OnMobile Global Limited


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OnMobile Global Limited is India’s largest value-added service (VAS) company.[2][3][4] The company offers contest management, content aggregation and distribution, voice short codes, mCommerce solutions, missed call alerts, multimedia push services, mobile advertising, mobile search, ringtones, ringback tones, personalized music greetings, mobile media portals, phone backup, voiceportals, and voice SMS.

OnMobile is headquartered in Bangalore, India where it has an R&D and network operations center. OnMobile also has offices in Delhi, Mumbai, Dhaka, Jakarta, Kuala Lumpur, London, Paris, Seattle, Singapore and Sydney.

Originally incorporated in September 2000 in California under the name Onscan Technologies India Private Limited as a spin off from Infosys, the company relocated to India.[5][6][7] The company changed its name to OnMobile Asia Pacific Private Limited in April 2001 and finally to its current name in August 2007.[7] OnMobile became the first Indian telecom VAS company to go public when it was listed on the Bombay Stock Exchange and the National Stock Exchange of India on February 19, 2008.[8]

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OnMobile Global Limited

  1. 1. OnMobile Global Limited • Annual Report 2007 - 08
  2. 2. 01 Not Just Hello... 08 Message from the Chairman 10 Company Snapshot 12 Financial Snapshot 14 The MVAS Ecosystem 15 Board of Directors 16 Corporate Information 17 Our Leadership Team 19 CEO and CFO Certificate 20 Report on Corporate Governance and Shareholder Information Contents 33 Directors’ Report 44 Management Discussion & Analysis 49 Report of the Auditors 52 Financial Statements 74 Balance Sheet Abstract 75 Report of the Auditors on Consolidated Financial Statements 76 Consolidated Financial Statements 95 Statement Regarding Subsidiary Companies 96 Notice
  3. 3. The mobile is an integral part of our lives today. The mobile is the only computer most people will ever have, which allows you to talk, interact, engage in commerce and do much more. At OnMobile, we enrich, empower and enhance your life through this mobile interactivity, by enabling you to use the mobile beyond just talk - Not just hello... Enriching lives by making technology really simple to use - choose the ringtone that identifies you, from over millions of songs or get ball-by-ball multi-media updates of your favourite cricket matches. Empowering lives by ensuring that you are in control - buy movie tickets, vote for your favourite contestant on a TV program, get the best shopping deals or get the best prices for your commodity. Enhancing lives through innovations, be it caller ringback tones, searching for and listening to your favourite songs on demand or safely backing up your precious pictures on the network. Such has been the power of this idea that the business size has become over $ 2 billion dollars, in India, in less than 8 years. And this is just the beginning. We are just beginning to know you. As billions of people are starting to use the mobile, the opportunities to empower, enrich and enhance are limitless. As we begin to offer our services in more and more countries across the world, more lives will be touched in more ways than one. Welcome to the business of touching lives, touching you.
  4. 4. Last ball, Rajasthan Royals need one run to win. Will Balaji get him? Dhoni has everyone up! Oh this is so exciting…Balaji comes, Sohail swings, and hard and….Rajasthan Royals are the IPL 20-20 champions! This is sensational stuff! This is awesome! 2
  5. 5. Last ball Royals Now consider this update on your phone. 'Rajasthan Royals won the IPL 20-20 on the last ball. ' How boring! Ask any cricket enthusiast about the delight of listening to cricket commentary when on the move. You cannot replace it. And now you can hear this on your mobile. Because your mobile is not just to make calls. The youth today are using it to date and to chat. Others turn to the mobile for songs, news alerts, cricket updates and more. And leading this revolution of bringing life to your lives is OnMobile. Ring tone and caller ringback tones are a way of life now. But that's not all. By combining SMS, IVR with speech recognition and WAP technologies, ensuring multilingual support and offering services over GSM as well as CDMA, OnMobile ensures a rich and delightful user experience, making services more relevant and easy to use. Over a million songs are searched and accessed every day, across the globe. In Trichy, call and you will be greeted in Tamil. You can also download songs, hear horoscopes, get updates on matches, weather and news in Tamil. Local language. Local flavour. On your mobile. In Malay in Malaysia, in Mandarin in Singapore. What began as a fun activity has now become a habit. OnMobile is enriching millions of lives each moment, every moment. awesome win 3
  6. 6. and aaya mera gana pas Agar aapko toh mu jhe jitan e ke liye , SMS … aur bh e jiye ya 4 505 ph 262 ir 60 ph 1p ar on e ki j iye 50 54 64 6 01 .
  7. 7. vote dial kijiye sms karen And the winner is ..! You picked your choice. You decided the winner. It's the power of you. This is true empowerment. Reality shows rule the roost today in the entertainment world. And mobile phones have become tools of empowerment. Some of the biggest shows on Indian television - KBC, Indian Idol, Fame Gurukul, Kya Aap Panchvi Paas Se Tez Hain, Dus Ka Dum and many, many more - are successful because of you, and because of the mobile. Imagine any of these without the power to vote or participate! And this empowerment is not restricted to reality shows. By leveraging Voice, DTMF, WAP and SMS interaction modes, OnMobile has reinvented the way M-Commerce transactions are done. A farmer gets prices from the mandi directly on his mobile. A moviegoer finds the availability of tickets and books them from his phone. Paying utility bills. Booking airline and railway tickets. The mobile revolution is on. Shopping, commerce, matrimonial services. On mobile, thanks to OnMobile. Empowering you. 5
  8. 8. You're beautiful. You're beautiful. You're beautiful. It's true. ('You're beautiful' by James Blunt) 6
  9. 9. You're beautiful Tring Tring is passé. These days, people call and hope that the other person does not answer. That's because when you call now, there is lovely music playing or a score update informing you about the latest India-Australia ODI, instead of the classic tring, tring. OnMobile's innovations have taken the mobile to another league all together. M-Search is one such innovation. Search for Jodhaa Akbar. Search for Madonna's Hard Candy. And it's intelligent searching. You don't need to enter Mission Impossible (MI). MI will get you the result equally efficiently. You make a spelling mistake and we will ignore it. To facilitate a voice search, we have in-built voice modulation and filters to recognize different accents and tones and by-pass pronunciation errors. And you can search across platforms, SMS, Voice or WAP. Across 10 languages. And more. Our Phone Backup facility allows you to safely copy and store in the network all your personal data including pictures, contacts, messages and applications stored in the phone. Apart from having a portal and customer care interface, Phone Backup allows for automatic backup and can be upgraded with new formats. OnMobile is enhancing your lives in many such ways. Expect more from us. by James Blunt 7
  10. 10. Message from the Chairman To all OnMobile stakeholders and loyal investors, This is our first annual report as a listed company, and we welcome our entire base of shareholders, new investors and stakeholders to the exciting world of Mobile Value Added Services (MVAS). This sunrise industry has emerged from a small fledgling sector back in 2001 when OnMobile started operations in India, to an industry which is estimated to exceed Rs. 8,000 crores in 08-09! This is as exciting as the start of the internet saga in the late 90s, when global companies such as Yahoo, Amazon, eBay emerged and changed the way in which consumers worldwide interacted with, and leveraged the capabilities of the internet. 8
  11. 11. We fully intend to play a similar role daily on high scale operations and in shaping and leading the MVAS planning the future to maintain the industry as it gains momentum with growth potential of this industry. customers in India, and in new In the past 12 months, we have consumer markets around the acquired two French companies, globe. The mobile phone is fast which give us access to cutting edge becoming the interactive channel of MVAS products and new data choice for billions of consumers services platform technology. We worldwide. Our mission is to are excited about leveraging our innovate and launch new services Indian cost structure and software which allow consumers to change skills to build out the full global the way they live and interact, via potential of these acquisitions. mobile phones. Our zeal to excel in product Our recent IPO in February 2008 innovation, customer thought sailed through despite most leadership, intelligent M&A and challenging market conditions, and financial performance remains intact has provided us a strong platform after all these years. OurVision 2010 with which we will expand in and program, to become one of the outside India, organically and leaders in the global MVAS industry inorganically. We are actively is under implementation. pursuing both these growth On behalf of all the shareholders, I avenues. The entrepreneurial would like to thank the entire OnMobile team which has taken us OnMobile team and customers, from startup to its current position partners, suppliers for their is largely intact after all these years, unflinching support over these and has been expanded and years. strengthened to capitalize on our industry leadership position. Our The future trajectory we are product and engineering teams are planning is challenging and exciting, hard at work developing new and I wish every one of you joins us products and services which will be in this journey together! launched this year, and we intend to maintain our past innovation track record and customer satisfaction experiences. Our customer account Arvind Rao teams are scaled up and in place, Chairman, CEO & co-founder working closely with customers 9
  12. 12. Company Snapshot • Interactive media solutions such as tele-voting, The Company Incorporated in the year 2000, OnMobile Global interactive programming, mobile auditioning and Limited (Company) is a leading provider of Mobile auctions. Value Added Services and products (MVAS) in India • Mobile commerce solutions like ticketing (movie with an expanding international presence. The and railway ticketing), utility payments and mobile Company's products are targeted at mobile marketing services. subscribers with an increasing focus on capitalising • Core business support solutions such as Phone on the convergence between wireless and wireline Backup and Pre-paid and Post-paid bill payments. telecommunications services, media, internet, mobile marketing and mobile commerce. The Company deploys these applications on its multi- modal platform, MMP 2500. This platform is a Product Portfolio carrier-grade system that effectively integrates The Company has a broad range of applications that multiple delivery modes and payments and are delivered by its customers, who are telecom subscription options for 2, 2.5 and 3G networks and operators and media companies, to their end-user handsets. subscribers, which enable them to personalise their mobile phones and thereby enhance user experience. Presence The Company is headquartered in Bangalore and has Key Products offices in Mumbai and Delhi in India. It also maintains The key products can be broadly categorised as offices in Dhaka, Jakarta, Kuala Lumpur, London, Paris, follows: Singapore and Sydney. • Network based in-call solutions like Caller The Company's customers include major Ringback Tones, Dynamic Voicemail and Missed Call telecommunications operators in India and in several Alert Service, etc. overseas countries. In addition to • Voice-based multi-modal portal which allows telecommunications operators, the Company also subscribers to access informational and markets its products and services to media entertainment content such as music, sports updates, companies, corporates, mobile handset news, stock and commodity price updates, in multiple manufacturers, content owners and advertisers. languages using speech-based navigation. Some of the key performance indicators of the • On-device client software applications. Company are as follows: 10
  13. 13. Operator ARPU Uplift 8-12 % Market Reach 390 million, including more than 100 million in international markets Total unique users 206 million Unique users / month 36 million Calls handled / month 5 billion RBT users / month 27 million Phone Backup downloads 22 million On-Device Portal downloads 4 million Content usage Via M-Search 200% increase • quot;V&D 100, Best MVAS Company Milestones in Innovation The Company has a track record of 2007, Indiaquot; by Voice & Data creating, developing and successfully • Amongst Deloitte Technology Fast 50 launching a large number of innovative India, 2007 software products. • Amongst Deloitte Technology Fast 2000-2003: Platform - Voice Portal 1.0 500 Asia Pacific, 2007 (English), Ring Tones, Infotainment • Amongst 100 IT Innovators 2007 by 2004: Indian Languages Model NASSCOM, India (3 languages), Ringback Tones ('RBT') Financial Performance 2005: Support for more languages, Live (consolidated) Audio Streaming,Ticketing During 2007-08, the Company recorded (Railways, Movies) a net revenue of Rs. 2,618.16 million, an 2006: Pricing innovations: Subscription, increase of 97% over the previous year. Not Enough Funds; Multimodal Support The earnings after tax of the Company including SMS,WAP, Multi-language WAP increased from Rs. 337.20 million in 2006-07 to Rs. 603.10 million in 2007- 2007-2008: M-Search (Voice & SMS), 08, an increase of 79%.The diluted M-Radio, RBT: Press * to copy, Mobile Earnings Per Share (EPS) increased from Investor Rs. 7 per share to Rs. 12, an increase of Awards and Achievements 71%. • Best VAS Partner Award 2007 by Airtel, India 11
  14. 14. Financial Snapshot 2003-04* 2004-05 2005-06 2006-07 2007-08 Particulars (Rs. in million) Financial Performance Net Revenue 172.64 409.46 826.17 1,329.72 2,618.16 Earnings before other income, depreciation, finance charges and tax 69.63 264.37 471.31 609.90 1,048.36 Earnings after Tax 43.08 140.06 247.79 337.20 603.10 Earnings per share (Diluted) (In Rs.)** 1 5 7 7 12 Financial Position Equity Share Capital 22.87 22.90 22.92 36.54 574.06 Reserves and Surplus 34.97 175.20 422.98 1,990.24 5,535.48 Networth 57.84 198.09 445.91 2,026.78 6,110.96 Gross Block 115.44 181.34 356.01 580.65 1,335.21 Net Block 102.33 123.45 213.01 292.20 795.34 Capital Expenditure 104.68 70.95 169.62 263.61 836.11 Investments 5.08 10.14 26.07 1,018.15 3,193.70 Net Current Assets (41.51) 70.76 230.20 512.47 958.49 Cash and Cash Equivalents 29.25 41.68 41.68 211.61 1,458.84 Total Assets 57.84 198.09 445.91 2,026.78 6,110.96 * 15 months ending March 2004 * * Adjusted for bonus issues in previous years 12
  15. 15. 603.10 79% 337.20 06-07 07-08 Earnings After Tax (Rs. in million) 2,618.16 97% 12 1,329.72 71% 7 06-07 07-08 07-08 06-07 Earnings Per Share (Diluted) (In Rs.) Net Revenue (Rs. in million) Stock Prices 650 20000 600 18000 550 500 16000 450 14000 400 19-02-08 07-03-08 31-03-08 OnMobile (lhs) BSE Sensex (rhs) 13
  16. 16. T h e M VA S E c o s y s t e m Mobile Value Added Services (MVAS) consists of all services beyond basic phone calls. Some common examples of MVAS include ring tones, ringback tones, news alerts, stock updates, contests, phone backup, televoting, mobile social networking, mobile advertising, M-Commerce movie ticketing, bill payment and pre-paid recharge. Typical ecosystem includes: Content Owners Develop and own content e.g. music, games, wallpapers etc. Content Collect and package different Aggregators kinds of content suitable for mobile platforms like caller OnMobile's Focus Space ringback tones, wallpapers, ring tones, news, etc. Application Service Develop and install Providers applications that allow easy access to the content and content - free applications, for the end users. Platform Providers Own the delivery platform and applications. Provide last mile access - Mobile allowing the end user to Operators download, listen or view the content on his phone. Bill the customer and pay the Content Owner, Aggregator, Application Service Provider and Platform Provider. 14
  17. 17. 1 Chandramouli Janakiraman Sridar A Iyengar H H Haight Arvind Rao 4 2 3 Executive Director Independent Director Non-Executive Director Chairman & Managing Director Prof. Jayanth Rama Varma 7 Naresh Malhotra Vikram Kirloskar 5 6 Independent Director Independent Director Independent Director 1 3 7 6 2 4 5 Board of Directors 15
  18. 18. Corporate Information Board of Directors Company Secretary Chairman & Managing Director D Srikiran Auditors Arvind Rao Executive Director Deloitte Haskins and Sells Chandramouli Janakiraman Chartered Accountants, Non-Executive Director Deloitte Centre, Anchorage II, Henry Huntly Haight 100/2 Richmond Road, Independent Directors Bangalore - 560025 Registered Office Jayanth Rama Varma Sridar A Iyengar No. 26, Bannerghatta Road, Vikram Kirloskar J. P. Nagar 3 Phase, rd Naresh Malhotra Bangalore - 560076 www.onmobile.com Board Committees Bankers Audit Committee The ICICI Bank Limited Jayanth Rama Varma Chairman ICICI Towers, 1 Floor, West Wing Naresh Malhotra Member st #1, Commissariat Road, Henry Huntly Haight Member Bangalore - 560025 Investor Grievances Committee Kotak Mahindra Bank Limited Vikram Kirloskar Chairman 2 Floor, West Wing, Naresh Malhotra Member nd 26 - 27 Raheja Towers, Chandramouli Janakiraman Member M. G. Road, Compensation Committee Bangalore - 560001 Sridar A Iyengar Chairman Citibank N.A. Vikram Kirloskar Member M. G. Road, Henry Huntly Haight Member Bangalore - 560001 16
  19. 19. OnMobile Leadership Team Sandeep Ganguly In addition to the Company’s whole-time directors, Arvind Rao and Chandramouli Janakiraman, following are also part of the leadership Head-Private Operators (India). He carries the overall responsibility team: for handling the private telecom operator market in India. He has over 12 years of experience in telecommunications industry. Kiran Anandampillai He received a Bachelor of Engineering degree in Electronics and Head-Consumer Products. He carries overall responsibility of Communication from Pune University and a Post Graduate Diploma defining and delivering products such as music, infotainment, sports in Business Administration in Marketing from the Indian Institute of and contests. He has over 14 years of experience in software and Management, Calcutta. telecommunication industries. He received Bachelor of Engineering degree from BMSCE, Bangalore in Telecommunications. Christy George Head-Network/In-Call Products. He carries overall responsibility of Pratapa Bernard defining and delivering Network/In-call products such as ringback Head-Marketing. He carries the overall responsibility for defining and tones, missed call alerts, dynamic voice mail system etc. He has over executing Corporate and Product Marketing functions. He has over 15 years of experience in software and telecommunication industries. 17 years of experience in the IT and Telecommunications industry. He He received Bachelor of Technology degree from IIT, Mumbai. received a Bachelor of Engineering degree from Bangalore University and also holds a Post Graduate Diploma in Marketing Management. Sandhya Gupta Head-Mergers and Acquisitions, Investments and Strategy. She carries Sanjay Bhambri the overall responsibility for mergers and acquisitions and strategic Co-Head, International Business Development. He is currently in charge of customers in Asia Pacific, Far East, Middle East and investments for the Company including international acquisitions, Africa. He has over 13 years of experience in Sales and Marketing. minority investments and equity related partnerships and joint He received his Bachelor of Science degree in Computer Science ventures. She has over 10 years of experience in financial services from Kurukshetra University, Kurukshetra and Masters of Business and capital markets industry. She received a Bachelors of Arts Management, MS University of Baroda,Vadodara. degree from the University of Rajasthan and a Master of Business Amit Kumar Dey Administration degree from the University of Mumbai. Co-Head of International Business Development & Alliances. Krishna Jha Amit played a key role in establishing our business in India, and is Head-Mobile Data Products and services. He carries the overall currently in charge of Sales and Business Development in markets responsibility of managing the Mobile Data Products and services unit west of India including the Americas and Europe. He is also handling of the Company. He has over 10 years of experience in software and strategic alliances with large global distributors and resellers for telecommunication industries. He received a Bachelor of Commerce our products and services. He has over 17 years of experience in degree from St. Xavier’s Calcutta and he also holds a Post Graduate the manufacturing and telecommunications industry. He holds a Diploma in Business Administration from IBS, Hyderabad. Bachelor of Engineering degree from Jadavpur University, Calcutta, and a Post Graduate Diploma in Business Administration from the Rajesh Moorti Indian Institute of Management, Calcutta. Chief Financial Officer. He carries the overall responsibility for Nicolas Frattaroli the finance, legal, secretarial and administration functions of the Executive director of the Company’s Subsidiary, Vox mobili S.A. Company. He has over 17 years of experience in consumer durables He carries the overall responsibility for the portfolio of products and non-durables industry. He received a Bachelor of Commerce mainly in Europe, the Middle East, Africa and the Americas. He has degree from Bangalore University and qualified as a Chartered over 15 years of experience in the telecommunications industry. He Accountant from The Institute of Chartered Accountants of India received a Masters of Science degree from the National Institute of and qualified as a Cost Accountant from The Institute of Cost and Telecommunications. Works Accountants of India. 17
  20. 20. Rajesh M.V Debraj Tripathy Head-Media Business. He carries the overall responsibility for Head-Mobile Marketing. He carries the overall responsibility working with media houses in India and driving media-based, telecom for Mobile Marketing including m-advertising. He has over 13 value-added services which generate new revenue streams for media years of experience in the media and advertising industry. He clients from the mobile sector. He has over 13 years of experience received his Bachelor of Engineering degree in Electronics and in the media and advertising industry. He received a Bachelor of Telecommunications from Sambalpur University, Orissa and Post Science degree and a Master of Science degree in Mathematics from Graduate Diploma in Business Administration from Indian Institute Sathya Sai Institute of Higher Learning, Andhra Pradesh. of Management, Calcutta. Sidharth Sharma Raghavendra Varma Head-Public Sector Operators (India). He carries the overall Head-Technology Platform. He carries overall responsibility of responsibility for serving the mobile value added services needs defining and delivering the MMP2500 platform, on which the of telecom operators in the public sector. He has over 8 years of Company’s products are built. He has over 15 years of experience experience in IT and telecommunications industry. He received a in software and telecommunication industries. He received Bachelor Bachelor of Engineering degree from Maharishi Dayanand University, of Technology degree in Information Technology from Banaras Hindu Rohtak. University,Varanasi. 18
  21. 21. CEO and CFO Certification We, Arvind Rao, Chief Executive Officer and Managing Director, and Rajesh Moorti, Chief Financial Officer of OnMobile Global Limited, to the best of our knowledge and belief, certify that: 1. We have reviewed the balance sheet and profit and loss account (consolidated and unconsolidated), and all its schedules and notes on accounts, as well as the cash flow statements, and the directors report; 2. Based on our knowledge and information, these statements do not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the statements made; 3. Based on the information, the financial statements, and other financial information included in this report, present in all material respects, a true and fair view of the Company’s affairs, the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report, and are in compliance with the existing accounting standards and / or applicable laws and regulations; 4. To the best of our knowledge and belief, no transactions entered into by the Company during the year are fraudulent, illegal or violative of the Company’s code of conduct; 5. We accept responsibility for establishing and maintaining internal controls and we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting. Deficiencies in the design or operation of such internal controls, if any, of which we are aware, have been disclosed to the auditors and the Audit Committee and steps have been taken to rectify these deficiencies. 6. We have indicated to the auditors and the Audit Committee: i. Significant changes in the internal control over financial reporting during the year; ii. Significant changes in the accounting policies during the year and that the same has been disclosed in the notes to the financial statements; and iii. Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting. 7. In the event of any materially significant misstatements or omissions, we will return to the Company that part of any bonus or incentive or equity based compensation, which was inflated on account of such errors, as decided by the audit committee; 8. We affirm that we have not denied any personnel, access to the audit committee of the Company (in respect of matters involving alleged misconduct) and we have provided protection to ‘whistle blowers’ from unfair termination and other unfair or prejudicial employment practices; and 9. We further declare that all Board members and senior managerial personnel have affirmed compliance with the code of conduct for the current year. Arvind Rao Rajesh Moorti CEO CFO Date: April 30, 2008 Place: Bangalore 19
  22. 22. Corporate Governance PHILOSOPHY It is the intention of the Company to be an acclaimed leader in the practice of Corporate Governance. The Company strives to ensure that the best practices of Corporate Governance and disclosure requirements are complied with, while ensuring that creation of wealth for shareholders and protection of interests of stakeholders, clients, suppliers and employees are adhered to with the highest level of integrity, fairness, accountability and transparency. BOARD OF DIRECTORS The OnMobile Board consists of executive and non-executive directors. The non-executive directors consist of eminent professionals from business, finance and reputed institutions.The Company does not have any nominee director.As per the articles of association of the Company, the Board can have a maximum of 12 members. Currently the Board has 7 directors, of which the Chairman of the Board is an executive director. India Listed All Companies Committee Chairpersons Name of the director Positions Category Companies* around the world## Memberships### of Committees### Chairman and Arvind Rao Executive – Promoter NIL 9 NIL NIL Managing Director Chandramouli Director Executive – Promoter NIL 6 1 NIL Janakiraman H H Haight IV Director Non-Executive NIL 13 1 NIL Sridar A Iyengar Director Independent 2 9 5 3 Naresh K Malhotra Director Independent 2 11 6 2 Jayanth R Varma Director Independent 1 3 2 2 Vikram S Kirloskar Director Independent 3 12 7 3 * Excluding directorships in OnMobile Global Limited and its subsidiaries Directorships in all companies around the world (listed & unlisted) including OnMobile Global Limited and its subsidiaries ## Includes memberships/chairmanships of audit committees and investor grievance committees in public companies (Listed and Unlisted) ### MEETINGS AND ATTENDANCE The details of the Board of Directors are as below: Strategic planning and policy formulations are looked after by Mr. Arvind Rao the Board. The senior management personnel heading respective Graduated with a Bachelor of Technology degree from the Indian business units are responsible for all day-to-day operation related Institute of Technology, Mumbai, Master of Science degree from issues, profitability, and productivity issues for their units. The Board the University of Wisconsin, Madison and a Master of Business meets at least four times in a year with the intervening period Administration degree from the Wharton School, the University of between two Board Meetings of not more than three months. The Pennsylvania. He has been with OnMobile Systems Inc., our Promoter, annual calendar of meetings is broadly determined at the beginning since its inception in 2000. Prior to joining the Company, he was of each year. Most Board Meetings are well attended as shown with Schlumberger Wireline Services in Thailand, China and Malaysia, below. During the year ended March 31, 2008, the Board met five McKinsey & Company in New York and India, the Chatterjee Group times on April 20, 2007, July 12, 2007, October 12, 2007, February in New York and India and Gilbert Global Equity Partners in New 9, 2008 and February 28, 2008. A structured agenda governs the York. He has over two decades of experience in financial services, IT meetings. Members of the Board, in consultation with the Chairman and the telecom industry. He was appointed as Managing Director by may bring up any matter for consideration of the Board. All items the Board at their meeting held on July 24, 2006 for a period of five of major importance in the agenda are backed by comprehensive years. Mr. Rao is on the Board of the following other Companies: documentation and background information to enable the Board 1. RiffMobile Private Limited to take an informed decision. Agenda papers are circulated well in 2. Mobile Traffik Private Limited advance of the Board meeting. 20
  23. 23. 11. Argnor Wireless Ventures B.V. 3. Cellphone Entertainment (Mumbai) Private Limited 12. SP Industries Inc. 4. OnMobile Systems, Inc. 5. OnMobile Singapore Pte Limited Prof. Jayanth R Varma 6. Vox mobili SA Graduated with a Bachelor of Commerce degree from Bangalore 7. Vox mobili Inc University. He did his post-graduation in management from the Indian 8. Phonetize Solutions Private Limited Institute of Management, Ahmedabad. He also obtained the Fellow of Mr. Chandramouli Janakiraman the Institute of Management, Ahmedabad and is also a qualified cost accountant from Institute of Cost and Works Accountants of India. Graduated with a Bachelor of Technology degree from the He has over 20 years of teaching, research and consulting experience National Institute of Technology, Allahabad. He has over 19 years of in the field of finance. He has previously served as a full-time member experience in the software industry. He has previously served as of SEBI and as Chairman of various committees formed by SEBI and Associate Vice President and Head of the Internet Products Group the Department of Company Affairs. He is a professor of the Indian in Infosys Technologies Limited. In 2000, he left Infosys and co- Institute of Management, Ahmedabad. He has been appointed as an founded OnMobile Systems Inc. He was appointed as a director by independent director by the shareholders of the Company at the the shareholders at the AGM held on May 12, 2003. Mr. Mouli Raman AGM held on August 17, 2007. Prof. Varma is on the Board of the is on the Board of the following other Companies: following other Companies: 1. Ver se Innovation Private Limited 2. OnMobile Singapore Pte Limited 1. Infosys BPO Limited (formerly Progeon Limited) 3. OnMobile Australia Pty. Ltd. 2. Axis Bank Limited (formerly UTI Bank Limited) 4. PT OnMobile Indonesia Mr. Naresh K. Malhotra 5. Phonetize Solutions Private Limited Graduated with a Bachelor of Commerce degree from St. Xavier’s Mr. H.H. Haight IV College, Calcutta University. He qualified as a Chartered Accountant Graduated with a Bachelor of Science degree from the University of in 1970. He has over 35 years of experience in India and overseas in California, Berkeley and a Master of Business Administration degree various companies including Imperial Chemical Industries, Unilever, from Harvard Business School. He has over 20 years of experience Colgate Palmolive, Bukhatir Investments, the U B Group, KPMG in the leadership and growth of various enterprise companies. He and Amalgamated Bean Coffee Trading Company. He has previously has previously served as Managing Director in Advent International served as founding partner and managing director of corporate Corp and Chief executive Officer in Argo Global Capital, LLC. He finance in KPMG in India. He is also an advisor to GIV Management has been appointed as a non-executive Director by the shareholders Inc., a Washington based Venture Capital Company. He has been of the Company at the AGM held on August 17, 2007. Mr. Haight is appointed as an independent director by the shareholders of the on the Board of the following other Companies: Company at the AGM held on August 17, 2007. Mr. Malhotra is on the Board of the following other Companies: 1. OnMobile Systems, Inc. 2. Genelabs Technology Inc. 1. N.M Properties & Consulting Private Limited 3. Maxager Technology Inc. 2. Bluestar Infotech Limited 4. Argo Global Capital, Inc. 3. Amalgamated Bean Coffee Trading Co. Private Limited 5. Argo Holding, LP. 4. Venture Infotek Global Private Limited 6. Argo Global Capital Corp. 5. Tarang Software Technologies Private Limited 7. Telecom Investment Inc. 6. Balan Natural Foods Private Limited 8. Neural Technologies, Inc 7. Royal Orchid Hotels Limited 9. NT3 8. Printo Documents Services Private Limited 10. Chinatron Group Holdings Limited 9. A B Holdings Private Limited 21
  24. 24. 10. Venture Infotek Inc. No. of Board No. of Board Attendance at the Director Meetings held Meetings attended Last AGM. Mr.Vikram S. Kirloskar Arvind Rao 5 5 No Graduated with a Bachelor of Engineering (Mechanical) from the Chandramouli Massachusetts Institute of Technology, Cambridge, USA. He has 5 5 Yes Janakiraman over 24 years of experience in the business of manufacturing H H Haight IV 5 4 No automobiles and auto parts. He has successfully set up a joint Sridar A Iyengar 5 4 No venture with Toyota, Japan called Toyota Kirloskar Motor Private Naresh K Malhotra 5 5 No Limited, which manufactures automobiles in India. He is a member Jayanth R Varma 5 4 No of the National Council of Confederation of Indian Industry. He has Vikram S Kirloskar 5 3 No been conferred with the Suvarna Karnataka award by the Karnataka Anthony Correa* 5 2 No Government, in recognition of his efforts in expanding and developing industry within the state. He has been appointed as an independent *Anthony Correa resigned effective from August 17, 2007 director by the shareholders of the Company at the AGM held on Information Placed before the Board August 17, 2007. Mr. Kirloskar is on the Board of the following other Apart from the items required to be placed before the Board for Companies: its approval, some of the following are also placed for review / 1. Kirloskar Systems Limited information: 2. Kirloskar Brothers Limited • Annual Operating Plans and Budgets (including Capital 3. Kirloskar Oil Engines Limited Budgets) 4. Kirloskar Pneumatic Company Limited • Quarterly performance, including business and financial 5. Kirloskar Theratronics Private Limited update. 6. Kirloskar Toyoda Textile Machinery Private Limited • Minutes of the audit and compensation committees 7. Toyota Kirloskar Auto Parts Private Limited • Information on recruitment and remuneration of senior 8. Toyota Kirloskar Motor Private Limited officers below the Board level 9. Vikram Geet Investments and Holdings Private Limited • Demand, prosecution, show cause notices and penalty 10. Toyota Tsucho Insurance Broker India Private Limited notices which are materially important Mr. Sridar A. Iyengar • Any issue which involves possible product or public liability claims against the Company or its directors/officers Is a fellow of the Institute of Chartered Accountants, England and • Status of business risk exposure, its management and related Wales. He has over 38 years of experience in corporate finance action plans. and accounting. He has previously served as chairman and chief • Proposals pertaining to joint venture and investment/ executive officer at KPMG, India operations. He is associated with acquisition decisions including payments towards intellectual Bessemer Venture Partners and is an independent director of various property or goodwill companies. He has been appointed as an independent director by the • Non-compliance of any regulatory, statutory or listing shareholders of the Company at the AGM held on August 17, 2007. requirements Mr. Sridar is on the Board of the following other Companies: • All proposals requiring strategic decisions 1. Infosys Technologies Limited • Sale of material nature, of investments, subsidiaries, assets, 2. ICICI Bank Limited which is not in the normal course of business; 3. Rediff.com India Limited • Quarterly details of foreign exchange exposures and the 4. Kovair Software Inc. steps taken by management to limit the risks of adverse 5. Infosys BPO Limited exchange rate movement, if material; 6. Rediff Holding Inc. 7. Career Launcher Limited 22
  25. 25. Remuneration/Compensation to Directors dated April 20, 2007, approved a sum of (1/6) % of the net profits of the Company to each of the non-executive directors (including The table below shows the amount paid or payable to the Directors independent directors) or a sum of Rs. 10,00,000/- per non-executive of the Company for the financial year March 31, 2008: director which ever is lower. Members of the Company propose to, at Fixed salary the forth coming Annual General Meeting of the Company, approve (includes perquisites Variable Sitting Commiss- Total the payment of remuneration by way of commission to independent Name and pay fees ion compensation directors for the financial year 2007-08. The Company has paid Rs. contribution to PF) 1,228,237/- as post tax sitting fees (includes Rs. 228,237/- pertaining EXECUTIVE DIRECTORS# to the financial year ended March 31, 2007 paid during the year ended March 31, 2008) to the non-executive directors. No sitting Arvind Rao 5,922,725 2,666,324 - - 8,589,049 fee was paid to any of the executive directors. Chandramouli 3,547,254 1,014,362 - - 4,561,616 Janakiraman The commission and the sitting fee have been arrived at as below: NON-EXECUTIVE DIRECTORS## 1. Commission payable for five of the non-executive directors H H Haight IV - - 280,000 1,000,000 1,280,000 - Rs. 5,000,000/- Naresh K - - 240,000 1,000,000 1,240,000 Malhotra 2. Sitting fee based on the attendance per Board or committee Sridar A Iyengar - - 160,000 1,000,000 1,160,000 meeting - Rs. 20,000/- per meeting Jayanth R Varma - - 160,000 1,000,000 1,160,000 PERIOD OF CONTRACT, NOTICE PERIOD AND Vikram S - - 120,000 1,000,000 1,120,000 Kirloskar SEVERANCE PAY OF DIRECTORS Anthony Correa* - - 40,000 - 40,000 Chairman & Managing Director *Anthony Correa resigned effective from August 17, 2007 The specific period of contract of service for the Chairman & Managing Note: #1) The above amounts exclude benefits accrued by the Company in respect of leave encashment and gratuity, as they are provided by the Company as a whole based on actuarial valuation. 2) The above amounts also exclude the stock compensation cost of Rs. 229,167/- arising out of grant of stock options to the ## Director is five years effective from July 24, 2006.The notice period is independent directors. 6 months. The Company is liable to pay a terminal compensation or REMUNERATION POLICY redundancy payment equivalent to 18 (eighteen) months paid in cash The Company’s remuneration policy is based on the performance of based on the previous financial year’s compensation plus forgiveness the individual employee and the success of the Company.Through its of any and all of the outstanding loans from the Company including compensation program, the Company endeavors to attract, retain, transfer of any vehicles used by employee at the time of termination develop and motivate a high performance workforce. The Company and any other appropriate statutory compensation applicable to follows a compensation mix of fixed pay, benefits and performance his employment. The executive directors shall not be considered based variable pay and sharing of wealth through the Company’s for retirement by rotation as per the Articles of Association of the stock options. Individual performance pay is determined by business Company. performance of the Company. The Company pays remuneration by Independent and Non-executive directors way of salary, benefits, perquisites and allowances (fixed component) Period of contract and notice pay is not applicable to the independent and performance incentives (variable component) to its executive and non-executive directors. They will retire by rotation. There is directors. Annual increments are decided by the Compensation no severance pay for any of the non-executive and independent Committee as approved by the Members. directors. Section 309 of the Companies Act, 1956 provides that a director STOCK OPTIONS TO THE INDEPENDENT AND who is neither in the whole-time employment of the Company nor a Managing Director may be paid remuneration by way of commission, NON-EXECUTIVE DIRECTORS if the Company by special resolution authorizes such payment. The following table shows the details of stock options to independent The Board Members of the Company had vide their resolution and non-executive directors during the year. 23
  26. 26. Company at the AGM held on August 17, 2007. The Company No. of stock options (after Grant price (after adjusting Name adjusting for bonus issues) for bonus issues) Secretary acts as secretary to the committee. Sridar A Iyengar 26,000 228/- The terms of reference of the audit committee include the Jayanth R Varma 26,000 228/ following: Naresh K Malhotra 26,000 228/ Vikram S Kirloskar 26,000 228/ • Overseeing the Company’s financial reporting process and H H Haight IV 26,000 228/ disclosure of its financial information to ensure that the The vesting period of each option is over a period of four years from financial statements are true and fair and provide sufficient the date of their joining and become fully exercisable at the time of information; vesting. None of the non-executive directors hold any shares in the • Recommending to the Board the appointment, re- Company as on the date of this report. appointment, and replacement of the statutory auditor and MATERIALLY SIGNIFICANT RELATED PARTY the fixation of audit fee. TRANSACTIONS • Approval of payments to the statutory auditors for any other There have been no materially significant related party transactions, services rendered by them and assess the independence and monetary transactions or relationships between the Company and objectivity of the auditors and to ensure that the nature and directors, management, subsidiary or relatives, except for those amount of non-audit work does not impair the auditor’s disclosed in the financial statements for the year ended March 31, independence and objectivity 2008. • Establishing and reviewing the scope of the statutory audit COMMITTEES OF THE BOARD including the observations of the auditors and review of the For the year ended March 31, 2008 the Board had four committees quarterly, half-yearly and annual financial statements before – the Audit Committee, the Compensation Committee, the IPO submission to the Board, with particular reference to matters Committee, the Shareholders and Investors Grievance Committee. required to be included in the Directors Responsibility The terms of reference of the Board committees are decided by Statement to be included in the Board’s report in terms of the Board from time to time. Meeting of each Board committee clause 2(AA) of S.217 of the Companies Act, 1956, changes is convened by the respective committee Chairman. The role and in the accounting policies and practices and reasons for the composition of these committees, including the number of meetings same, significant adjustments made in the financial statements held during the financial year and the related attendance are given arising out of audit findings. below. • The appointment, removal and terms of remuneration of the 1. Audit Committee internal auditors, discussion and follow up on any important This committee consists of a minimum of three (3) directors findings with the internal auditors. In case there is a suspected of whom two thirds including the Chairman are independent case of fraud or irregularity, review of the findings of the directors. The Chairman of the committee is Jayanth R Varma an internal auditors and reporting the matter to the Board. independent director. He is an Associate Member of the Institute • Have post audit discussions with the statutory auditors to of Cost and Works Accountants of India; he has also obtained a ascertain any area of concern. fellowship of the Indian Institute of Management Ahmedabad and • Regular review of the performance of statutory and internal has over 20 years of teaching, research and consulting experience auditors together with the management. in the field of finance. He has previously served as a full-time member of SEBI and as Chairman of various committees formed • Establishing the scope and frequency of internal audit, by SEBI and the Department of Company Affairs. He is a professor reviewing the findings of the internal auditors and ensuring of the Indian Institute of Management, Ahmedabad. He has been the adequacy of internal control systems including structure appointed as an independent director by the shareholders of the 24
  27. 27. The Company has instituted internal process and systems to of the internal audit department, frequency of internal audit, ensure that the audit committee has access to all the material staffing and seniority of the official heading the department. information, and reviews on a regular basis the following: Review the functioning of the whistle blower mechanism. • Management Discussion and Analysis of financial condition • To look into reasons for substantial defaults in the payment to and results of operations; depositors, debenture holders, shareholders and creditors. • Statement of significant related party transactions (as defined • To look into the matters pertaining to the Director’s by the audit committee), submitted by management; Responsibility Statement with respect to compliance with applicable accounting standards and accounting policies. • Management certificates on internal controls and compliance with laws and regulations, including any exceptions to these; • Compliance with Stock Exchange listing requirements concerning financial statements. • Management letters / letters of internal control weaknesses issued by the statutory auditors; • The Committee shall look into any related party transactions i.e., transactions of the Company of material nature and • Internal audit reports relating to internal control disclose such transactions, with promoters or management, weaknesses; their subsidiaries or relatives etc., that may have potential • The financial statements, in particular the investments, if any conflict with the interests of Company at large. made by the unlisted subsidiary companies. • Review of management discussion and analysis of financial Details of Audit Committee Meetings during the financial condition and results of operations, statements of related party transactions submitted by management, management year letters/letters of internal control weaknesses issued by the During the financial year ended March 31, 2008, four meetings of the statutory auditors. audit committee were held as follows: • To meet periodically as it may deem fit to meet its objectives Committee No. of Members Sl no. Date Strength Present. and to have at least four such meetings in a financial year on 1 April 19, 2007 03 03 a quarterly basis 2 July 11, 2007 03 03 • Obtaining an update on the risk management framework and 3 October 11, 2007 03 03 the manner in which risks are being addressed; 4 February 28, 2008 03 03 Attendance at the Audit Committee Meetings during the financial • Such other matters as may from time to time are required by year any statutory, contractual or other regulatory requirements to be attended to by the audit committee. Director No. of Meetings attended Jayanth R Varma 04 The audit committee also specifically reviews the un-audited/ Naresh K Malhotra 04 audited quarterly financial results of the Company before these H H Haight IV 04 are submitted to the Board for approval. Minutes of each audit 2. Compensation Committee committee meeting are placed before the Board for noting This committee consists of a minimum of three (3) directors The powers of the audit committee shall include the power; of whom two thirds including the Chairman are independent 1. To investigate activity within its terms of reference. directors.The Chairman of the committee is Sridar A Iyengar. He 2. To seek information from any employees. is a fellow of the Institute of Chartered Accountants, England and 3. To obtain outside legal or other professional advice. Wales. He has over 38 years of experience in corporate finance 4. To secure attendance of outsiders with relevant expertise, if and accounting. He has previously served as chairman and chief it considers necessary. executive officer at KPMG, India operations. He is associated 25
  28. 28. with Bessemer Venture Partners and is an independent director No. of Members Sl no. Date Committee Strength Present. of various companies including Infosys Technologies Limited, 1 April 20, 2007 03 03 ICICI Bank Limited and Rediff.com India Limited. He has been 2 July 12, 2007 03 03 appointed as an independent director by the shareholders of the 3 October 12, 2007 03 03 4 February 27, 2008 03 02 Company at the AGM held on August 17, 2007. The Company Secretary acts as secretary to the committee. Attendance at the Compensation Committee Meetings during the financial year The terms of reference of the compensation committee include the following: Director No. of Meetings attended Sridar A Iyengar 04 1. Annual review of the salary, bonus and other compensation H H Haight IV 04 plans of the CEO, CTO and President of the Company. Vikram S Kirloskar 03 3. Share Transfer and Investor Grievance Committee 2. Review and approve the salary, bonus and compensation plans for all the executive directors of the Company The Share Transfer and Investor Grievance Committee consists of a minimum of three (3) directors of whom two thirds including 3. Framing suitable policies and systems to ensure that there is the Chairman are independent directors. This committee was no violation, by an employee or Company of any applicable constituted by our Board at their meeting held on April 20, laws in India or overseas, including: 2007. This committee was formed to specifically look into the • The Securities and Exchange Board of India (Insider redressal of shareholder and investor complaints pertaining to Trading) Regulations, 1992; or allotment or transfer of shares, non-receipt of balance sheet, non-receipt of declared dividends etc. The Share Transfer and • The Securities and Exchange Board of India (Prohibition Investor Grievance Committee consists of Vikram S Kirloskar of Fraudulent and Unfair Trade Practices relating to the (Chairman), Naresh K Malhotra and Chandramouli Janakiraman. Securities market) Regulations, 1995. The Chairman of the committee is Mr. Vikram S Kirloskar an 4. Administer the implementation and award of stock options independent director. He has over 24 years of experience in the under the stock option plans of the Company business of manufacturing automobiles and auto parts. He is the chairman and managing director of Kirloskar Systems Limited, 5. Perform such functions as are required to be performed vice chairman of Toyota Kirloskar Motor Private Limited and by the compensation committee under Clause 5 of the Toyota Kirloskar Auto Parts Private Limited. The Company Securities and Exchange Board of India (Employee Stock Secretary acts as secretary to the committee. Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. The terms of reference of the Share Transfer and Investor Grievance Committee are as follows: 6. Recommend to the Board of Directors of the Company on any other employment incentives as the compensation • To approve and register, transfer and/or transmission of all committee deems it appropriate in the best interests of the classes of shares; Company • To look into the redressal of shareholder and investor 7. Such other matters as may from time to time are required by complaints like non-transfer of shares, non-receipt of balance any statutory, contractual or other regulatory requirements sheet, non-receipt of declared dividends etc; and to be attended to by such committee. • To do all such acts, things or deeds as may be necessary or Details of Compensation Committee Meetings during the incidental to the exercise of the above powers. financial year During the financial year ended March 31, 2008, four meetings of the compensation committee were held as follows: 26