Smartlink Holdings Ltd Management Discussions.


The global economy grew at 2.4% in CY 2019, slowing from 3% in CY 2018 amid global trade war, tariff related uncertainties, and Brexit. Global trade environment continued to remain tough as we entered 2020 due to heightened trade tensions.

Global growth outlook has changed since the outbreak of COVID-19. There has been coordinated global monetary policy easing and fiscal support from governments. These policy support measures would act as cushions offsetting weakness in growth to some extent. However, global economic activity is likely to contract in 2020 and global growth environment will remain challenging in the short term. The World Bank predicts that the global Gross Domestic Product ("GDP") will decline by 5.2% in the year 2020.

It has been a tough year for the global economy and the already weak trade environment was delivered a killer blow by the Covid-19 pandemic which has sent the economies of virtually all the nations reeling.


The Indian economy grew by 4.2% in FY 2019-20 still remaining one of the fastest growing major economies in the world. Industrial activity remained steady in the beginning of the year, but saw marked weakness as the year progressed. Despite weak trade environment amid increasing protectionism, services exports remained resilient at about 8%.

Indias forex reserves increased to US$ 475.56 billion as on 27th March 2020, according to data from the Reserve Bank of India. The outbreak of COVID-19 would make the growth environment difficult in the first half of FY 2020-21 but liquidity measures announced by the government could help provide some support. The markets would continue to undergo massive disruptions due to the COVID-19 pandemic. The economic fallout of and the subsequent recovery from COVID-19 will depend on multiple factors, such as recovery driven by containment efforts, supply chain disruptions, impact of lockdowns etc. The continued spread of COVID-19 could adversely affect workforces, customers, economies and financial markets globally, potentially leading to further economic downturn.


The combined consumer and enterprise worldwide wireless local area network (WLAN) market segments rose 2.3% year over year in the first quarter of 2020 (1Q20), according to results published in the International Data Corporation (IDC) Worldwide Quarterly WLAN Tracker. The enterprise segment fell 2.2% year over year in 1Q20 with $1.3 billion in revenue.

The first quarter of 2020 began showing the impact of the COVID-19 global pandemic on the enterprise WLAN market. The novel coronavirus began spreading in China early in the quarter then expanded into Europe and North America later in the quarter. The subsequent lockdown of economies represented a headwind for the enterprise WLAN market.

A driver for the enterprise WLAN market is the new Wi-Fi 6 standard, also known as 802.11ax. Across the enterprise market, Wi-Fi 6-supported dependent access points (APs) made up 11.8% of unit shipments and 21.8% of revenues. The previous generation standard, 802.11ac, still made up the majority of shipments (80.9%) and revenues (76.2%).

Meanwhile, the consumer WLAN market grew 5.5% year over year in 1Q20. Within the consumer market, 62.5% of shipments and 79.4% of revenues were for 802.11ac products. APs supporting the older 802.11n standard still made up 36.9% of unit shipments and 17.6% of revenues, not surprising given the price sensitivity seen across many emerging markets.


The Networking market in India has shown a lot of growth potential based on DC footprint expansion across enterprises. The number of connected devices is increasing rapidly and the focus on managing data from the "Edge to core" is becoming important more than ever. As organizations are looking to digitally transform themselves are in the compulsion to adopt software- based technologies to improve manageability. Technologies like SD-WAN can derive very high levels of flexibility and agility by transferring the manageability to software.

The Indian Networking Market which comprises of Ethernet Switch, Router and WLAN segments posted a growth of 14.8% in the first quarters of 2019 and 5.5% decline in second quarter. The third quarter saw a steep decline of 30.6% 30.6% due to strong investments that happened during 2018, while in the 4th quarter the decline rate tapered down and stood at 22.5%

The Ethernet Switch, Router, and WLAN market are expected to grow in single digits in terms of compound annual growth rate (CAGR) for 2018-2023. Increased adoption of emerging technologies such as cloud, IOT, mobility, etc. would drive incremental revenues. IDC also expects large investments for 5G rollouts in the next couple of years. India Networking Market showed a 5.5% YoY Decline in 2Q19, primarily due to Router Segment; IDC India Reports says.

Passive Networking Products:

The India structured cabling market is projected to reach $861.6 million by 2023, increasing demand for copper cables, growing data center market, increasing number of product launch activities by the market players, and rising demand for bandwidth solutions, are the major factors driving the growth of the market.

On the basis of application, the India structured cabling market has been categorized into data center and LAN. Data center is expected to register faster growth in the market, during the forecast period, owing to growing demand for cloud computing and cloud storage. This demand is fulfilled by increasing number of data centers in the country. Regionally, the India structured cabling market has been categorized into northern, southern, eastern, and western. Southern region is projected to hold the largest revenue share of 41%, by 2023, in the India structured cabling market, with cities like Bangalore, Chennai, and Hyderabad that are few of the largest IT hubs in the country.


The income of Smartlink Holdings is mainly from investments and rent income from immovable properties.


The IT networking industry grows by leaps and bounds every year however, the one thing that stays comparatively constant is the brand. Due to the technology industrys accelerated evolution brands take on increased importance by providing an effective counterbalance to what buyers perceive as constant change, clutter and confusion. At Digisol, we strive to push the boundaries with our marketing activities and accord great importance to brand building which will ensure the Companys long-term success. The main focus has been to position DIGISOL as a leading ‘Made in India brand that offers products of global standards, credibility and delivers a fantastic user experience.

Active Networking Products:

Digisol offers a wide range of active networking products with the portfolio encompasses over 150 products across the IT networking spectrum. Marketed under the brand name DIGISOL, these products incorporate world class quality and are backed by Synegras and Telesmarts own manufacturing facility and a nationwide distribution network. The Company offers call-based technical support backed by a strong in-house service team.

Digisol has been steadily working to introduce new generation products like Next Gen wireless routers, networking switches and enterprise wireless products based on the changing needs of the market. These also include products manufactured by the Groups manufacturing arm Synegra EMS.

Passive Networking Products:

Technology is constantly changing and so are business needs. With the latest technologies like 5G, IoT, Wi-Fi 6, SDN and Cloud coming in, Digisol launched ConvergeX series Future Ready Structured Cabling Solution under its New Digisol Enterprise structured cabling system. These solutions have been helping enterprises build the next generation of business and create paths toward future growth. The name Digisol ConvergeX refers to the term ‘Converge that stands for a single network that unifies and carries a combination of data, voice and video traffic, while X stands for the Xtreme speed. ConvergeX enterprise structured cabling series aims to enhance the way enterprises works and unlocks opportunities for the future.

DIGISOL cabling portfolio includes end-to-end cabling solution (Cat 5e, Cat 6 & Cat6A), UTP/STP LAN Cables, Patch Panels/ Cords. The fiber range includes Fiber cables, Fiber connectors, couplers ETC. The Companys cabling products adhere to EIA/ TIA, ISO/IEC and UL international standards. ROHS compliant products are backed by international 25 years product performance warranty.

Brand Building is the key to DIGISOLs success:

Brand building has always been accorded top priority at Digisol. While it is important to provide finest quality products of the latest technology, the manner in which the consumer perceives the brand is equally important, especially from the long-term perspective.

Digisol will continue to invest in educating the channel community and system integrators who interact with the end consumers and play a strong role in building the brand. The company introduced DITT- Digisol Institute of Technical Training that focus on educating Partners and System Integrators community about forthcoming technologies in IT Networking Industry.

Digisol believes in encouraging stakeholder by introducing various promotion schemes and loyalty programs. To gain share in the electrician and contractors market, the company has introduced Digisol Cash Karo loyalty programme that aims to build relationship with electricians and reward them by giving them an opportunity to win reward points on purchasing Digisol Structured Cabling products and redeem these points for cash.


(Values in USD million)


Q1 2019

Q2 2019

Q3 2019

Q4 2019

Value Growth Value Growth Value Growth Value Growth
Ethernet Switch Market 146.00 4.5% 140.1 2.1% 149.1 7% 142.6 3.7%
Router Market 133.9 34.1% 72.3 24.3% 96.5 33.0% 75.8 46.5%
WLAN 53.37 5.6% 54.9 9.1%% 57.00 12.0% 56.7 >1/13.1%
Indian Networking Market 14.8% 5.5 30.6% 22.5%

* Source from "IDC WLAN AND LAN" tracker report

The Companys brand building efforts include participation in the leading industry events, trade shows and expos with strong brand presence in resellers outlet through in-shop branding. In addition to traditional advertising in India, Digisol is active on important social media platforms like Facebook, LinkedIn, Instagram, and Twitter.

Brand Building Activities:

Several Brand Building activities were undertaken during the year:

• Organized various Channel Partner events

• Introduced Digisol Institute of Technical Training

• Create mass visibility of Digisol Cash Karo Loyalty Program

• Participation in Trade Shows and Expos

• Launched various Schemes for Partners & System Integrators

• Content Creation-White Papers, Success Stories, Blogs, Videos etc.

• Retail Branding

• Advertising

Digisol Support:

Digisol offers high quality after sales service and support to deliver total customer satisfaction. The company provides these services under a special division known as ‘Digisol Support. It has embarked on a journey of consolidation and improving customer experience through a new model of service network that offers faster turnaround of customer service. Digisols RMA has an all India network of 63 DIGISOL service and support centres and has a Technical Call centre as well, called STAC (Smartlink Technical Assistance Centre). Digisols customer care team supports all India customers on voice, email and chat.


Synegra is a wholly owned manufacturing subsidiary of Smartlink Holdings Limited. Synegra is an Electronics Manufacturing Services (EMS)/Original Design Manufacturing (ODM) Company which caters to IT, Networking, Telecom, Medical, Automotive and Defence sectors. Its certified facilities at Goa includes SMT lines, Assembly Testing Lines and a highly skilled team for electronics manufacturing including components sourcing.

Synegra provides contract manufacturing services to Digisol Systems Ltd. as well as other electronic brands and companies.

telesmart scs limited

Telesmart is a subsidiary of Smartlink Holdings Limited and engaged in the business of manufacturing a wide range of Structured Cabling Systems (SCS) products. The Company has its manufacturing facility at Verna, Goa and is in the business of developing, and manufacturing of copper and fiber range of cabling products. The focus of the Company is on contract manufacturing of various structured cabling products in both copper and fiber range.

Telesmarts cabling portfolio includes end-to-end cabling solution (Cat 5e, Cat 6 & Cat6A), Patch Panels, Patch Cords and Face Plates. The fiber range includes Fiber Patch Cords, Pig Tails and LIUs.


i) Standalone Financials

In the financial year 2019-20, the Company achieved an Income from operations of Rs 1,515.81 lakhs as compared to Rs 2,071.58 lakhs in the previous year.

The Companys Loss After Tax for the year ending 31st March, 2020 was Rs 1,343.48 lakhs as compared to Rs 2,830.70 lakhs in the previous year.

Key Financials Ratio:

Particulars FY 2020 FY 2019
Current Ratio (in %) 14.97 23.31
Operation Profit Margin (in %) -49.85 -114.50
Net Profit Margin (in %) -86.47 136.54
Return on Net Worth (in %) -7.00 -10.95

ii) Consolidated Financials

In the financial year 2019-20, the group achieved an Income from operations of Rs 7,515.88 lakhs as compared to Rs 10,645.03 lakhs in the previous year.

The Loss After Tax for the year was Rs 1,471.61 lakhs for the year ending 31st March, 2020 as compared to Loss after Tax of Rs 294.55 lakhs in the previous year.


Smartlink and its subsidiaries are equal-opportunity employers and human values form the backbone of the organization.

Our Values at work:

• An ethical, value-based approach

• Careers that offer learning opportunities

• Growth and feeling of sense of accomplishment

• Performance oriented

• Combination of hard work and customer orientation

We have always focused on developing the employees and enhancing their capabilities. The key element of our Human Resource strategy is to provide a working environment that encourages innovation, enhances work satisfaction and builds a merit-driven organization. The organisations human resource vision is to create a committed workforce through people-enabling processes and knowledge sharing practices based upon its value system. As on 31st March, 2020, the Company had 27 employees. Smartlinks future success will depend, in part, on our ability to continue to attract, retain and motivate highly qualified technical and management personnel, for whom competition is intense.


In the event of a severe global slowdown, falling external demand would exert a powerful drag on Asias economies including India, impacting companys prospects.

Smartlink invests in various financial instruments like mutual fund, bonds, Non-convertible debentures and other securites and thus Smartlink is exposed to credit risk, market risk and interest rate risk.

The risk of technological obsolescence is very high in the segments where the companys subsidiaries operates. Moreover, the technological advancements are dictated by the large OEM players. On the other hand, we need to continuously invest to keep launching new products to enhance reach and reputation amongst customers and channel partners.

The companys subsidiaries are exposed to fluctuations in foreign currency, in particular the movement of US dollar vis-a-vis the Indian Rupee as the subsidiaries import more than 70% of the components here the payment is in US Dollars. In todays constantly changing markets, companies may opt to maintain and grow sales by selling at competitive prices. Products have become commoditized over time as alternative products become available or the number of suppliers offering the same product increases. Macroeconomic conditions caused by COVID-19 could also result in financial difficulties for our clients, including limited access to the credit markets, insolvency or bankruptcy.


Smart link has aligned its current systems of internal financial control with the requirement of Companies Act, 2013. The Internal Control framework is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control.

The framework requires the Company to identify and analyse risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness. Smartlinks internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorization and ensuring compliance of corporate policies.

The Audit Committee periodically reviews the functions of Internal Audit.

Our management assessed the effectiveness of the Companys internal control over financial reporting (as defined in Clause 17 of SEBI Listing Regulations 2015) as of 31st March, 2020. Based on its evaluation (as defined in section 177 of Companies Act 2013 and Clause 18 of SEBI Listing Regulations 2015), our audit committee has concluded that, as of 31st March, 2020, our internal financial controls were adequate and operating effectively.


Certain statements made in this report relating to the Companys objectives, projections, outlook, estimates, etc. may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such estimates or projections etc., whether expressed or implied. Several factors including but not limited to economic conditions affecting demand and supply, government regulations and taxation, input prices, exchange rate fluctuation, etc. over which the Company does not have any direct control, can make a significant difference to the Companys operations. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on any forward-looking statements. The MD&A should be read in conjunction with the Companys financial statements included herein and the notes thereto.