MUMBAI, INDIA: D-Link (India), the networking product firm and the arm of D-Link Corporation headquartered Taiwan has announced its demerger into two separate companies – D-Link (India) and Smartlink Network Systems Ltd.

The first company (D-Link (India) Ltd.) will handle the sales and marketing business of D-Link branded active networking products, while the newly formed company (Smartlink Network Systems Ltd.) will focus on business of manufacturing, R&D, sales and services of networking products, as well as sales and marketing of SCS products.

"For D-Link the demerger hasn't happened for the first time. In past, D-Link Corporation management at Taiwan had done a similar demerger of its business where the manufacturing business was separated from sales, marketing and R&D. With the two companies, it offers a bigger market share and market penetration," said A P Chan, CFO and executive vice president D-Link Corporation.

"Also, demerger will offer better transparency into the business along with better management. Even other companies likes Acer, Asus have done demerger for its businesses," added Chan.
About the financial structure of the two companies, Jangoo Dalal, CEO and managing director, D-Link (India) Ltd., said, "D-Link Corporation will hold about 60 per cent share in D-Link (India) Ltd., two per cent share of Naik and his associates and rest will be public's share."

"While in Smartlink Network Systems Ltd., Naik and his associates will hold 62 per cent share and rest will be public share. D-Link Corporation will have no share in this new company," added Dalal. At present, both the companies will have 50-50 per cent revenue and balance sheet share.

Further he said, "the need of demerger is for sharper focus of different businesses and distinct set of activities. Both the companies will have its independent long term strategies and will help to accelerate growth."

The company has about 22 regional distributors and about 2000 retailers spread across India, along with 700 employees that work in the manufacturing, R&D, sales and marketing tasks.

As part of the transfer of business, each shareholder in the company will receive one equity share of face value of Rs 2 in Smartlink, for each equity share of face value Rs 2 presently held.

The scheme is subject to the approval of shareholders, creditors, and other approval as may be required, including that of stock exchange, Mumbai High Court, Foreign investment promotion Board and the Reserve bank of India.