K.R. NAIK

Executive Chairman, Smartlink Holdings Ltd.
Chairman & Founder, Digisol Systems,

THE FATHER OF INDIAN IT NETWORKING INDUSTRY

Nobody needs an explanation as to why IT networking products have become an essential feature in today's fast paced business landscape. With the advent of the internet and management information systems (think computers, phones and software), businesses have been able to transform from small local outfits to international household names. In order to keep up with competition as a result of internet commercialisation, companies are increasingly turning to information technology, or hardware, software and telecommunications networks, to streamline services and boost performance. In a developing country like India, it's ever so more the case.

Even so, consider this. The IT revolution in India was signalled by the arrival of computer networking and the impact it made on many aspects of our lives.

It was part of something bigger – electronic and digital revolution that brought us computers and a plethora of communication facilities.

Recalls K.R. Naik, Executive Chairman, SMARTLINK HOLDINGS, and Chairman & Founder, DIGISOL SYSTEMS, an IT industry veteran, two decades back he was recognized as the Father of India's information technology networking industry: “Back in the 1970s, mainframe computers in market were developed by IBM-USA, ICL-UK, and maybe one or two European companies. India was nowhere. Personal computers (PCs) started appearing in the 1980s, when custom duties on import was as high as 100%.”

In order to encourage local manufacturing of PCs, the Indian Government reduced detail parts import duty below 40%, making it attractive to manufacturer to assemble in India. Many companies entered the fray, but duty difference in finished products and detail parts reduced every year. By 2003, due to the WTO agreement, all finished products in the IT sector became Duty Free. This resulted in almost all manufacturing companies closing down.

“Despite suffering losses, my company SMARTLINK somehow managed to weather the storm,” says Naik. “No matter what, we cannot compete with cheap imports from China. But now that the Government is beginning to take a great deal of interest in making India aatmanirbhar (self-reliant), by encouraging manufacturing in the country and by implementing duties on finished products from overseas, we can hope for better days. It's a step forward for the Make in India movement.

K.R. Naik, Executive Chairman, SMARTLINK HOLDINGS Ltd., and Chairman & Founder, DIGISOL SYSTEMS, traces the story of IT networking products in the country as well as his own story

For 50 years you played a key role in creating the IT networking market and the surrounding channel ecosystem in India. Could you trace your personal journey in the IT industry? 
50 years ago, we used to have large sized mainframe computers, the most well-known of which was IBM. Back then, the IBM India plant used to manufacture card-punching machines, namely the IBM 029 and IBM 129 models, at its Andheri plant in Mumbai. You might be surprised to know that back then we used to export these 'Made in India' machines to Europe, Japan and 10-15 other countries worldwide. We had over 400 vendors supplying parts from all over India I joined the IBM manufacturing plant in 1969. Initially, IBM used to re-condition large mainframe computers. Then around 1973, we started manufacturing IBM Machines by sourcing detail parts from all over India as well as complicated importing from IBM vendors outside India. But due to government policy, IBM closed its operations in 1978. Then in 1986, I started my own venture called Virtual Computers Pvt. Ltd., manufacturing personal computers (PCs) by sourcing detail parts from Singapore. I used to assemble motherboards and add-on cards at the Mumbai factory. The duty difference in detail parts imports and finished products import was as high as 60% initially. Hence, at that time, many companies sprung up all over India, manufacturing PCs. When networking products started appearing in India, I convinced D-Link Taiwan, a multinational company, to start manufacturing in India by taking advantage of the duty difference. In 1993, I shifted the factory to Goa as we needed a large area to use SMT lines. I formed a new company, SMARTLINK, and offered as much as 51% stake to D-Link Taiwan. In 1995, the name changed to D-Link India from SMARTLINK. Unfortunately, the Taiwanese Chairman Ken Kao felt sick and moved to the US. The new management was more sceptical, and invested only 19%. After two years, they raised it to 40%. It was only when they realised the latent potential that they raised the stake to 51%. D-Link products were all active networking products. However, as I had lots of experience in the passive range of products, I wanted to introduce SCS products. But Ken Kao was not comfortable using the D-Link brand for this, and asked me to use my own brand. Thus the Digilink brand was conceived. In 2005, D-Link Taiwan chose to become a brand products sales & marketing company. All R&D and manufacturing operations ceased, and a new company called Alpha Network Ltd was formed. Since import of detail parts from D-Link Taiwan was also stopped, we in India started sourcing detail parts from China and Taiwan suppliers. This ensured a huge advantage in price. Meanwhile, our passive products continued to be 100% manufactured here under the Digilink brand. Because we had a large manufacturing base, we started manufacturing other products as well. We entered into a JV with Gigabyte and began manufacturing motherboards. The business of D-Link and Digilink became 50:50. As the D-Link Taiwan parent company became a brand products trading company worldwide, both Ken Kao and I felt it was better to split the business for future growth, with one company in manufacturing with me holding the majority stake with the Digilink brand; and one product trading company - the D-Link brand with D-Link Taiwan holding the majority.

So in 2008, D-Link India de-merged by changing its name back to SMARTLINK and continued manufacturing Digilink SCS products and all other products using SMT lines. All the stock of D-Link brand products were transferred to a newly formed products trading company, D-Link India. Business continued in SMARTLINK via manufacturing of Digilink passive brand products. Having 6 SMT lines in active products, SMARTLINK introduced the DIGISOL brand in 2009. Having a large manufacturing base, SMARTLINK also introduced tablets and motherboards. The SCS business became No 1 in channel sales in India as it had a large manufacturing base besides having its own patents.

In 2011, Schneider Electric, a renowned French company in SCS products acquired the Digilink brand with all manufacturing, sales & marketing operations. We continued manufacturing all kinds of active products in the DIGISOL brand along with other products. As we parted off the Digilink brand's SCS business to Schneider, D-Link India Trading Company entered the SCS market by importing finished products from China. In five years, the Digilink brand lost its channel business to D-Link. So we decided to enter the fray after a five-year hiatus. Instead of getting China products and trading, we chose to manufacture the latest patented products by forming a joint venture with a company having the latest patents. Then in the fourth quarter of 2016, we reentered the SCS products space again by manufacturing higher grade patented products. A new manufacturing company was formed by taking a foreign partner having a lot of latest patents in SCS products. To simplify operations, SMARTLINK became a Holding company with assets and cash. The business split in three independent units offering scope to expand – Digisol SYSTEMS (a brand products company); Telesmart SCS (for SCS products in copper and fiber having a foreign company as partner); and Synegra EMS (for all kinds of active products manufacturing, and with large space for SMT lines, soldering lines, and assembly lines). DIGISOL, our brand products company, sources products from Synegra and Telesmart, as well as worldwide suppliers.

Tell us about your passion for passive product manufacturing
After the JV with D-Link Taiwan, we started manufacturing active products in India. But I was also in passive products, having a JV with Sapphire, the UK-based company. After introducing active products, I introduced passive products by manufacturing under the D-Link brand, as had prior experience. Ken Kao was not happy to use the D-Link brand for passive products. As such, D-Link Taiwan is a multinational with more than 14 offices and with worldwide sales in more than 50 countries in only active products even today. Therefore, I introduced Digilink, my brand of SCS products.

Until the Government of India announced the second edition of production-linked incentives (PLI) schemes across 10 key sectors, Indian manufacturers were losing out to traders who were simply importing finished products or SKD from countries like China. Your comments…
We all know that Indian manufacturing is nothing but importing majority of detail parts from up countries, manufacturing some parts locally, assembling & testing of products, and offering after-sales support to customers. The costs for test equipment in case of some products like fiber runs into crores of rupees. It doesn't benefit manufacturers like us at all. On some products like switches, the basic custom duty being 10% is net saving. You're better off importing as the manufacturing cost is quite low. Once said that, the Government's PLI scheme is fairly encouraging. But once manufacturing of large volumes starts, and volume of consumption of detail parts increases, manufacturing of detail parts will happen in India automatically, as large volume of local requirement helps detail parts manufacturing. We too will start manufacturing some detail parts instead of importing.

Why did a reputed multinational company like Schneider Electric, which acquired a successful brand like Digilink fail to impact the market? What caused the fall of such a big multinational?
After Schneider Electric acquired the Digilink brand in SCS products, manufacturing in India almost all products from components level, D-Link India's new management decided to enter the passive products line in India by importing from China (China produces outdated patents. It's worth noting that once a patent is 20 years old, anyone can manufacture it, even in India). Schneider, having acquired our patents, continued to manufacture here. Schneider could not compete with D-Link's pricing, and exited from the network connectivity structured cabling business (Digilink) in India. 

Is that why you decided to reenter the market after five years?
Since I possessed expertise in manufacturing, I decided to reenter the passive products line by manufacturing. As I had offered my products patent to Schneider Electric while parting with the Digilink business, I decided to take a Taiwan ODM supplier as our partner, having many patents of SCS products in Taiwan. We established a new company, Telesmart SCS Ltd., and invested in tooling, moulds, test equipment, etc., and started manufacturing in Goa.

To what extent (if any) has the PLI scheme helped Indian manufacturers such as yourself negate the impact of importers.
The PLI scheme will help all manufacturers. Today, we are getting more enquiries to manufacture products and so we are expanding and getting the latest SMT lines to take care of detail parts of very small size. This is the best support we have received from the Government. Let's wait for a year or two years to see the results.

The Government's failure to impose heavier import duty must have been a mitigating factor in the industry's predicament…
After the WTO agreement on IT products, importing became duty free, and it became difficult for the Government to impose duty. I feel at least the recentproducts such as FTTH routers and WiFi mobile phones should have attracted duty in order to encourage manufacturing in India. I must admit here that I have not gone through the details of the agreement.

Can you shed some light on DITT? Empowerment of the next generation must be something you feel deeply about…
In a bid to empower our partners and system integrators across India, we launched a certification and training institution, DITT - DIGISOL Institute of Technical Training. The institution aims to create value for all our network engineers, channel partners, and ISPs by consistently delivering quality training programmes which are always in sync with the market demands. DITT comprises of 8+ online training programmes that cover industry-trending topics like FTTH, structured cabling solutions for tomorrow, switching and wireless solutions, etc. It comprises both free and paid training.

The objective of these training programs is to enhance the knowledge of our T2 partners on the latest technological trends and to introduce them to a wide range of products that DIGISOL offers. DIGISOL has been on the forefront of empowering partners, system integrators, and ISPs/MSOs across India by conducting various training programmes under DITT. Even during the time of unprecedented uncertainty, the company took the responsibility to empower all the partners by conducting online training programmes.

Tell us about your recent product developments and offerings in manufacturing for your brand company DIGISOL?
The demand for FTTH products has grown enormously in recent years considering the increasing demand for high-speed internet. Our endeavour is to offer the bestin-class wireless products that offer high performance, connectivity, and are manufactured in India. We introduced our bestselling FTTH products - DG-GR1321 & DG-GR6010 XPON ONU routers as 'Manufactured in India' by assembling detail parts. DG-GR1321 is designed to fulfil FTTH and triple play service demands of network operators, while the DG-GR6010 ONU modem is designed to fulfil FTTH ultra-broadband access request of home and SOHO users. We are also launching our bestselling switches that are made in India. We have introduced many Made in India products previously under the passive networking range of products, and with the launch of these GEPON products, we aim to strengthen our foothold and increase our market share. 

Kamalaksha Rama Naik, better known as K.R. Naik, is an Indian Industrial Engineer, and an IT networking industry veteran with experience of close to five decades. Two decades back he was recognized as Father of India's IT Networking Industry due to his pioneeringspirit in Manufacturing Networking Products in India for nearly 3 decades. He also played a key role in creating the Channel Distribution in IT Networking Products market and developing the Channel Ecosystem in India.

Over the years, he has pioneered several new businesses and distribution models as early as 1990 when IT was a nascent industry, and the concept of an IT Distribution Channel was just conceived. He is credited for giving India its first indigenous IT Networking Products manufacturing company – SMARTLINK Network Systems Ltd., which has been a local manufacturing success story for over three decades. 

Mr. Naik has been instrumental in introducing Channel Distribution of products of well-known global IT Enterprise Products brands Cisco & Foundry. He had joint ventures in manufacturing products locally with D-Link Corporation in Networking Products, GIGABYTE for motherboards, LANNER for Industrial IT Products and SAPPHIRE UK for SCS products. D-Link India R&D operations was in Bengaluru, supporting D-Link Corporation from 1997 and later closed operation in 2011.

Mr. Naik was born in Karwar, Karnataka on 19th November 1947. He completed his schooling in Karwar and later shifted to Mumbai. He is a mechanical engineer with a P.G. Diploma in Industrial Engineering and Licentiate in Plastic Engineering. He did a Business Management course from Jamnalal Bajaj Institute in Mumbai, which was sponsored by IBM. He began his IT career with IBM's manufacturing plant in 1969 at Mumbai, starting as a Mainframe Peripheral Assembly Engineer, and thereafter worked in various departments including product development and sourcing. During his IBM stint he had best opportunity to learn and develop various types of detail parts of an indigenous developed line printer.

After IBM closed India operations in 1978, he joined ORG System Ltd., where in he was one of the 10 team members who designed and developed prototype first indigenous line printer with a speed of 1000 lines per minute in year 1981. After the IBM India operation closure, many mainframe computer maintenance companies were formed in India but started facing problems to procure spare parts of peripherals. In 1982 he started precession parts manufacturing and reworking of worn out parts under Modern Components Tooling Pvt. Ltd. (MOTCO). He used his IBM experience in developing and reworking very costly and complicated parts of IBM peripherals locally.

As personal computers started appearing in the market, he decided to manufacture PCs in Mumbai and obtained the License to Manufacture Personal Computers by forming new Company VIRTUAL COMPUTERS PVT. LTD. He imported HOLLIS USA Soldering Machine to manufacture motherboards and add-on cards in Mumbai and offered 'VIRTUAL COMPUTER' a Personal Computer Brand in India.

In 1990 as Networking Cards started appearing in market, he decided to take distribution of D-Link Brand in Mumbai and started offering the D-Link brand of Network Cards by importing from Taiwan along with Personal Computers.

In 1993 for expansion he shifted to Goa, to setup a large manufacturing unit under SMARTLINK with intention of Joint Venture with D-Link Taiwan. Then

in 1995 D-Link Corporation joined as partner and the company name was changed to D-Link India. Over the years, the manufacturing operations expanded to 8 SMT lines catering to various products. Further, he started manufacturing SCS products locally with Sapphire UK, who were ODM suppliers to many worldwide branded companies. He introduced DIGILINK an indigenous local brand in Passive Networking (Structured Cabling Systems) with own developed patented contacts design of KEYSTONE.

As D-Link Taiwan in 2005 had become a Brand Products Trading Company and started sourcing products from ODM suppliers, D-Link India also started sourcing products of parts directly from many ODM suppliers in Taiwan & China. As Indian operations had become more independent, it was decided to part the joint venture and a formal demerger with the JV partner resulted in changing the company name back to SMARTLINK from D-Link India, while sharpening its focus on its Indian brand DIGILINK SCS Products by manufacturing in Copper and Fiber. Having a large manufacturing base, the company also started manufacturing large quantity motherboards and introduced its Indian brand DIGISOL in Active Networking products line in 2009.

Today under SMARTLINK HOLDINGS which is main BSE/NSE listed company, there are three brand companies:

1. SYNEGRA EMS Company, where all Active Products are manufactured to supply EMS and ODM products to brand companies.

2. TELESMART SCS Company, where all Passive Products in Copper and Fiber are manufactured, to supply to brand companies.

3. DIGISOL SYSTEMS, the Brand products company with sales, marketing & all India support.

Mr. Naik is Chairman and Founder of his own brand company DIGISOL SYSTEMS. He is a former President of Manufacturers' Association for Information Technology (MAIT).

SMARTLINK HOLDINGS LTD. 
SMARTLINK is a BSE | NSE listed company with expertise of IT networking products marketing. Established in 1993 in Goa, it is a forerunner in the field of IT networking products manufacturing, having a large manufacturing base in Goa. SMARTLINK played an instrumental role in introducing the global IT brand Cisco Systems and Foundry (in high-end switching) in India through channel distribution, besides having joint ventures with leading brands like D-Link (in Networking Products), Sapphire UK (in structured cabling products), Lanner (in industrial products), and Gigabyte (in motherboards), by manufacturing large volume products at its Goa Factory. Nonetheless, following the WTO agreement, all these partner companies that were well established in India lost their manufacturing benefits, and had to part ways with SMARTLINK. SMARTLINK, however, had a large manufacturing base and expertise in manufacturing all kinds of  IT  products. 

It continued introducing local brands in motherboards, tablets, and networking in the Active products line like routers, switching, Wi-Fi, and all kinds of products in copper and fiber in SCS. Recently, SMARTLINK has become a Holdings company with assets and cash, by splitting all operations into three independent units and giving scope of expansion individually. The three companies – SYNEGRA EMS, TELESMART SCS and DIGISOL SYSTEMS are independent of each other.

SYNEGRA EMS LTD.
SYNEGRA is a 100% owned EMS products manufacturing company of SMARTLINK HOLDINGS LIMITED. It has a large manufacturing setup of SMT lines, soldering lines, assembly & testing lines.

It manufactures  all kinds of products – from PCB assemblies like motherboards, add-on cards, the latest FTTH and Wi-Fi products, telecom products, mobile phones, automotive electronic products and Defence applications products. SYNEGRA sources detail parts from local suppliers as well as from well known companies worldwide. SYNEGRA offers locally manufactured Active Range of networking products by sourcing detail parts from Taiwan and China to DIGISOL SYSTEMS, as Made in India products.

www.synegra.com

TELESMART SCS LTD.
TELESMART is a subsidiary of SMARTLINK HOLDINGS LTD. with a Taiwan partner having several patents in SCS products in copper connecting parts with high bandwidth applications engaged in the manufacturing of a wide range of SCS ODM products to supply brand companies. as of now, it supplies the DIGISOL brand to DIGISOL SYSTEMS. TELESMART also has assembly and testing equipment in the fiber range of products. Fiber products are manufactured and supplied to brand companies like DIGISOL SYSTEMS LTD. The company is also looking for contract manufacturing for its fiber products. TELESMART'S SCS products portfolio includes end-to-end cabling solutions in copper from Cat 5e, Cat 6, Cat6A, STP, FTP, Patch Panels, Patch Cords, and Face Plates. The fiber range includes all kinds of Fiber Patch Cords, Pigtails with performance certificates, and LIUs.

www.telesmartscs.com

DIGISOL SYSTEMS LTD.
DIGISOL SYSTEMS came into existence after SMARTLINK's JV with the Taiwanese company D-Link ended in 2009. With a large manufacturing base,

an all-India distribution line, and two decades of experience in manufacturing & marketing, it made perfect sense to introduce a new local brand called DIGISOL. Today, DIGISOL is a trusted Made in India IT networking brand for all large volume products in the Active range, including FTTH and Wi-Fi products, routers, and switches. In the Passive range, it has Copper and Fiber products. 

It is a wholly owned subsidiary of SMARTLINK HOLDINGS LTD. DIGISOL SYSTEMS is the only India-based IT networking brand products company that has a strong pan-India presence, with sales representatives in 50 cities, 10 branch offices, 45 distributors, 63 service support centres, and over 1,000 partners. DIGISOL's endeavour is to consistently offer innovative future-ready products that aim to meet consumer expectations in the IT networking space, by sourcing locally from SMARTLINK subsidiaries SYNEGRA EMS and TELESMART SCS or by sourcing low volume  products from worldwide.

For more information visit:
www.digisol.com