Wednesday, October 8, 2008

D-Link (India) announces demerger

Mumbai, The Board of Directors of D-Link (India) Ltd. have approved the proposal of restructuring the business of the company by a ‘Scheme of Arrangement’ at its Board Meeting held on Sunday, 5th October, 2008.

The Scheme provides for demerger of the business of sales and marketing of 
D-Link branded active networking products into one company (D-Link (India) Ltd.) and the residual business of structured cabling systems, R&D, manufacturing and service operations into another company (Smartlink Network Systems Ltd.). The Scheme is subject to the approval of shareholders, creditors and other approvals as may be required including that of stock exchanges, High Court of Mumbai, Foreign Investment Promotion Board and Reserve Bank of India.  

Each shareholder of D-Link (India) Ltd. shall receive one equity share (of face value Rs.2) in Smartlink Network Systems Ltd. for each equity share (of face value Rs.2) presently held in the company.  

D-Link is one of the leading networking product brands globally. In India, besides sales and marketing of active networking products, the company is also engaged in other activities that are unique compared to D-Link operations globally. These include manufacturing, R&D and service of networking products as well as sales and service of SCS products.  

Post completion of the steps involved in the demerger process, the new D-Link (India) will have the business of sales and marketing of D-Link branded active networking products and the new company Smartlink Network Systems Ltd. will have the business of manufacturing, R&D, sales and service of networking products and sales and marketing of SCS products.

The Board believes that the demerger will result in focused business operations of the two companies and allow them increased flexibility in taking advantage of the huge growth opportunities in their respective business segments.  

India represents one of the fastest growing markets for networking products and a strong focus on development of this business will further accelerate the growth in the healthy market share that D-Link branded active networking products enjoy in India.  

Smartlink will drive both captive and contract manufacturing businesses at its ISO 9000 certified factory in Goa; R&D at its world-class centre in Bangalore with specific focus on VoIP and routing products; design and development, manufacturing, marketing and sales of branded Digi-Link Passive Structured Cabling Systems and provide nationwide service and support for networking products.  

Speaking on the occasion, Mr. K.R. Naik, Executive Chairman of D-Link (India) Ltd. said, “The demerger will bring sharper focus to the two distinct set of activities and allow both companies to chart independent long term strategies. This will lead to accelerated growth of the businesses of both companies resulting in enhanced shareholder value”

Speaking on the occasion, Mr. A. P. Chen, CFO and Executive VP D-Link Corporation. said, “We are excited by the growth potential in the India Market for Active Networking Products and believe that further focused approach resulting out of this demerger would help us accelerate our growth in India.”

Pursuant to the demerger, the shares of Smartlink Network Systems Ltd. shall be listed on Bombay Stock Exchange and National Stock Exchange.

About D-Link (India) Ltd.

D-Link (India) Ltd. ranks among India’s premier networking firms. Globally, 
D-Link Corporation features among the top five networking companies. D-Link is India’s most preferred networking* company and also the 2nd largest networking company in India**. It also enjoys the unique distinction of being the only company providing both Active and Passive Networking (SCS) Products. In recent PCQuest users choice awards, Digi-Link ranked No 1 in India's most Wanted IT Brands for Structured Cabling. It has a 24X7 toll free support helpdesk & 17 highly advanced service centers dotted across India to reach out to customer needs locally.

* CRN Channel Champion award 2007

** IDC 2007 data

 Restructuring the business of D-Link (India) Ltd.

 The Board of Directors of D-Link (India) Limited (the “Company”) at its meeting held on October 5, 2008 have considered and approved a proposal to restructure the business of the Company. 

The proposal shall be implemented by a Scheme of Arrangement under the provisions of Sections 391-394 (“Scheme”) of the Companies Act, 1956 which will provide for:

1. The transfer by way of a demerger of the business of marketing and selling of “D-Link” branded active networking products, associated assets and liabilities, and the trade mark “D-Link” to the Smartlink Network Systems Limited (“Smartlink”).

2. In consideration for the transfer of business as above, each shareholder in the Company shall receive one equity share (of face value Rs 2/-) in Smartlink, for each equity share (of face value Rs 2/-) presently held in the Company.

3. The Scheme also provides that upon the demerger and as an integral part of the Scheme, Mr. K. R. Naik and certain other promoters of the Company (“KRN”) shall swap 72,16,166 equity shares of face value Rs. 2/- held by them in Smartlink, constituting 24.05% of its equity share capital, to D-Link Holding Mauritius Inc. (“D-Link Mauritius”), another promoter of the Company, in exchange for the transfer by D-Link Mauritius to KRN of 1,08,98,497 equity shares of Rs. 2/- each held by D-Link Mauritius in the Company, constituting 36.32% of its equity share capital. Additionally, D-Link Mauritius shall pay KRN USD 5,000,000 (United States Dollars Five Million Only), as further consideration for the aforesaid swap of shares.

 4. Upon the swap of shares, the Company shall be re-named as “Smartlink Network Systems Limited” and Smartlink shall be re-named as “D-Link (India) Limited”.

The Board also approved the share entitlement ratio in relation to the demerger of 1 equity share in Smartlink of face value Rs. 2/- each credited as fully paid up for every 1 equity share in the Company of face value Rs. 2/- credited as fully paid up. 

Pursuant to the demerger, the shares of Smartlink shall be listed on the Bombay Stock Exchange and the National Stock Exchange. 

The above proposals are subject to the satisfaction of various conditions, including obtaining necessary approvals from the shareholders and the creditors and regulatory authorities including those of the Stock Exchanges under the Listing Agreement, Foreign Investment Promotion Board, Reserve Bank of India and sanction of the Scheme by the Bombay High Court, Goa Bench.

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