Expect Digisol sales to jump in FY12: Smartlink

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Expect Digisol sales to jump in FY12: Smartlink

Networking firm Smartlink Network Systems has recommended a dividend of Rs 2 per equity share for the financial year 2010-11. Also, the board of directors have declared a special interim dividend of Rs 30 per share.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Smartlink Net See previous management interviews See what other Experts & Brokerages are saying about Smartlink Net Smartlink Net BSE | NSE 29/05/12 Are Mutual Funds betting on Smartlink Net?

Networking firm Smartlink Network Systems  has recommended a dividend of Rs 2 per equity share for the financial year 2010-11. Also, the board of directors have declared a special interim dividend of Rs 30 per share.

KR Naik, Exec Chairman, Smartlink Network Systems in an interview with CNBC-TV18, "As far as sales of Digisol is concerned, there will be very good sale in FY12 maybe three times than last year. We are having large set up in the factory; we are going to introduce some more products which will be announced in one month's time. We are also going to add some more products."

Below is the verbatim transcript of Naik's interview with Mitali Mukherjee and Sonia Shenoy of CNBC-TV18. Also watch the accompanying video.

Q: You finished the previous year with sales of Rs 190 crore but the EBITDA was down. What is it that your company can hope to do in FY12 both in terms of sales and what that would mean for your bottomline?

A; Last year it was down mainly because we introduced a new product called Digisol in active networking field. Copper has played main role in the Digilink brand, construction cabling and that has also squeezed some margin. Our margins were low only because of these two reasons, otherwise everything is perfect.

Digilink has been transferred to Schneider Electric along with people and operations associated to Digilink manufacturing. We are sure that it will definitely grow because of many other reasons which can give extra growth, since it is having a worldwide brand. So there is absolutely no problem on the Digilink side.

Talking about Digisol, we are in the business of networking for more than 20 years now. We also had a joint venture for nearly 14-15 years which was demerged almost this years back. With this kind of experience, R&D, manufacturing and best networking for sales and marketing. We have now big scope for taking this product to no 1 position in India.

Q: So for the listed SmarLink entity, what is that FY12 could delivery in terms of sales and profits?

A: As far as sales of Digisol is concerned, there will be very good sale maybe three times than what we had last year. This is because last year we were at entry stage. We are having large set up in the factory; we are going to introduce some more products which will be announced in one month's time. We are also going to add some more products. It will take another one or two months for us to come with concrete proposal for these products. The deal is just over now and we will need one and half months more.

Q: That is the worry that the street has that the money that you have got from the sale of Digilnk will take some time to be pumped into your existing businesses and the scale up will take lot of, specifically Digisol, Can you give us an indication of when the scale up would take place and when would it start to reflect in your books, will it be in this fiscal itself or will we have to wait for another fiscal?

A: You will see that in this fiscal itself because we are not new in this business. We were the first people to enter in networking field, we started manufacturing almost two decades back. So there no set back, we don't have to bother and this year itself we will do well.

Also Read: Mehraboon Irani's view on Smartlink Network Systems

Q: What kind of margins have you set out for FY12? This time around you slipped quite a bit to 12.5% versus 19.5% earlier on, do you think you will slip further or is there scope of further stability?

A: The margins will be definitely same but there could be some extra marketing expenses similar to what we had last year because Digisol is a new product and we will have to market it. But that is not expense that is for building the brand, that will be there 100%. Otherwise there shouldn't be any problem.

Q: You declared a special interim dividend of Rs 30 to a share for investors. Any other special payout that the company or the board will be considering?

A: After IPO we had very clearlt told the shareholders that whatever we get every year, we will share minimum 25% of the earnings. So, that 25% has been given. It is not something new. We have been doing from day one of IPO. If we cannot utilize the money then it should be given to the shareholders.