The Indian government is looking into matters related to the sudden resignation of its co-founder MD and CEO Arvind Rao, report Mint and The Economic Times. Corporate affairs minister M. Veerappa Moily has sought a report on the company from the Registrar of Companies.
Following an Economic Times report which suggested that Rao was diverting funds to another entity promoted by him, OnMobile had denied that Rao was being investigated by the Board for any misappropriation of funds. Yet, a week and a half later, it acknowledged that “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.” Following this, Rao resigned. Forbes India had reported on Monday that in March, OnMobile’s then CFO Amit Rastogi had sent a letter, co-signed by co-founder Mouli Raman, pointing out financial irregularities amounting to Rs 12 crore, raising questions about the Rao’s involvement.
Despite claims that “strong alternate controls have ensured that the Company did not suffer any loss”, OnMobile hasn’t yet come clean on what exactly were these weaknesses, which led to its CEO resigning, and which processes are now being fixed. Note that there were allegations of misappropriation to certain promoter group companies.
Note that OnMobile had clarified that Sandhya Gupta, the company’s M&A head had resigned earlier this year for personal reasons, and said that “Her departure from the Company was not a result of any allegations of wrongdoing”. Public filings with India’s Registrar of Companies that MediaNama has looked up, indicate that Gupta was a director on the board of some of the promoter group companies, along with Rao, but this is not indicative of any wrongdoing. Details we’ve gleaned about the promoter group companies:
Riff Mobile (shares were pledged)
Incorporated: 2005
Directors: Arvind Rao, Sandhya Gupta
Shareholding: 10000 shares (authorized share capital of Rs 10 lakhs). Arvind Rao holds 9900 shares, Sandhya Gupta holds 100 shares
Performance in FY11:
- Turnover of Rs 53.28 lakhs, down from Rs 2.26 crore in FY10
- Operating Expenses of Rs 3.15 crore, up from Rs 2.50 crore in FY10.
- Loss before tax: Rs 2.61 crore, up from a loss of Rs 24 crore in FY10.
Mobile Traffik (Is a subsidiary of Riff Mobile)
Incorporated: 2002
Directors: Clint Cabral. Sandhya Gupta resigned from the board of Mobile Traffik on the 12th of June 2012, while Ramesh Shankar Vetale was appointed as director on the board. Arvind Rao and Sandhya Gupta were its first directors. Sandeep Ganguly, one of the seniormost execs at OnMobile had been a director at the company, signing on in 2009, and resigning on 31st January 2011.
Shareholding: Initially, 5000 shares each were held by Gupta and Rao. In March 2010, the authorized share capital of the company was increased to 550,000 shares. Riff Mobile was allotted 500,000 shares of Mobile Traffik.
Performance in FY11:
- Turnover of Rs 1.52 crore
- Expenditure of Rs 2.13 crore
- Loss after Tax: Rs 60.84 lakhs
Oskar Habitat (shares were pledged)
Incorporated: 2009
Directors: Sandhya Gupta, Arvind Rao
Shareholding: 10000 shares. Arvind Rao holds 5000 shares, Sandhya Gupta holds 5000 shares
Note: The company received a gift of shares of Onmobile Global Limited amounting to Rs 53,03,50,000 from one of the directors of the company, during the financial year ending 31st March 2011. The Directors report states that “The Company is yet to commence its commercial operations.”
*
Note: please refrain from making any abusive/libelous comments. These will be moderated if flagged or when noticed by moderators.
