MIRA INFORM REPORT

Report Date :

30.12.2008

IDENTIFICATION DETAILS

Name :	PUNJAB COMMUNICATIONS LIMITED
Registered Office :	B-91, Phase VIII, Industrial Area, S A S Nagar, Chandigarh – 160 071, Chandigarh
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	21.07.1981
Com. Reg. No.:	4616
CIN No.: [Company Identification No.]	L32202CH1981SGC004616
Legal Form :	Public Limited Liability Company. The Company shares are listed on the stock exchange.
Line of Business :	Manufacturer and Marker of DTL (Channel), PCL (Channels and Terminals), Radio (Sys.), M/W Radio (TR), T MUX (TR), RAX/MAX/SBM RAX (Lines), OLTE (TR), 2 GHZ (TR) and VSAT (TR)

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 5200000
Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear
Comments :	Subject is an old and established company having moderate track records. Company’s profitability is under severe pressure and continue to incur losses. Payments are reported as slow at times. The company can be considered for small to mediocre business dealings.

LOCATIONS

Registered Office :	B-91, Phase VIII, Industrial Area, S A S Nagar, Chandigarh – 160 071, Chandigarh, India
Tel. No.:	91-172-2237101 (4 Lines), 3046900 (4 Lines) / 5044542
Fax No.:	91-172-2237125 / 3046919
Website :	http://www.puncom.com
Factory :	C-135 and B-93 and A-39, Phase VIII, Industrial Area, S. A. S. Nagar, Mohali, Chandigarh, India
Office :	Human Resource and Admin
Tel. No.:	91-172-5044536
E-Mail :	hrd@puncom.com
Office :	Marketing
Tel. No.:	91-172-5044527
E-Mail :	marketing@puncom.com
Office :	Production
Tel. No.:	91-172-5044537
E-Mail :	assembly@puncom.com
Office :	Information Systems
Tel. No.:	91-172-2237129
E-Mail :	isd@puncom.com
Office :	Finance
Tel. No.:	91-172-5044530
E-Mail :	finance@puncom.com
Office :	Business Development Group
Tel. No.:	91-172-5044535
E-Mail :	bdg@puncom.com
Office :	Projects
Tel. No.:	91-172-2237133
E-Mail :	projects@puncom.com
Office :	Material
Tel. No.:	91-172-2237132
E-Mail :	material@puncom.com
Office :	Company Secretary
Tel. No.:	91-172-5044542
E-Mail :	cosecy@puncom.com
Office :	Designated E-mail Address for Share Holders Grievances
Tel. No.:	91-172-5044542
E-Mail :	shareholders@puncom.com

DIRECTORS

Name :	Mr. A.R. Talwar, IAS
Designation :	Chairman
Name :	Mr. R.K. Verma, IAS
Designation :	Director and Senior Vice Chairman
Name :	Mr. Anurag Verma, IAS
Designation :	Managing Director
Name :	Mr. R. K. Nangia (CA)
Designation :	Director
Name :	Mr. V P Chandan, IRSSE
Designation :	Director
Name :	Maj. Gen. G S Bains, AVSM
Designation :	Director
Name :	Mr. Rajiv Dewan (CA)
Designation :	Director
Name :	Mr. S S Channy
Designation :	Director
Name :	Mr. R B Nayak
Designation :	Director
Name :	Mr. A K Chopra
Designation :	Director
Audit Committee :
Name :	Mr. V P Chandan, IRSSE
Designation :	Chairman
Name :	R. K. Nangia (CA)
Designation :	Member
Name :	Maj. Gen. G S Bains, AVSM
Designation :	Member
Name :	Rajiv Dewan (CA)
Designation :	Member
Investors Grievance Redressal Committee :
Name :	Mr. V P Chandan, IRSSE
Designation :	Chairman
Name :	R. K. Nangia (CA)
Designation :	Member
Name :	Maj. Gen. G S Bains, AVSM
Designation :	Member
Name :	Rajiv Dewan (CA)
Designation :	Member

KEY EXECUTIVES

Name :	Mr. CS Madhur Bain Singh
Designation :	Company Secretary
Name :	Mr. R.S. Chawla (CA)
Designation :	Head (Finance)

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

(As on 30.09.2008)

Category	No. of Shares	Percentage of Holding
Shareholding of Promoter and Promoter Group
Indian
Central Government/ State Government(s)	8561701	71.21
Public shareholding
Institutions
Mutual Funds/UTI	3600	0.03
Financial Institutions/ Banks	67866	0.56
Central Government/ State Government(s)	9475	0.08
Insurance Companies	5800	0.05
Non-institutions
Bodies Corporate	461255	3.84
Individuals
I. Individual shareholders holding nominal share capital up to Rs. 0.100 million	2705859	22.51
II. Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	195208	1.62
Any Other
- NRIs/OCBs	12219	0.10
- Lying in Escrow A/c -   Buy Back with Karvy Consultants Limited	419	0.00
- Trust	163	0.00
GRAND TOTAL	12023565	100.00

BUSINESS DETAILS

Line of Business :

Manufacturer and Marker of DTL (Channel), PCL (Channels and Terminals), Radio (Sys.), M/W Radio (TR), T MUX (TR), RAX/MAX/SBM RAX (Lines), OLTE (TR), 2 GHZ (TR) and VSAT (TR)

Products :

Product Description	ITC Code
Multiplexer	8517
Electronic Switching Equipments	8517
DTL System	8529
Radio Systems	8525

GENERAL INFORMATION

Customers :

· Bank of Rajasthan

· Bharat Heavy Electricals Limited

· Department of Telecommunication

· FITEL, Subsidiary of Fujitsu, Japan

· Gas Authority of India Limited

· Hero Cycles

· India Today Group of Publications

· Indian Oil Corporation

· Indian Railways

· IndusInd Bank

· Kokan Railway Corporation Limited

· Lorain Products, Lorain, Ohio, USA

· Mahanagar Telephone Nigam Limited

· Ministry of Defence

· Oil and Natural Gas Corporation

Bankers :

· State Bank of India

· Union Bank of India

· IndusInd Bank Limited

· Allahabad Bank

· Bank of Rajasthan Limited

Facilities :

Secured Loans	(As on 31.03.2008) Rs. in millions
From Banks
Cash Credit	1.696
Loan against FDR.s	15.967
Total	17.663

Banking Relations :	-
Statutory Auditors :
Name :	N. Kumar Chhabra and Company Chartered Accountants
Associates/Subsidiaries :	· PCL Telecom Limited · Punjab Digital Industrial Systems Limited
Holding Company :	Electronic Corporation of Punjab

CAPITAL STRUCTURE

(As on 31.03.2008)

Authorised Capital :

No. of Shares	Type	Value	Amount
2000000	Equity Shares	Rs.10/- each	Rs.200.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
12050000	Equity Shares	Rs.10/- each	Rs.120.500 millions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2008	31.03.2007	31.03.2006
SHAREHOLDERS FUNDS
1] Share Capital		120.500	120.480	120.480
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		923.500	951.352	1023.957
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		1044.000	1071.832	1144.437
LOAN FUNDS
1] Secured Loans		10.300	17.663	29.765
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		10.300	17.663	29.765
DEFERRED TAX LIABILITIES		0.000	4.169	6.120
TOTAL		1054.300	1093.664	1180.322
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		82.400	90.320	102.424
Capital work-in-progress		0.000	0.000	0.494
INVESTMENT		11.600	11.563	85.126
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	180.400	114.428	134.375
	Sundry Debtors	176.200	309.196	427.314
	Cash & Bank Balances	897.800	783.538	639.316
	Other Current Assets	0.000	7.101	4.184
	Loans & Advances	49.900	42.626	67.057
Total Current Assets		1304.300	1256.889	1272.246
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	237.300	267.853	306.884
	Provisions	108.200	0.000	0.000
Total Current Liabilities		345.500	267.853	306.884
Net Current Assets		958.800	989.036	965.362
MISCELLANEOUS EXPENSES		1.500	2.745	26.916
TOTAL		1054.300	1093.664	1180.322

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		84.600	357.022	568.068
Other Income		107.000	67.709	63.126
Total Income		191.600	424.731	631.194
Profit/(Loss) Before Tax		(28.900)	(71.706)	(63.310)
Provision for Taxation		(1.100)	(1.250)	(1.575)
Profit/(Loss) After Tax		(27.800)	(70.456)	(61.735)
Imports :
	Raw Materials	NA	65.136	135.079
	Stores & Spares	NA	0.198	0.049
Total Imports		NA	65.334	135.128
Expenditures :
	Manufacturing Expenses	4.700	15.271	16.600
	Administrative Expenses	11.700	20.922	20.213
	Raw Material Consumed	45.800	295.610	473.005
	Increase/(Decrease) in Finished Goods	(7.300)	(4.882)	18.507
	Interest and Financial Charges	2.200	4.551	5.444
	Depreciation & Amortization	12.200	13.890	15.842
	Other Expenditure	151.200	151.075	144.893
Total Expenditure		220.500	496.437	694.504

QUARTERLY RESULTS

PARTICULARS	30.06.2008	30.09.2008
Type	1st Quarter	2nd Quarter
Sales Turnover	1147.200	37.100
Other Income	20.700	33.100
Total Income	1167.900	70.200
Total Expenditure	1158.500	57.300
Operating Profit	9.400	12.900
Interest	0.500	0.400
Gross Profit	8.900	12.500
Depreciation	2.800	2.800
Tax	0.100	0.200
Reported PAT	6.000	9.500

KEY RATIOS

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
PAT / Total Income	(%)	(14.51)	(16.59)	(9.78)
Net Profit Margin (PBT/Sales)	(%)	(34.16)	(20.08)	(11.14)
Return on Total Assets (PBT/Total Assets}	(%)	(2.08)	(5.32)	(4.61)
Return on Investment (ROI) (PBT/Networth)		(0.03)	(0.07)	(0.06)
Debt Equity Ratio (Total Liability/Networth)		0.34	0.27	0.29
Current Ratio (Current Asset/Current Liability)		3.78	4.69	4.15

LOCAL AGENCY FURTHER INFORMATION

Fixed Assets

· Land

· Building

· Plant and Machinery

· Temporary Structure

· Electrical Installation

· Office Equipment

· Furniture and Fixture

· Vehicles

Web Details

Profile

Subject is India's premier Telecom and IT equipment and solution provider company having successfully supplied and implemented a host of state-of-the-art Telecom, Software and integrated turnkey solutions across the country.

Subject is ISO 9001:2000 and has always strived to provide technologically superior high quality equipments and services  and  since  inception  in  1981  has developed a strong brand image amongst a vast clientele including bulk telecom users ,corporates, service providers, railways, power sector, government and security agencies. The diverse product range covers Switching and networking equipments, Broadband, Wireless, STM1/4/16, PLCC, Power plants, Security products etc. manufactured at its state-of-the-art manufactring facility in Mohali, near Chandigarh. Broadly the activities cover the following areas:  

· Telecom equipment manufacturing

· IT and Software Solutions

· Turnkey Projects

· Repair and Maintenance

Subject has considerable strength and resources in terms of infrastructure, technical expertise and sound financials and given its experience it has the necessary strength to undertake large projects. Salient features in the profile are as follows:

· 350 Employees including 150 engineers.

· Wide range of type approved Telecom products.

· Strong in house product and software design strengths

· Sophisticated SMT Assembly line for hi-tech equipment manufacturing

· Capital Equipments : US $ 11.2 Million (Capability : Optical upto 2.5 Gb/s and Radio upto 40 Ghz)

· Air-Conditioned Assembly Area ( 190,000 ft2)

· Standby Captive Power Generation : 3 MW

· Countrywide After Sales Support Network

· Networth more than 1300 millions.(US $30 million) 

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.47.89
UK Pound	1	Rs.70.84
Euro	1	Rs.67.37

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	4
OPERATING SCALE	1~10	2
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	5
--PROFITABILIRY	1~10	-
--LIQUIDITY	1~10	4
--LEVERAGE	1~10	4
--RESERVES	1~10	3
--CREDIT LINES	1~10	3
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		31

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions