An e-mail questionnaire to OnMobile spokesperson on the latest status of these VC investors did not elicit any response at the time of filing this report.
The stake sale by Smallcap started a day after OnMobile denied rumours about the alleged fraud and speculation that its board has ordered a probe against the company CEO, Arvind Rao, for fund misappropriation and diversion to another organisation promoted by him.
"The company denies all such rumours and allegations, which are baseless and devoid of factual accuracy. Arvind Rao is not being investigated by the Board for any misappropriation of funds. Arvind, while continuing as managing director, spearheads the international business. To ensure that the rest of the business gets adequate focus, the day to day operations of the company are being overseen by a sub-committee of the Board," a company statement issued last week had said.
On Sandhya Gupta's exit, the company stated, "She resigned for purely personal reasons earlier this year. Her departure was not a result of any allegations of wrongdoing." On the appointment of external consultants, the company said, "Hiring of external consultants over the past year have been pursuant to the "OnMobile 2020" strategy. The external consultants have been engaged to review, rework and strengthen the company's corporate governance policies, including internal control mechanisms, procurement-to-payment processes, risk management framework, succession planning etc."
The company has been in news for quite some time due to management flux as well as not too bright financial performance. In May 2012, the company appointed a new CFO, Rajesh Kunnath, after two CFOs -- Rajesh Moorti and Amit Rastogi -- quit in a span of six months. This was preceded by a management change earlier when Arvind Rao stepped down as the company's chairman, but continued as the CEO and managing director.
Moreover, the company continues to face pressure on its bottomline, even though its revenue continues to show an uptrend. For the fourth quarter ended March 31, the firm saw its consolidated net profit shrink 82 per cent over the year-ago period and 73 per cent, compared to the previous quarter ended December 31, 2011, to Rs 4.8 crore. This was even as the revenues clocked double digit growth. For the year ended March 31, the firm clocked 18.6 per cent growth in consolidated revenues to Rs 638 crore even as net profit shrunk over 7 per cent to Rs 83 crore. At the current market cap of Rs 347 crore, OnMobile is trading just over 4x its FY12 net profit.
(Edited by Prem Udayabhanu)