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KR Naik walks away from D-Link to promote SmartLink
By siliconindia
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Saturday, 11 October 2008, 17:11 IST
Mumbai: D-Link, a Taiwanese networking company, has parted ways with its Indian promoter KR Naik, who will now be the promoter of Smartlink Network Systems, a new entity formed by the de-merger of the structuring cabling and manufacturing business of D-Link (India). D-Link will take over 24 percent of Naik's shareholding in the company under a share swap agreement. Naik will receive cash of $5 million.
Smartlink will be listed on the stock exchanges and the shareholders of the existing D-Link (India) will receive shares of Smartlink in the same ratio. D-Link will transfer its 36 percent holding in Smartlink to Naik under the share swap agreement. After the de-merger, Naik will hold 62 percent in Smartlink. The remaining stake will be held by the public.
In the new D-Link (India), which will now handle only the sales and marketing of D-Link products, parent firm D-Link will hold 60 percent, Naik will retain two percent and the remaining will be owned by the public. "We have got our own things to do. The de-merger will allow both the companies to chart independent long-term strategies, leading to accelerated growth and enhanced shareholder value," said Naik, who will continue as the chairman of both the companies for some time.
About half of the revenues of the existing D-Link (India) come from the sales of networking products, including switches, routers and modems and these will be retained after the de-merger. The remaining revenues, which come from its structured cabling business, contract manufacturing at the Goa plant and voice-over-internet protocol (VoIP) products from the R&D centre at Bangalore, will go to Smartlink.
"I see a strong and solid market in India and other emerging markets. The demand slowdown is only in US and Europe," The Economic Times quoted A P Chen, CFO and executive VP of D-Link, as saying.
About 580 employees of D-Link (India) will move to Smartlink, while 120 will stay on.
