Smartlink Network Systems - ZENMoney

Company Profile: Smartlink Network Systems Limited (SNSL) took its present form in 2009 after parting ways with its Taiwanese jointventure partner D-Link Corporation. Following the demerger, SNSL retained its manufacturing facilities in Goa. SNSL later sold (in March 2011) structured cabling products business (Digilink) to Schneider Electric India for a consideration of Rs. 503 crore. The company presently has three lines of businesses namely; Digisol (Active network solutions & converged communications products like switching, broadband routing etc. ), Digilite (sells motherboards under this brand name) and Digicare (repair and servicing of IT products). SNSL has one fully owned subsidiary Smartlink Middle East FZE. Presently company has a network of over 17 branch offices, 25 regional distributors, 180 stockist partners, 222 System Integrators and more than 5000 resellers across India. Company has a SMT line in Goa spread over 120,000 sq. ft.

Strengths:

- The company has cash & equivalents and current investments amounting to about Rs. 121.32 per share.

- The company has a strong distribution network across the country and a strong R&D capability to fully support its DIGISOL & DIGILITE range of businesses. For its DIGICARE business the company has established a very wide servicing network with well qualified professionals.

Concerns:

- Presently the company is not making profits at the operating level (after taking out the other income).

- Company imports raw materials and Traded Goods, a steep Rupee depreciation and a weak economy affect the operating margins.

Outlook: SNSL intends to be among the top three Active Networking Solutions players in India in another two to three years. SNSL has a strong experience of two decades in Active Networking Products and is backed up by a proven R&D capability and strong distribution network (1000+ empowered value resellers and 5000 + empowered resellers) spread across the country. In the DIGILITE business company has been able to ship more than 350,000 mother-boards in a period of 18 months, which along with the strong national base of distributors like Redington India & others holds the company in a relatively better position. DIGICARE (Repair Services) has been able to generate significant export revenues in FY13. This business is well supported by a network 64 (22 Direct & 42 service partners) RMA service and support centres across India. These business characteristics along with the strong demand foreseen for Networking (IT Hardware) devices - because of the rapid roll out of broadband services and, company's additional capability to contract manufacture smart-phones & tablets at its Goa manufacturing plant augment the safety provided by the strong balance sheet of the company.

Source : Equity Bulls

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