From the Annual report 2014-15
Smartlink has revamped its strategies which are now more customized to the ‘Make in India’ campaign which is reflected in the packaging of its products. Local manufacturing is a sure win-win formula as it would require designing and manufacturing for India by India.
Manufacturing in India will enable Smartlink to make significant savings. There will also be a significant reduction in lead time for deliveries to the customer, especially in the case of complex engineering or high-tech products. This will allow Smartlink to be far more responsive and flexible to changing customer needs. Also, servicing of locally manufactured products will be much convenient because it is easy to understand technology that has gone in manufacturing local products…
The new 4G compatible and high speed routers, cater to the demand for faster and seamless connectivity, while the 3G Wi-Fi dongle, Mi-Fi
routers and Powerbank Routers are the perfect fit being connected on the go and sharing internet with colleagues and family for both
professionals and students alike…
… DIGISOL had also introduced CCTV surveillance, to increase its reach in the analogue field, as it already was present in the digital space with IP Surveillance.
DIGISOL sees this as a major business line in the future and will be investing in a clear strategy with a focused team, to grow and spread its wings further in this field. With the current product line catering to all sizes of the market and DIGISOL’s advent into the HD space, the CCTV product line will see a significant growth in both innovation
and timely market requirement…
…Price cutting led to severe erosion in margins and with the market showing a major shift from desktops to laptops and tablets, the prospects for motherboard manufacturers were indeed grim. Smartlink
saw the writing on the wall and decided to exit the motherboard business sold under Digilite Brand…
Management has finally exited the low/no margin motherboard business and is scaling down the tablet, powerunit businesses. The result is showing in the results. Though topline is down sharply profitability is up.
Company is now gearing to make use of opportunities provided by the
government’s Make in India initiative. Major thrust will be on the
networking business with company hiring actress Sonakshi Sinha as brand ambassador for the router and other networking business.
As for financials, management is still very niggardly with dividends. However investments from the sale of networking business to Schneider some years ago is showing good appreciation.
Value of investments up from Rs 283 cr to Rs 318 cr in one year. Provisions including statutory dues like employees’ PF, etc is Rs 8 cr. In addition company is holding cash equivalents more than Rs 52 cr.
SO THE COMPANY WITH MARKETCAP OF RS 274 CR IS STILL A CASH BARGAIN DESPITE THE STOCK PRICE RUNNING UP.
Remains to be seen how fast the company can achieve profitability at the operating level. This will take the stock price to stratospheric levels.
Management is also reported to be negotiating with state governments to set up manufacturing facilities. If land is allotted at low prices, then the cash hoard will surely help in scaling up operations further.
disclosure: core holding