Is this passive profit for Schneider?

By Minakshi Shetty - 16 April, 2012

profits

Schneider Electric, the global specialist in energy management, signed an agreement to acquire the assets of the DIGILINK business from Smartlink Network Systems. In a landmark deal inked in Mumbai recently, Smartlink sold their DIGILINK brand to Schneider Electric for Rs 503 crore. The DIGILINK brand comprises passive networking business including the manufacturing, marketing, and sale of structured cable products.

DIGILINK has 92 employees in its Mumbai HQ. It has a manufacturing unit and an R&D center in Goa along with sales and distribution offices across India. DIGILINK has a strong presence in retail, educational institutes, government, financial services, small office, and home office segments.

KR Naik, executive chairman, Smartlink said, "We are pleased to enter into this agreement as the transaction recognizes the value of DIGILINK's pre-eminent position in the structured cabling business including the strengths of the brand, the strong network, support and dedication of our distributors and last but not the least, a well qualified, capable and motivated workforce."

According to a company report, DIGILINK had sales of about Rs 155 crore for the year ended December 31, 2010 and is being sold on a slump sale basis to Schneider as a going concern. The transaction would primarily include the transfer of the 'DIGILINK' brand and trademarks, manufacturing facility at Goa, distribution network, and the employees related to the business. However, the DIGILINK brand name will remain unchanged. The company has agreed to a non-compete condition for a period of 5 years for the passive networking business, subject to shareholder approval and other customary conditions.

Regarding what Smartlink intends to do with the proceeds from this deal, Naik said that the company was in talks for investment and equity-sharing among the company shareholders. However, one of the primary areas of focus will be on building the Digisol brand in India.

 

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