punjab Government follows applicable pay-scales uniformly for all its employees as per the respective designation and tenure of employee with the company. There are no performance linked hikes, variable pay or special monetary benefits for Directors/KMPs.

j) Key parameters for any variable component of remuneration availed by the directors : NIL

k) Ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year : N/A

l) affirmation that the remuneration is as per the remuneration policy of the company : Yes

B. Companies (Particulars of Employees) Rules, 1975

As per Section 134 of the Companies Act, 2013 and Section 217(2A) of the Companies Act, 1956 (wherever applicable) 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 Rs.60,00,000/- or above and a monthly remuneration of Rs.5,00,000/- and above in case the employee worked for less than a year. Since there is no employee drawing remuneration exceeding the aforesaid limits, hence the same is not applicable.

Puncom's shares on the Bourses

The Shares of your Company are listed with The Bombay Stock Exchange Limited, Mumbai (BSE) only. Presently approx. 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 Rs.47.10 (26th March, 2015) to the high of Rs.107.75 (17th June, 2014).

Disclosure w.r.t. Conservation of energy, technology absorption and Foreign Exchange Earnings and Outgo:

A. CONSERVATION OF ENERGY

a) Steps taken & impact on conservation of energy:

Steps 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 taking place.

Impact: The consumption has reduced due to the above measures taken.

b) Steps taken for utilizing alternate sources of energy : The system is in place for alternate sources of energy.

c) Capital investment on energy conservation equipments : NIL

B. TECHNOLOGY ABSORPTION

a) Efforts made towards technology absorption: Efforts in brief made towards technology absorption, adoption and innovation.

b) Benefits derived: 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

c) Technology imported (during the last three years) :

Details of technology imported NIL

Year of Import N/A

Whether the technology has been fully absorbed NIL

If not absorbed, areas where absorption has not taken place and reasons thereof N/A

d) Expenditure incurred on Research and Development

(Rs.In lacs)

Current Year Previous Year

Capital NIL NIL

Recurring NIL NIL

Total R&D expenditure as a %age of total turnover NIL NIL



Material changes and Commitments affecting the financial position of the company after the close of the year

The particulars with respect to Material changes and commitments affecting the financial position of the company which have occurred between the end of the financial year i.e. 31st March, 2015 till the date of this report i.e. 12th August, 2015 under Section 134(3)(l) of the Companies Act, 2013 are as follows :

1. The appointment of Global Advisors and Legal Advisors for the purpose of disinvestment has been terminated and as per the decision of the Core Group of Officers on Disinvestment, fresh appointment of Global Advisors and Legal Advisors is to be made from Sale of Assets point of view.

Corporate Social Responsibility

As the Company is not covered under the provisions of section 135 of the Companies Act, 2013, hence the Company has not formed any Corporate Social Responsibility Committee to carry on CSR programs and activities.

Details of significant and material orders passed

Following significant orders were passed by Courts, Tribunals affecting the going concern status and operations in future of the company :

a) In the matter of Punjab Communications Limited v/s State of UP, an application under Order 9 Rule 13 of the Civil Procedure Code was filed by the State of UP, which was decided in all the lower and High court in favour of the company. However, on appeal of the State of UP before the Hon'ble Supreme Court of India, the decision was reversed, The company has filed a Curative Petition and the same is pending in the said Court.

b) Your Company is in the list of Companies to be disinvested by the Government of Punjab and steps in this regard have already been initiated by them.

Adequacy of Internal Financial Controls

The company has adequate internal financial controls with reference to financial statements and these are working effectively.

Management Discussion and Analysis Report

The Management Discussion and analysis Report for the year under review as stipulated under the Listing Agreement with the Stock Exchange(s) is annexed as Annexure and is an integral part of this report.

Corporate Governance Report

The Corporate Governance Report for the year under review as stipulated under the Listing Agreement with the Stock Exchange(s) is annexed as Annexure and is an integral part of this report.

Industrial Relations

The employee-employer relationship remained cordial and harmonious throughout the year. The Board of Directors of your Company placed on record their satisfaction for the dedicated services rendered by the employees of the company.

Extract of Annual Return

The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and administration) Rules, 2014 in the prescribed form MGT-9 is enclosed as Annexure and is an integral part of this Report.

Acknowledgement

The Board places on record its gratitude to the BSNL, Punjab Energy Development Agency (PEDA), Department of Railways, Ministry of Defence, VSNL, MTNL, PGCIL, PSEB and other esteemed customers in India and abroad. The Board also places on record its gratitude to 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.

Place : S.A.S. Nagar (ANIRUDH TEWARI)

Date : August 12, 2015 CHAIRMAN


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the Thirty Third Annual Report of your Company together with the Audited Statement of Accounts for the Financial Year ended 31st March 2014.

Financial Results Rs In lacs

Particulars 2013-14 2012-13

Gross Income 3226.77 3623.38

Total expenditure 3725.88 3443.89

Profit before tax -630.78 310.67

Profit/Loss after tax -684.64 300.19

Dividend Nil Nil

Paid up equity 1202.36 1202.36

Profit/Loss appropriated to General Reserve -684.64 300.19

Reserves (Including Capital Reserves) 9233.28 10024.02

Net fixed assets 449.53 497.57

Capital employed 10570.59 11228.82

Earning/Loss per share (in Rs.) -5.69 2.50

Cash earning/loss per share (in Rs.) -4.92 0.86

Book value per share (in Rs.) 86.81 92.94

includes exceptional item of Rs. 271.48 Lacs Review of Operations During the year, the company continued its efforts to 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. Rs. 2038.48 Lacs in financial year 2013-14 besides income of Rs. 1188.28 Lacs from other activities.

The book value of share held by you is around Rs. 86.81/- per share and the Reserves stood at approx. Rs. 9233.28 Crores. The Company has invested an amount of Rs. 41.4 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 product initiatives.

Dividend

Due to inappropriate profits in the current year, the Board of Directors of your Company has not recommended any dividend for the year 2013-14.

Change in Directorship

Following changes, in the constitution of Board of Directors, happened during the period under review upto 12th August, 2014.

Sh. Asish K. Bhattacharyya has been appointed as Independent Director w.e.f. 12th August, 2013. Further Sh. D. K. Tiwari, IAS was appointed as Vice Chairman and Director of our company w.e.f. 10th September, 2013 replacing Sh. Vijay N Zade, IAS. Later Sh. D. K. Tiwari, IAS was appointed/ re-designated as Vice Chairman and Managing Director of the company w.e.f. 23rd September, 2013.

Subsequently, Smt. Kavita Singh, IAS was appointed as Vice Chairperson and Managing Director in place of Sh. D. K. Tiwari, IAS w.e.f. 29th January, 2014. However her nomination as VC & MD was withdrawn w.e.f. 1st April, 2014. Consequent to that Sh. D. K. Tiwari, IAS was appointed as Vice Chairman and Managing Director of our Company in place of Smt. Kavita Singh, IAS w.e.f. 15th May, 2014.

The Company also appointed Sh. D. P. Reddy, IAS as Director & Chairman in place of Sh. Karan Avtar Singh, IAS w.e.f. 10th June, 2014. Recently Sh. Raj Kamal Chaudhary, IAS was appointed as Director & Vice Chairman of our company w.e.f. 3rd July, 2014.

Directors' Responsibility Statement

Pursuant to the requirement under section 134(5) of the Companies Act, 2013, with respect to Directors' Responsibility

Statement, it is hereby confirmed :

i) That in the preparation of accounts for the financial year ended 31st March, 2014, 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 provisions of the Companies Act, 2013 and the Companies Act, 1956 wherever applicable for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) That the Directors have prepared the accounts for the financial year ended 31st March 2014 on a going concern basis.

v) That the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls were adequate and were operating effectively.

vi) That the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.

Puncom's Subsidiaries

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

Punjab & Haryana High Court at Chandigarh. The Court on 20th 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 order.

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 company. The Court on 20th 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 have been compiled and offered for handing over to the 'Liquidator's 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 Rs. 33.00/- (8th July, 2013) to the high of Rs. 111.95/- (5th November, 2013).

Corporate Plan/ Operations

With lot of hard work and best efforts Puncom has been able to increase its market share of its PLCC product. This has been well supplemented by its V-Mux Product. Though the Government did not make any appreciable change in its policy to promote manufacturing in India, yet Puncom has done reasonably well keeping in mind the stiff competition in Telecom field and squeezing margins.

Puncom is executing some prestigious OFC turnkey projects for railways. Puncom is focusing on outdoor projects in addition to the indoor turnkey projects. This would help Puncom in improving its market share in Railways. Puncom is also offering its V-Mux and Power Plant equipment to other contractors who are executing turnkey projects for Railways. This not only helps in improving the sales but also increase in Puncom make equipment in Railway network.

Puncom has established itself very well in the power utility sector by improving its share of PLCC in various state electricity boards, PGCIL etc. Puncom make PLCC is priced very competitively and therefore it has become difficult for other manufacturers to compete with Puncom. To further increase its market share in this sector Puncom is offering and supplying PLCC equipment to private parties which are undertaking turnkey projects of sub-stations for various state electricity boards.

While Puncom has made good inroads in turnkey projects it is also undertaking repair and maintenance contracts for V- Mux, power plant and PLCC equipment. Undertaking such value added activities would not only help in improving the sales but also help in strengthening the performance of Puncom equipment in various networks of railways, power utility sector etc.

In the recent industrial policy of Govt of India, lots of efforts are being made to strengthen and promote manufacturing sector in India. Puncom is making continuous efforts to add new products to its kitty by having tie-ups with other potential companies which may like to establish their manufacturing base in India. Puncom is also in continuous search of companies which are looking for a tie-up from services point of view involving installation, erection and commissioning work for equipments in which Puncom has experience.

The Future

- India has seen an exponential growth of telecom network in India for several years now, 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 received latest and best equipments and technologies from largest equipment MNCs at lowest prices. Unfortunately, this technology upgrade, by-passed Indian telecom manufacturers, as majority of the equipment was simply imported fully finished into India. Government of India has now become sensitive to the huge current account deficit caused by unbridled import of MNC equipment, and is creating policy frame work, including preference for increased domestic manufacturing in telecom and IT. Driven by these imperatives, and by the gradual maturing of industry, domestic manufacturing by MNCs directly or in tie ups is likely to increase with increased localization and IP content.

- 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.

- Historically, Puncom has been deriving its revenue mainly from Power, Railway and BSNL segments. 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 B. Rattan & Associates, Chartered Accountants, was appointed as Statutory Auditors of the Company for the year 2013-2014. Notes to Accounts forming part of Annual accounts are self-explanatory and exhaustive to the remarks of Auditors in their report dated 30th May, 2014.

i) As regards non-recognition of the accrued interest amounting to Rs. 968.43 lacs (up to 12.07.2005 i.e date of deposit of Rs. 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 realization 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 Matter of Emphasis Para (a) of Independent Auditor's Report]

ii) 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 Matter of Emphasis Para (b) of Independent Auditor's Report]

iii) The excise and custom duty demand of Rs. 30.20 lacs is disputed with the Excise and Custom department. In this regard, Puncom had submitted the reply/necessary documents but no further communications have been received till date. [Refer Annexure to the Independent Auditor's Report Para 9(b) (i)]

iv) As regards Sales Tax demand including interest aggregating to Rs. 14.85 Lacs (net of pre-deposit), which is disputed, we are to inform that company has filed an appeal and the same is pending at the office of Sales Tax Appellate Tribunal, Andhra Pradesh. [Refer Annexure to the Independent Auditor's Report Para 9(b) (ii)]

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 taking place.

b) Impact of measures at (a) 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.

c) 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 plans : Nil

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 Rs. 24,00,000/- or above and a monthly remuneration of Rs. 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.

Industrial Relations

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 company.

Acknowledgement

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.

Place : S.A.S. Nagar (Mohali) ( D. P. REDDY ) Date : August 12, 2014 CHAIRMAN


Mar 31, 2010

The Directors have pleasure in presenting the Twenty Ninth Annual Report of your Company together with the Audited Statement of Accounts for the Financial Year ended 31st March 2010

Financial Results (Rs. in lacs)

Particulars 2009-10 2008-09

Gross income 12057 14071

Total expenditure 11810 13760

Profit/Loss before tax 177 184

Profit/Loss after tax 152 266

Dividend Nil Nil

Paid up equity 1202 1202

Profit/Loss appropriated to General Reserve 99 317

Reserves (Including Capital Reserve) 9651 9551

Net fixed assets 650 726

Capital employed 10856 10868

Earning/Loss per share (in Rs.) 1.27 1.99

Cash earning/loss per share (in Rs.) 2.31 4.78

Book value per share (in Rs. ) 90.28 89.22

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 Rs. 110 Cr. in financial year 2009-10 besides income of Rs. 10 Cr. from other activities.

The book value of share held by you is Rs. 90.28/- per share and the Reserves stood at Rs. 96.51 Crores. The Company has invested an amount of Rs. 11.43 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 product initiatives.

Dividend

Due to inappropriate profits in the current year, the Board of Directors of your Company has not recommended any dividend for the year 2009-10.

Change in Directorship

During the financial year 2009-10, Maj. Gen. G.S. Bains resigned from the Board of your company.

Directors Responsibility Statement

Pursuant to the requirement under section 217J2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed:

i) That in the preparation of accounts for the financial year ended 31" March, 2010, 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 prevention and detecting fraud and other irregularity;

iv) That the Directors have prepared the accounts for the financial year ended 31st March 2010 on a going concern basis.

Puncoms Subsidiaries

Your company has two subsidiaries namely IWs 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 Honble Punjab & Haryana High Court at Chandigarh. The Court on 20th 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 Honble Court is yet to issue the dissolution order,

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 Honble Punjab & Haryana High Court at Chandigarh for winding-up of the company. The Court on 20,h February, 2009 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 records are being compiled for onward submission to the Official Liquidator office.

Puncoms shares on the Bourses

The Shares of your Company are listed with The Stock Exchange, Mumbai (BSE) only. Presently about 95% of the companys shares have been dematerialized and during the year under report, the share price of the company ranged between the low of Rs. 121- to the high of Rs. 70/-.

Corporate Plan/Operations

The telecom markets in India have seen rapid changes in the recent years where the focus has been more on GSM networks and associated value added services than on landline and manufacturing.

Puncom is making all possible efforts to make its presence felt in the area 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, yet they are giving reasonably good turnovers. Efforts are being made to consolidate the position for these products in the existing markets.

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 Govt, most of the telecom companies are making efforts to set up manufacturing bases in India to Indianise their operations. Your company has made lot of efforts in tying up with some multi-national companies for establishing their production base at Puncom. Puncom has already signed an MOU with one such company for manufacturing its non-core RF products. However, certain policy changes are expected from the Indian Govt in the near future to address the security concerns.

The Company is speaking to a multinational company based in Israel for a tender based marketing tie-up for railway and power sector. An NDA has been signed with the company. Further, discussions are being held with the company to explore the possibility of broadening the product base which could cater to different market segments. The Company is also making continuous efforts to add more technologically advanced products to its kitty by way of TOT with a view to maximize the sale.

The Company has recently introduced some new training programmes and is formulating strategies to increase the strengths of students in this area of activity by pursuing aggressive marketing techniques.

The Future

For several years now India has been having an exponential growth of telecom network in India leading to an increase in subscriber density to an impressive 52%, which till recently was in single digit, -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 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 and there is a talk of some corrective steps.

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 increase 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 2009- 2010. Notes on 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 Rs. 968.43 lacs (upto 12.07.2005 i.e date of deposit of Rs. 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 Para4(vi)(a)]

ii) As regards observation made by the Auditors regarding recognition of revenue on sales amounting to Rs. 27.79 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(vii)(b)J

iii) Regarding accounting of certain income and expenditure on cash basis, the same has been accounted for as per disclosures of Accounting Policy given in Schedule 22 of the accounts. [Refer Audit Report Para 4(vii)(c)]

iv) As regards excise duty demand including penalty and interest aggregating to Rs. 268.94 lacs (net of pre-deposit) which is disputed, we are to inform that company has filed an appeal and the same is pending before the Central Excise Tribunal. [ReferAnnexure to Audit Report Para 9(b)(1)]

v) The excise and custom duty demand of Rs. 31.90 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)(ii)]

vi) As regards Sale Tax demand including interest aggregating to Rs 5.04 Lacs (net of pre deposit), which is disputed, we are to inform that company has filled an appeal and the same is pending in the office of Commissioner Appeal, Commercial Taxes, Uttar Pradesh. [ReferAnnexure to Audit Report Para 9(b)(iii)j

Explanation for variation in Published results vis-a-vis Audited results for the year ended 31" March, 2010

The Board of Directors adopted the Un-audited Financial Results for the financial year 2009-10 on quarterly basis and later on (un-audited annual results) in its Board Meeting held on 10th May, 2010, which were subsequently published as well as sent to stock exchanges vide our letter dated 10" May, 2010, pursuant to clause 41 of the listing agreement. The sum total of the published Quarterly Un-audited results for the first, second, third and fourth quarter for the year ended 31" March, 2010 and the audited results as on that date along with variation is given hereunder:

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 taking place.

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. TECHNOLOGYABSORPTION

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 plans: The Company has tied-up with HUAWEI Group for supply of cutting edge technology products in the transmission like SDH, DWDM, Super WDM etc. to major customers in India like BSNL.MTNL.

b) Total Foreign Exchange Used and Earned is given as a part of Form B, which forms part of this report. Further the company is planning to enter defence market under tie-up with a MNC/Foreign Company.

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 Rs. 24,00,000/- or above and a monthly remuneration of Rs. 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.

Industrial Relations

The employee-employer relationship remained cordial and harmonious throughout the year. The Board of Directors of your Company place on record their satisfaction for the dedicated services rendered by the employees of the company.

Acknowledgement

The Board places on record its gratitude to the Bharat Sanchar Nigam Limited (BSNL), Department of Railways, Ministry of Defence, VSNL, MTNL, PGCIL, PSEB and other esteemed customers in India and abroad, our consortium bankers viz. State Bank of India (Lead Bank), Allahabad Bank, Induslnd Bank & Union Bank of India 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.

Place: S.A.S. Nagar (Mohali) (SARWAN SINGH CHANNY)

Date : November 10, 2010 CHAIRMAN

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