Update: How has the stock market reacted to this news? Well, the OnMobile stock closed at Rs 33.60 on the BSE yesterday. Now it’s up to Rs 36.30 (at 1309hrs IST)
Yesterday: OnMobile Global has said that Arvind Rao, its CEO and MD and one of the promoters of the company, has resigned, and Mouli Raman, co-founder and Executive Director is taking on the role of interim Managing Director, while the company searches for a new CEO.
At the same time, the company has acknowledged that a special review completed by its legal advisors, Amarchand Mangaldas & Suresh A. Shroff, Advocates, duly supported by KPMG, has identified “weaknesses in some processes.” The company hasn’t clarified what these weaknesses were, but says that it has taken steps to rectify these weaknesses, that “strong alternate controls have ensured that the Company did not suffer any loss”, and that “Recognizing that these weaknesses took place during his tenure, Mr. Arvind Rao, has submitted his resignation”.
The company is being quite vague about what these weaknesses in some processes were, and this is fodder for further speculation: this announcement (read the press release below), follows a statement earlier this month, wherein OnMobile denied media reports saying that Rao was involved in misappropriation of funds, and an enquiry being conducted by an external auditor for it. Those reports surfaced following a change initiated by the companys board, wherein Rao was said to be looking at its international business, and an operations committee comprising of the board Chairman Haight and audit committee Chairman Naresh Malhotra formed an operations committee looking into the India business. Note that two CFO’s had resigned at OnMobile in the last six months: first Rajesh Moorti, the CFO who had taken the company public, had put in his papers in January, and then Amit Rastogi resigned from the company a few months after joining. OnMobile’s COO and President Sanjay Uppal has also moved to the US, “in an advisory capacity in the short term”, and Sandhya Gupta, its M&A Head, resigned earlier this year.
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Bangalore, India – July 9, 2012: As previously reported, OnMobile a leader in mobile VAS has been going through a review, of its corporate governance procedures. Based on a recently concluded special review completed by our legal advisors, Amarchand Mangaldas & Suresh A. Shroff, Advocates duly supported by KPMG, the Board of Directors today took on record the report submitted and noted that the review had identified weaknesses in some processes. The Company has initiated steps to rectify all the weaknesses.
While the review has identified some weaknesses, strong alternate controls have ensured that the Company did not suffer any loss. Recognizing that these weaknesses took place during his tenure, Mr. Arvind Rao, has submitted his resignation from the position as Managing Director and CEO with immediate effect and the Board has accepted the same. The Company recognizes his valuable contribution as one of its founding promoters.
Mouli Raman, Co—founder and Executive Director will take on the role of interim Managing Director. The Company has also initiated a search for a new CEO.
Mr. H H Haight, Chairman of the Board, speaking after the Board meeting said “I respect Arvind’s decision. Arvind has contributed greatly to OnMobile’s growth. As a company we are committed to upholding the highest corporate governance standards and we seek the continued support of all the stake holders to help OnMobile realize its true potential.”
OnMobile [NSE:ONMOBILE], headquartered in Bangalore, India, with services in 52 countries, is the leading Value Added Services [VAS] company for Mobile, Landline and Media Service Providers. OnMobile offers an innovative array of products in Mobile Entertainment, Search and Discovery, Data Services and Mobile Social Networking and is a leader in the VAS Managed Services industry. The products span a range of channels including SMS, Voice, Video, WAP, Web, USSD and On-Device Portals, enabling OnMobile’s 92 telecom and media customers to generate high revenues. With over 1600 employees worldwide, OnMobile has offices around the globe, including London, Paris, Silicon Valley, Miami and Seattle. www.onmobile.com