After KPMG flak, OnMobile CEO resigns

Founder takes responsibility for 'weaknesses in some processes' the auditor alleged took place in the company during his tenure

Beryl Menezes l Mumbai

Arvind Rao, founder, MD and CEO of OnMobile, India's number one mobile value-added services (VAS) provider, has resigned, following a KPMG probe that confirmed faulty corporate practices under his stewardship. Shares of OnMobile closed 3.59% down at `33.60 on the NSE on Monday, well before Rao's exit was announced. Barely a week ago, Rao was accused of misappropriating company funds towards a private venture, something that he denied. Even the company said Rao "was not being investigated by the board for any misappropriation of funds." But the OnMobile board ordered a probe nevertheless as talk emerged that the company's head of mergers and acquisitions, Sandhya Gupta, may have also been involved. Although insider talk suggested she was allegedly fired a few weeks ago, it was said she left on her own volition. Referring to Rao's exit, a company statement said investigations "had identified weaknesses in some processes. The company has initiated steps to rectify all the weaknesses." Labelling the crackdown "corporate governance procedures" and insisting that OnMobile did not suffer any losses, the statement said Rao resigned with immediate effect and the board accepted his decision.Rao was said to focus on international business while an operations committee, comprising chairman H H Haight, who is also an early investor in OnMobile, and audit committee chairman Naresh Malhotra, would look after the day-to-day affairs.Following Rao's resignation, Mouli Raman, co-founder and executive director (and the whistleblower), will now act as interim MD and CEO until the search for a new CEO ends. OnMobile's India business has been declining even as its foreign business flourished. For the third consecutive quarter, India revenues declined 3.4% in January-March to `84.4 crore. During the same period, however, its international revenues grew 14%. In an interview with DNA Money earlier this month, Rao had said, "OnMobile does not find Indian operations feasible and the company expects 80% of revenues to come from abroad in the next two years." 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."