Punjab Communications recovered from the lower levels on Thursday witnessing an early fall on the back of news that the Videocon group had pulled out of the race for its acquistion.

The scrip of the Punjab state-run telecommunications equipment maker slipped 2.2% to Rs 77.80 on BSE in early afternoon trades. But that was, in fact, a recovery, as it had plunged 8.2% to Rs 73 earlier. Volumes on the counter were modest – 304,000 shares - so far.

The volatility materialises ahead of the opening of price bids for Punjab Communciations at 15:00 IST today. PCL shares have surged sharply over the last few days despite intermittent volatility. From a recent low of Rs 53.20 on 12 February 2003, the scrip jumped a whopping 54% to Rs 81.95 on 4 March 2003.

As per reports, the Videocon group, which was one of the contenders for PCL, has pulled out of the race to acquire a stake in the telecom equipment maker. The reason cited by the group for pulling out of the bidding process is that it is not comfortable with the fact that PCL's profits come from investments rather than operations. As per market talk, there is now only one bidder left in the fray!

Punjab State Electronics Development and Production Corporation, which holds a 69.7% stake in PCL, is divesting its entire stake in the company. PSEDPC had invited preliminary bids for that stake in August 2002.

The sell-off process of PCL was held back for some time to safeguard interests of employees. Labour unions had requested for introduction of a voluntary retirement scheme before the ownership was transferred to a private party. Bidders, too, had reportedly supported the VRS idea.

The state government had set a net worth of at least Rs 100 crore ($20.56 million) for bidders in the divestment.

PCL was incorporated in July 1981 by the Punjab State Electronics Development and Production Corporation to manufacture direct-to-line multiplexing equipment. Later, it diversified into the production of pulse code modulated multiplexers, trans multiplexers, voice frequency telegraphs, rural automatic exchanges, digital VHF radios, etc. The major users of these products are BSNL, ONGC, VSNL, Railways, defence sector etc.

For the third quarter ended 31 December 2002, PCL registered a loss of Rs 11.68 crore, compared to a net profit of Rs 2.03 crore in the corresponding period of the previous year. Net sales dropped by 78.6% to Rs 8.95 crore from Rs 41.79 crore in DQ 2001.