Copy of on Mobile Annual Report 2009

Dear Shareholders,

Sridar A Iyengar

Independent Director21

Prof. Jayanth Varma


H H Haight

Non-Executive Director3 Arvind Rao

Chairman & Managing Director4

Naresh Malhotra


6

54

3

2

1

Chandramouli Janakiraman

Executive Director

PB 21

Board of Directors

Chairman & Managing Director

Arvind Rao

Executive Director


Non-Executive Director

H H Haight IV

Independent Directors

Jayanth Rama Varma

Naresh Malhotra

Sridar A Iyengar

Board Committees

Audit Committee

Jayanth Rama Varma ChairmanH H Haight IV MemberNaresh Malhotra Member

Investor Grievances Committee

Naresh Malhotra ChairmanChandramouli Janakiraman MemberJayanth Rama Varma Member

Compensation Committe

Sridar A Iyengar ChairmanH H Haight IV MemberNaresh Malhotra Member

Registered Office

No. 26, Bannerghatta Road,

J P Nagar Phase III,

Bangalore – 560 076

www.onmobile.com

Statutory Auditors

Deloitte Haskins and Sells

Chartered Accountants, Bangalore

Internal Auditors

M/s. K P Rao & Co.

Chartered Accountants, Bangalore

Bankers

Kotak Mahindra Bank Limited

ICICI Bank Limited

Citibank N A

State Bank of India

IDBI Bank Limited

Punjab National Bank

Hongkong and Shanghai Banking Corporation

Bank of India

Canara Bank

Axis Bank Limited

Standard Chartered Bank

Company Secretary

D Srikiran

Registrar and Share Transfer Agent

Karvy Computershare Private Limited

Karvy House, 21, Avenue - 4,

Plot No. 17 to 24, Vittalrao Nagar, Madhapur,

Hyderabad - 500 081

Phone No. 040-223420818-828

Fax No. - 040 - 23420814

Corporate Information

22 2322 23

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

have 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, 2009

Place: Mumbai

22 2322 23

CORPORATE GOVERNANCE

Corporate Governance is concerned with holding the balance between

economic and social goals and between individual and communal goals. The

corporate governace framework is there to encourage the efficient use of

resources and equally to require accountability for the stewardship of the

resources. The aim is to align as nearly as possible the interests of indivdual,

corporation and society - Sir Adrian Cadbury

The Company’s Report on Corporate Governance is presented herewith. The Company’s main philosophy as detailed below is to ensure high accountability, transparency and to provide correct financial and management information to the shareholders at the right time.

PHILOSOPHy

The Company’s Philosophy on Corporate Governance is as under:

i. Ensure that the Board exercises its fiduciary responsibilities towards Shareowners, thereby ensuring high accountability;

ii. Ensure that the decision making is transparent and documentary evidence is traceable through the minutes of the meetings of the Board/Committee thereof;

iii. Ensure that the Board, the Senior Management Team, the Compliance Officer, the Employees and all concerned are fully committed to maximizing long-term value to the Shareowners and the Company;

iv. Ensure that the financial and managerial information, which management shares with the Board, as well as the current and potential investors is timely and accurate;

v. Ensure that the core values of the Company are protected;

vi. Ensure that the Company strives to achieve world class operating practices

Report on Corporate Governance

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 6 Directors, of which the Chairman of the Board is an Executive Director.

Details of Board meetings held during the year

Date of Board Meeting Board Strength No. of directors present

April 30, 2008 7 7

July 31, 2008 7 6

October 31, 2008 6 6

January 30, 2009 6* 6

Mr. Hatim Tyabji was appointed as an alternate director for Mr. Haight to attend the said meeting.

Note: Mr. Vikram Kirloskar, who was a member of the Board, regsined effective August 08, 2008

MEETINGS AND ATTENDANCE

Strategic Planning and Policy Formulations are looked after by the Board. The Senior Management Personnel heading respective Business Units are responsible for all day-to-day operations, productivity and profitability of their units. The board meets at least four times in a year with the intervening period between two Board Meetings of not more than three months. The annual calendar of meetings is broadly determined at the beginning of each year. Most Board Meetings are well attended as shown below. During the year Ended March 31, 2009, the board met four times on 30.04.2008, 31.07.2008, 31.10.2008 and 30.01.2009. A structured agenda governs the meetings. Members of the Board, in consultation with the Chairman may bring up any matter for consideration of the Board. All items of major importance in the agenda are backed by comprehensive documentation and background information to enable the board to take an informed decision. Agenda papers are circulated well in advance of the board meeting.

Details of Directors

Name of Director Position Category

Attendance in Board Meetings

Other Board

Held AttendedAttendance in Last AGM

Directorships Indian listed Companies+

Directorships all around world++

Committee Chairmanships#

Committee Memberships#

Arvind RaoCEO, Executive Chairman &

Managing DirectorExecutive – Promoter 4 4 Present NIL 11 NIL NIL

Chandramouli Janakiraman Whole time director and CTO Executive – Promoter 4 4 Present NIL 6 NIL 1

HH Haight IV Director Non-Executive 4 3 Present NIL 9 NIL 1

Sridar Iyengar Director Independent 4 4 Present 2 10 3 5

Naresh Malhotra Director Independent 4 4 Present 2 11 3 8

Jayanth Varma Director Independent 4 4 Present 1 3 2 1

Vikram Kirloskar@ Director Independent 4 1 Absent 3 12 3 7

+ 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) including OnMobile Global Limited

@Mr. Vikram Kirloskar resigned effective from August 08, 2008

24 2524 25

The details of the Board of Directors are as below:

Mr. Arvind Rao

Mr. Rao graduated with a Bachelor of Technology degree from the Indian

Institute of Technology, Mumbai, Master of Science degree from the

University of Wisconsin, Madison and a Master of Business Administration

degree from the Wharton School, the University of Pennsylvania. He has

been with OnMobile Systems Inc, our promoter, since its inception in 2000.

Prior to joining our Company, he was at Schlumberger Wireline Services

in Thailand, China and Malaysia, at McKinsey & Company in New york

and India, Private Equity Investment Manager at the Chatterjee Group in

New york and India and Managing Director Technology investments at

Gilbert Global Equity Partners in New york. He has over two decades of

experience in financial services, IT and the telecom industry. During the

year, Mr. Rao, won the award for the Start-Up Entrepreneur of the year

2008 from Ernst & young during their Tenth Entrepreneur Awards 2008.

He was appointed as Managing Director by the Board at their meeting

held on July 24, 2006 for a period of five years. Mr. Rao is on the Board

of the following other Companies:

1. RiffMobile Private Limited

2. Mobile Traffik Private Limited

3. Cellphone Entertainment (Mumbai) Private Limited

4. OnMobile Systems, Inc.

5. OnMobile Singapore Pte Limited

6. Vox mobili SA

7. Vox mobili Inc.

8. Phonetize Solutions Private Limited

9. Telisma SA

10. OnMobile Europe BV

Mr. Chandramouli Janakiraman

Mr. Mouli Raman graduated with a Bachelor of Technology degree

from the National Institute of Technology, Allahabad. He has over

20 years of experience in the software industry. He has previously served

as Associate Vice President and Head of the Internet Products Group in

Infosys Technologies Limited. In 2000, he left Infosys and co-founded

OnMobile Systems Inc. along with Mr. Arvind Rao. He was appointed

as a director by the shareholders at the AGM held on May 12, 2003.

Mr. Mouli Raman is on the Board of the following other Companies:

1. Ver se Innovation Private Limited

2. OnMobile Singapore Pte Limited

3. OnMobile Australia Pty. Ltd.

4. PT OnMobile Indonesia


Mr. H.H. Haight IV

Mr. Haight graduated with a Bachelor of Science degree from the

University of California, Berkeley and a Master of Business Administration

degree from Harvard Business School. He has over 20 years of experience

in the leadership and growth of various enterprise companies. He has

previously served as Managing Director in Advent International Corp

and Chief Executive Officer in Argo Global Capital, LLC. He had retired

by rotation and was re-appointed as a non-executive Director by the

shareholders of our Company at the AGM held on August 01, 2008. Mr.

Haight is on the Board of the following other Companies:

1. OnMobile Systems, Inc.

2. Argo Global Capital, Inc.

3. Argo Holding, LP.

4. Argo Global Capital Corp.

5. Telecom Investment Inc.

6. Neural Technologies, Inc

7. NT3

8. Nostix

9. SP Industries

Prof. Jayanth Varma

Prof. Varma did his post-graduation in management from the Indian

Institute of Management, Ahmedabad (IIMA). Subsequently, he

obtained his doctorate in management from the Indian Institute of

Management, Ahmedabad. He is also a qualified cost accountant. He is

currently a Professor in Finance and Accounting at the Indian Institute of

Management, Ahmedabad. Prof. Varma was a full time Member of the

Securities and Exchange Board of India (SEBI) for a year. Prof. Varma

was the Chairman of the Group set up by SEBI to review the Revised

Carry Forward System, of the SEBI Committee on Risk Containment

Measures in the Derivatives Markets as well as of the SEBI Committee on

Employee Stock Options, of the SEBI Advisory Committee on Derivatives

and of the SEBI Group on Secondary Market Risk Management. He has

been appointed as an independent Director by the shareholders of our

Company at the AGM held on August 17, 2007. Prof. Varma is on the

Board of the following other Companies:

1. Infosys BPO Limited

2. Axis Bank Limited

24 2524 25

Mr. Naresh K. Malhotra

Mr. Malhotra graduated with a Bachelor of Commerce degree from

St. Xavier’s College, Calcutta University. He qualified as a Chartered

Accountant in 1970. He has over 38 years of experience in India and

overseas in various companies including Imperial Chemical Industries,

Unilever, Colgate Palmolive, Bukhatir Investments, the UB Group, KPMG

and Amalgamated Bean Coffee Trading Company. He has previously

served as founding partner and Managing Director of corporate finance

in KPMG in India. He is currently an Operating Partner at Sequoia Capital

India Advisors. He has been appointed as an independent Director by

the shareholders of our Company at the AGM held on August 17, 2007.

Mr. Malhotra retires by rotation and being eligible offers himself for re-

appointment at the forthcoming AGM to be held on August 01, 2009. Mr.

Malhotra is on the Board of the following other Companies:

1. Blue Star Infotech Limited

2. Royal Orchid Hotels Limited

3. A B Holdings Private Limited

4. Balan Natural Foods Private Limited

5. Cotton County Retail Limited

6. Deriv IT Solutions Private Limited

7. Genesis Colors Private Limited

8. Printo Document Services Private Limited

9. Tarang Software Technologies Private Limited

10. Deriv TTE Solutions Private Limited

11. N.M. Properties and Consulting Private Limited.

Mr. Sridar A. Iyengar

Mr. Iyengar is a fellow of the Institute of Chartered Accountants, England

and Wales. He has over 39 years of experience in corporate finance and

accounting. He has previously served as chairman and chief executive

officer at KPMG, India operations. He is associated with Bessemer Venture

Partners and is an independent Director of various companies including

Infosys Technologies Limited, ICICI Bank Limited and Rediff.com. He

has been appointed as an independent Director by the shareholders of

our Company at the AGM held on August 17, 2007. Mr. Iyengar retires

by rotation and being eligible offers himself for re-appointment at the

forthcoming AGM to be held on August 01, 2009. Mr. Iyengar is on the

Board of the following other Companies:

1. Infosys Technologies Limited

2. ICICI Bank Limited

3. Rediff.com India Limited

4. Kovair Software Inc.

5. Infosys BPO Limited

6. Aver Q Inc

7. Rediff Holding Inc.

8. Career Launcher India Limited

9. Mahindra Holidays & Resorts India Limited

Mr. Vikram S. Kirloskar (Director for part of the year)

Mr. Kirloskar graduated with a Bachelor of Engineering (Mechanical)

degree from the Massachusetts Institute of Technology, Cambridge, USA.

He has over 25 years of experience in the business of manufacturing

automobiles and auto parts. He has successfully set up a joint venture

with Toyota, Japan called Toyota Kirloskar Motor Private Limited, which

manufactures automobiles in India. He is the chairman and managing

director of Kirloskar Systems Limited, vice chairman of Toyota Kirloskar

Motor Private Limited and Toyota Kirloskar Auto Parts Private Limited.

He is a member of the National Council of Confederation of Indian

Industry. He has been conferred with the Suvarna Karnataka award by

the Karnataka Government, in recognition of his efforts in expanding

and developing industry within the state. He was appointed as an

independent Director by the shareholders of our Company at the AGM

held on August 17, 2007. Mr. Kirloskar resigned effective August 08,

2008. Mr. Kirloskar is on the Board of the following other Companies, as

on the date of his resignation:

1. Kirloskar Systems Limited

2. Kirloskar Brothers Limited

3. Kirloskar Oil Engines Limited

4. Kirloskar Pneumatic Company Limited

5. Kirloskar Theratronics Private Limited

6. Kirloskar Toyoda Textile Machinery Private Limited

7. Toyota Kirloskar Auto Parts Private Limited

8. Toyota Kirloskar Motor Private Limited

9. Vikram Geet Investments and Holdings Pvt. Ltd.

10. Common Purpose India

11. Toyota Tsucho Insurance Broker India Pvt. Ltd.

Information Placed before the Board

Apart from the items required to be placed before the board for its approval,

some of the following are also placed for review / information:

Annual Operating Plans and Budgets (including Capital Budgets)

Quarterly performance, including business and financial update.

26 2726 27

Minutes of the Board, Audit, Compensation and Investor Grievance Committees

Information on recruitment and remuneration of senior officers below the Board Level

Demand, prosecution, show cause notices and penalty notices which are materially important

Any issue which involves possible product or public liability claims against the Company or its Directors/officers

Status of business risk exposure, its management and related action plans

Proposals pertaining to Joint Venture and Investment/Acquisition Decisions including payments towards intellectual property or goodwill

Non-Compliance of any regulatory, statutory or listing requirements

All proposals requiring Strategic decisions Sale of material nature, of investments, subsidiaries, assets,

which is not in the normal course of business. Quarterly details of foreign exchange exposures and the steps

taken by management to limit the risks of adverse exchange rate movement, if material.

Remuneration/Compensation to Directors

The table below shows the amount paid or payable to the Directors of the

Company for the financial year March 31, 2009:

Amount in Rs. Million

Sl No.

Name

Salary and Other benefits

(INR)

Commission (INR)

TotalService Contract/notice period/ severance fees/

pension

1. Arvind Rao 10.09 NIL 10.09 5 years up to July 23, 2011.Severance-Notice

period of 18 months compensation and 6

months notice

2. Chandramouli Janakiraman

3.50 NIL 3.50 5 years up to July 23, 2011

3. HH Haight IV NIL 1.10 1.10 Retirement by rotation

4. Sridar Iyengar NIL 1.10 1.10 Retirement by rotation

5.Naresh

MalhotraNIL 1.10 1.10 Retirement by rotation

6. Jayanth Varma NIL 1.10 1.10 Retirement by rotation

7.Vikram

Kirloskar*NIL 0.39 0.39 Resigned

*Mr. Vikram Kirloskar resigned effective from August 08, 2008

**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.64, 167/- arising out of grant of stock

options to the independent Directors.

3) The above remuneration excludes sitting fees.

Remuneration Policy

The Company’s remuneration policy is based on the performance of

the individual employee and the success of the Company. Through its

compensation program, the Company endeavors to attract, retain,

develop and motivate a high performance workforce. The Company

follows a compensation mix of fixed pay, benefits and performance based

variable pay and sharing of wealth through the Company’s stock options.

Individual performance pay is determined by business performance of

the Company. The Company pays remuneration by way of salary,

benefits, perquisites and allowances (fixed component) and performance

incentives (variable component) to its Managing Director and Executive

Director. Annual increments are decided by the Compensation Committee

as approved by the Members.

Section 309 of the Companies Act, 1956 provides that a Director

who is neither in the whole-time employment of the Company nor a

Managing Director may be paid remuneration by way of commission,

unless the Company by special resolution authorizes such payment. The

Shareholders of the Company had vide their resolution dated August 01,

2008, approved a sum not exceeding a total of 1% of the net profits

of the Company computed in accordance with the provisions of section

198(1) of the Companies Act, 1956 to be paid to all the non-executive

directors of the Company or an amount varying from Rs. 1,000,000/-

(Rupees One Million) to Rs. 2,000,000/- (Rupees Two Million) per non-

executive director (including any independent Director) which ever is

lower. The Board of Directors of the Company approved the payment of

4.79 Million remuneration by way of commission to the Non-Executive

and/or independent Directors for the financial year 2008-09. The Company

has paid Rs. 740,000/- as sitting fees to the non-executive Directors. No

sitting fee was paid to any of the executive Directors.

The commission and the sitting fee have been arrived at as below:

1. Commission payable for five of the non-executive Directors - Rs.

4.79 Million

2. Pre-Tax Sitting fee based on the attendance per Board or

committee meeting - Rs. 20,000/- per meeting

PERIOD OF CONTRACT, NOTICE PERIOD AND SEVERANCE PAy OF DIRECTORSChairman & Managing Director

The specific period of contract of service for the Chairman & Managing

Director is five years effective from July 24, 2006. The notice period is

6 months. The Company is liable to pay a terminal compensation or

26 2726 27

redundancy payment equivalent to 18 (eighteen) months paid in cash

based on the previous financial year’s compensation plus forgiveness

of any and all of the outstanding loans from the Company including

transfer of any vehicles used by employee at the time of termination

and any other appropriate statutory compensation applicable to his

employment. The Executive Director and the Managing Director shall not

be considered for retirement by rotation as per the Articles of Association

of the Company.

Independent, Non-Executive Directors

Period of contract and notice pay is not applicable to the Independent

and Non-Executive Directors. They will retire by rotation. There is no

severance pay for any of the non-executive and independent directors.

STOCK OPTIONS TO THE INDEPENDENT AND NON-EXECUTIVE DIRECTORS

The Independent and Non-Executive Directors have not been issued

any stock options during the year. Each of the Independent and Non-

Executive Directors were issued 26,000 stock options in the financial year

2007-08.

The vesting period of each option is over a period of four years from the

date of their joining and become fully exercisable at the time of vesting.

None of the Non-Executive Directors hold any shares in the Company

as on the date of this report. One of the ex-Independent Directors Mr.

Vikram Kirloskar had exercised 13,000 stock options on the date of his

resignation by paying the exercise price and applicable fringe benefit

taxes.

MATERIALLy SIGNIFICANT RELATED PARTy TRANSACTIONSThere have been no materially significant related party transactions,

monetary transactions or relationships between the Company and

directors, management, subsidiary or relatives, except for those disclosed

in the financial statements for the year ended March 31, 2009.

COMMITTEES OF THE BOARDFor the year Ended March 31, 2009 the Board had three Committees –

the Audit Committee, the Compensation Committee, the Shareholders

and Investors Grievance Committee. The terms of reference of the Board

Committees are decided by the Board from time to time. Meeting of each

Board Committee is convened by the respective Committee Chairman.

The role and composition of these committees, including the number of

meetings held during the financial year and the related attendance are

given below:

1. Audit Committee

This committee consists of a minimum of three (3) directors of

whom two thirds including the Chairman are Independent Directors.

The Chairman of the committee is Prof. Jayanth Rama Varma an

independent director. He is an Associate Member of the Institute

of Cost and Works Accountants of India; he has also obtained a

fellowship of the Indian Institute of Management Ahmedabad and

has over 20 years of teaching, research and consulting experience in

the field of finance. He has previously served as a full-time member

of SEBI and as Chairman of various committees formed by SEBI and

the Department of Company Affairs. He is a professor of the Indian

Institute of Management, Ahmedabad. He has been appointed as

an independent Director by the shareholders of our Company at

the AGM held on August 17, 2007. The Company Secretary acts as

secretary to the committee.

Brief description of terms of reference:

Adopt and review formal written charter approved by the Board

for its self governance;

Review with the management the annual/half-yearly/quarterly

financial statements;

Hold separate discussion with Internal and Statutory Auditors

and among members of Audit committee to find out whether the

Company’s financial statements are fairly presented in conformity

with Generally Accepted Accounting Principles (GAAP);

Review the adequacy of accounting records maintained in

accordance with the provisions of Companies Act 1956;

To look into reasons for substantial defaults if any in payment to

depositors, shareowners and creditors;

Review the performance of Statutory Auditors and recommend

their appointment and remuneration to the Board, considering

their independence and effectiveness;

Perform other activities consistent with the Charter, Company’s

Memorandum and Articles, the Companies Act, 1956 and other

Governing Laws.

Details of Audit Committee Meetings during the financial year

During the financial year ended March 31, 2009, four meetings of the

audit committee were held. The details of the same are as follows:

28 2928 29

Sl. No.

Name of Director and Position

Meetings/Attendance

April 30, 2008

July 31,2008

October 31,2008

January 30,2009

1. Jayanth Varma – Chairman Present Present Present Present

2. HH Haight IV – Member Present Present Present -

3. Naresh Malhotra – Member Present Present Present Present

4. *Hatim Tyabji – Member NA NA NA Present*Mr. Hatim Tyabji was appointed as alternate director for the Board and Committee Meetings held on

January 29 and 30, 2009

2. Compensation Committee

This committee consists of a minimum of three (3) directors of whom

two thirds including the Chairman are Independent Directors. The

Committee consists of Sridar Iyengar (Chairman), Naresh Malhotra

and HH Haight IV. The Chairman of the Committee is Mr. Sridar

Iyengar, independent Director. He is a fellow of the Institute of

Chartered Accountants, England and Wales. He has over 39 years of

experience in corporate finance and accounting. He has previously

served as chairman and chief executive officer at KPMG, India

operations. He is associated with Bessemer Venture Partners and

is an independent Director of various companies including Infosys

Technologies Limited, ICICI Bank Limited and Rediff.com India

Limited. He has been appointed as an independent Director by the

shareholders of our Company at the AGM held on August 17, 2007.

Mr. Sridar Iyengar retires by rotation and being eligible offers himself

for re-appointment at the forthcoming AGM to be held on August 01,

2009. The Company Secretary acts as secretary to the committee.

The terms of reference of the Compensation Committee include the

following:

1. Annual review of the salary, bonus and other compensation

plans of the CEO, CTO and President of the Company.

2. Review and approve the salary, bonus and compensation plans

for all the executive directors of the Company

3. Framing suitable policies and systems to ensure that there is no

violation, by an Employee or Company of any applicable laws in

India or overseas, including:

• TheSecuritiesandExchangeBoardofIndia(InsiderTrading)

Regulations, 1992; or

• The Securities and Exchange Board of India (Prohibition

of Fraudulent and Unfair Trade Practices relating to the

Securities market) Regulations, 1995.

4. Administer the implementation and award of stock options

under the stock option plans of the Company

5. Perform such functions as are required to be performed by the

Compensation Committee under Clause 5 of the Securities and

Exchange Board of India (Employee Stock Option Scheme and

Employee Stock Purchase Scheme) Guidelines, 1999

6. Recommend to the Board of Directors of the Company on any

other employment incentives as the compensation committee

deems it appropriate in the best interests of the Company

7. Such other matters as may from time to time are required by

any statutory, contractual or other regulatory requirements to be

attended to by such committee.

Details of Compensation Committee Meetings during the financial

year


Compensation Committee were held. The details of the same are as

follows:

Sl No.

Name of Director and Position

Meetings/Attendance

April 30, 2008

July 31, 2008

October 31, 2008

January 30, 2009

1. Sridar Iyengar – Chairman Present Present Present Present

2. HH Haight IV– Member Present Present Present -

3. *Vikram Kirloskar – Member Present Absent NA NA

4. +Naresh Malhotra – Member NA NA Present Present

5. #Hatim Tyabji – Member NA NA NA Present

*Mr. Vikram Kirloskar resigned effective from August 08, 2008

+ Appointed as member effective October 30, 2008

#Mr. Hatim Tyabji was appointed as alternate director for the Board and Committee Meetings held on

January 29 and 30, 2009

3. Share Transfer and Investor Grievance Committee

The Share Transfer and Investor Grievance Committee consists of

a minimum of three directors of whom two thirds including the

Chairman are Independent Directors. This Committee was constituted

by our Board at their meeting held on April 20, 2007. This Committee

was formed to specifically look into the redressal of shareholder and

investor complaints and issues pertaining to allotment or transfer

of shares, non-receipt of balance sheet, non-receipt of declared

dividends etc. The Share Transfer and Investor Grievance Committee

consists of Naresh Malhotra (Chairman), Prof. Jayanth Rama Varma

and Chandramouli Janakiraman. The Chairman of the Committee is

Mr. Naresh Malhotra, independent Director. He has over 39 years

28 2928 29

of experience in India and overseas in various companies including

Imperial Chemical Industries, Unilever, Colgate Palmolive, Bukhatir

Investments, the U B Group, KPMG and Amalgamated Bean Coffee

Trading Company. He has previously served as founding partner and

managing director of corporate finance in KPMG in India. He has

been appointed as an independent Director by the shareholders of our

Company at the AGM held on August 17, 2007. Mr. Malhotra retires

by rotation and being eligible offers himself for re-appointment at

the forthcoming AGM to be held on August 01, 2009. The company

secretary acts as secretary to the committee.

The terms of reference of the Share Transfer and Investor Grievance

Committee are as follows:

• To approve and register, transfer and/or transmission of all

classes of shares;

• Tolookintotheredressalofshareholderandinvestorcomplaints

like non-transfer of shares, non-receipt of balance sheet, non-

receipt of declared dividends etc; and

• To do all such acts, things or deeds as may be necessary or

incidental to the exercise of the above powers.

Details of Shareholder and Investor Grievance Committee

Meetings held during the financial year


Shareholder and Investor Grievance Committee were held. The details of

the same are as follows:

Sl

No.

Name of Director and

Position

Meetings/

Attendance

April 30,

2008July 31,2008

October

31,2008

January

30,2009

1.*Vikram Kirloskar –

ChairmanPresent Absent NA NA

2.Chandramouli Janakira-

man –Member Present Present Present Present

3.#Naresh Malhotra –

Chairman Present Present Present Present

4. +Jayanth Rama Varma NA NA Present Present

* Resigned from the Board effective August 08, 2008

# Appointed as Chairman effective October 30, 2008

+ Appointed as member effective October 30, 2008

Details of complaints received and resolved during the period

since the listing date till March 31, 2009 are as below:

Information for shareholder complaints received so far

Name of Non-executive Director Heading the Committee

Naresh Malhotra – Independent Director

Name and Designation of Compliance Officer Srikiran D, Company Secretary

Number of Shareholders complaints received so far

422

Number of Shareholder complaints pending 0

Number of pending share transfers 0

Disclosures

There are no materially significant related party transactions of the

Company which have potential conflict with the interests of the Company

at large. Details of non-compliance by the Company, penalties, and

strictures imposed on the Company by Stock Exchanges, SEBI or any

statutory authority, on any matter related to capital markets, during the

period from April 01, 2008 to March 31, 2009 - NIL.

The Company has adopted a Whistle Blower Policy and has established

the necessary mechanism in line with Clause 49 of the Listing Agreement

with the Stock Exchanges, for employees to report concerns about

unethical behavior. No person has been denied access to the Audit

Committee. The Company has disclosed all the mandatory requirements

under Clause 49 of the Listing Agreement.

Among the non-mandatory requirements of the Clause 49 of the Listing

Agreement, the Company has set up Compensation Committee and has

a whistle blower policy in place.

Details of the Public issue and utilization thereof

The details pertaining to the utilization of the proceeds of the fresh issue

of Equity Shares under the Initial Public Offering (IPO) of the Company in

financial year 2008-09 are specified herein below.

The utilization of IPO proceeds is as below:

Amount in Rs. Million

ParticularsProjection in prospectus

Actual funds utilised till March 31, 2009

Purchase equipment for our offices at Bangalore, Mumbai and Delhi and various customer sites

1,805 562

Working capital requirements 50 50

Repayment of Loan 350 350

General Corporate purposes 1,339 1050

Total 3,544 2012

30 3130 31

Management Discussion and AnalysisAs required by Clause 49 of the Listing Agreement, the Management Discussion and Analysis is provided elsewhere in the Annual Report.

CEO/CFO CertificationAs required by Clause 49 of the listing agreement, the CEO / CFO certification is provided elsewhere in the Annual Report.

Auditors’ Certification on Corporate GovernanceAs required by Clause 49 of the Listing Agreement, the auditor’s certificate is obtained and provided in the Annual Report.

Annual General MeetingsDetails of the last three Annual General Meetings of the Company are given below:

Particulars date and time

Fy 2006-07 August 17, 2007 10:00 AM

Fy 2007-08 August 1, 2008 10:00 AM

Fy 2008-09 August 1, 2009 10:00 AM

Venue

No. 26, Bannerghat-ta Road, JP Nagar Phase III, Bangalore - 560076

Hotel Royal Orchid, 01, Golf Avenue, Adjoining KGA Golf Course, Airport Road, Bangalore – 560 008

Hotel Royal Orchid, 01, Golf Avenue, Adjoining KGA Golf Course, Airport Road, Bangalore – 560 008

Details of the postal ballot resolutions passed by the Company till the date of this report are given below:

FINANCIAL yEAR DATE TIME VENUE

2007-08 April 18, 2008 Not Applicable Not Applicable

2008-09 October 30, 2008 Not Applicable Not Applicable

Results of the Special Resolution passed through Postal Ballot are as follows:

April 18, 2008

ParticularsNo. of

Postal Ballot forms

No. of shares

% of paid up equity

capital

Number of valid postal ballot forms received

283 34,509,256 60.11

Votes in favor of the Resolution 253 34,136,705 59.46

Votes against the Resolution 30 372,551 0.64

Number of invalid postal ballot forms received

21 503,644 0.87

Scrutinizer to the Postal Ballot Resolution – “Mr. SN Mishra”, Company Secretary

October 30, 2008

ParticularsNo. of

Postal Ballot forms

No. of shares

% of paid up equity

capital

Number of valid postal ballot forms received

204 32,444,160 56.16

Votes in favor of the Resolution 185 31,998,483 55.38

Votes against the Resolution 19 445,677 00.78

Number of invalid postal ballot forms received

9 322,816 00.56

Scrutinizer to the Postal Ballot Resolution – “Mr. SN Mishra”, Company Secretary

General Information for Share holders

Registered and Corporate OfficeOnMobile Global LimitedNo. 26, Bannerghatta Road, JP Nagar Phase III, Bangalore – 560076, Karnataka, India.T + 91 80 4180 2500F + 91 80 4180 2810W http://www.onmobile.com

OTHER LOCATIONS (Domestic)BANGALORE:RPS Green Space, No. 165/5, 1st Main, Krishna Raju Layout, J P Nagar Phase VII, Bangalore – 560 076T +91 80 40096000F + 91 80 40096009

MUMBAI:#1004, Floor 10, Dalamal House, Nariman Point, Mumbai – 400 021+ 91 22 22833470+ 91 22 22876141

Sumer Plaza, Floor 4 and 5, Marol Maroshi Road, Marol, Andheri (E), Mumbai – 400 059T + 91 22 40588588F + 91 22 40588558

DELHI:704, Floor 7, Bhikaji Cama Bhawan, Bhikaji Cama Place, New Delhi – 110 066+ 91 11 41859722+ 91 11 41859722

G-1, Ground Floor, Global Arcade,M G Road, Sikandarpur, Gurgaon – 122 002

OTHER LOCATIONS (International):AUSTRALIALevel 34, 100 Miller Street, N Sydney, NSW – 2060, AustraliaT +61 296571342

BANGLADESHRupayan Centre (Floor 17, South East), Plot No. 72, Mohakhali Commercial Area, Dhaka 1212, Bangladesh T +88 019 11740351 +88 018 19232428 +88 017 11566999

FRANCEVoxmobili SA (an OnMobile Company)36, rue Brunel75017 Paris - France T + 33 140262334 F +33 140269288

Telisma SA (an OnMobile Company)97 av. du Général Leclerc 75014 Paris T +33 156536444 F +33 145432454

30 3130 31

INDONESIAPT OnMobile IndonesiaM-23, Mayapada Tower, 11th Floor,Jl. Jenderal Sudirman Kav. 28Jakarta 12920, Indonesia T +62 2152897330 F +62 2152897375

MALAYSIALevel 16,Menara Hap Seng, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia T +60 392367230 +60 392367231 F +60 392367333

SINGAPOREOnMobile Singapore Pte. Ltd. APBC Raffles Place, 30 Raffles Place, #23-00 Chevron House, Singapore - 048622 T +65 62335048 F +65 62335041

Listing Details The shares of the Company are listed on: Bombay Stock Exchange (BSE) Phiroze Jheejheebhouy Towers,Dalal Street, Fort, Mumbai – 400 001National Stock Exchange of India Limited (NSE)Exchange Plaza, Plot No. C/1, G Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400 051The Listing Fees for both the exchanges have been paid and compliance of the listing agreements has been done for the Fy 2008-09.

Stock Code National Stock Exchange of India Limited (NSE) – ONMOBILEBombay Stock Exchange Limited (BSE) – 532944Reuters – ONMO.Bloomberg – ONMB:IN

FORTH COMING ANNUAL GENERAL MEETING (AGM) The Ninth Annual General Meeting (AGM) of the Members of OnMobile Global Limited will be held on Saturday, the 01st of August 2009, at 10.30A.M. at Hotel Royal Orchid, 01, Golf Avenue, Adjoining KGA Golf Course, Airport Road, Bangalore – 560 008

FINANCIAL CALENDAR (TENTATIVE AND SUBJECT TO CHANGE)

Event Likely Board Meeting Schedule

Financial reporting for the quarter ended June 30, 2009 July 30/31, 2009

Financial reporting for the quarter ended September 30, 2009 October 25/26/27, 2009

Financial reporting for the quarter ended December 31, 2009 January 28/29, 2010

Financial reporting for the quarter ended March 31, 2010 April 29/30, 2010

BOOK CLOSURE DATE(S) July 28, 2009 to July 31, 2009

REGISTRARS AND SHARE TRANSFER AGENTS Karvy Computershare Private LimitedKarvy House, 21, Avenue – 4Plot No. 17 to 24, Vittalrao Nagar, Madhapur,Hyderabad – 500 081T +91 40 23420818-828F +91 40 23420814

DEPOSITORy SySTEM Currently 97.78% of the Company’s share capital is held in dematerialised form. For any assistance in conversion of the physical shares to demat form or vice versa, the investors may approach Karvy Computershare Private Limited or Mr. Srikiran D, Compliance Officer, at the addresses mentioned above.

Email ID of Grievance Redressal Division [email protected] or [email protected]

NEPALWard No. 6, Galfutar, Mahangal VCD, Kathmandu, Nepal

SOUTH AFRICACentral Office Park No. 3, 257 Jean Avenue, Centurion 0157, South Africa

ROMANIABucharest, 34 Aurel Vlaicu Street, Ground Floor, 2nd District, Romania

Representing Officers of the CompanyCorrespondence to the following officers may be addressed at the registered office of the Company.

COMPANy SECRETARy AND COMPLIANCE OFFICERD SrikiranCompany SecretaryT + 91 80 4180 2500F + 91 80 4180 2810E [email protected]

32 3332 33

Distribution of Shareholding

Distribution Schedule - Consolidated as on March 31, 2009Category (Amount) No. of Cases % of Cases Shares % of Shares

1 – 5000 17,177 95.43 11,571,750 2.00

5001 – 10000 359 1.99 2,318,550 0.40

10001 – 20000 171 0.95 2,367,810 0.41

20001 – 30000 75 0.42 1,852,470 0.32

30001 – 40000 27 0.15 926,240 0.16

40001 – 50000 16 0.09 739,930 0.13

50001 – 100000 43 0.24 3,130,280 0.54

100001 & Above 131 0.73 555,426,160 96.04

TOTAL 17,999 100 578,333,190 100

Shareholding pattern as on March 31, 2009

Category

code

Category of Shareholder No. of share-

holder

Total No. of

shares

No. of shares held in dematerialized

form

Total shareholding as a percentage

of total number of shares

Shares Pledged or otherwise encum-

bered

As a percentage of (A+B)

As a percentage of (A+B+C)

Number of Shares As a percentage

(I) (II) (III) (IV) (V) (VI) (VII) (VIII)(IX)=(VIII)/

(IV)*100

(A)Shareholding of Promoter and Promoter Group

(1) Indian

(a)Individuals/ Hindu Undivided Family

5 7,619,950 7,619,930 13.18 13.18 150,000 1.97

(b)Central Governent / State Govern-ment (s)

-- -- -- -- -- --

(c) Bodies Corporate -- -- -- -- -- --(d) Financial Institutions / Banks -- -- -- -- -- -- --(e) Any Other (specify) -- -- -- -- -- -- --

Sub-Total (A)(1) 5 7,619,950 7,619,930 13.18 13.18 150,000 1.97(2) Foreign --

(a)Individuals (Non-Resident Individu-als/ Foreign Individuals)

-- -- -- -- -- -- --

(b) Bodies Corporate 1 25,403,867 25,403,867 43.95 43.95 -- --(c) Institutions -- -- -- -- -- -- --(d) Any Other (specify) -- -- -- -- -- -- --

Sub-Total (A)(2) 1 25,403,867 25,403,867 43.95 43.95 -- --Total Shareholding of Promoter and Promoter Group (A) = (A)(1)+(A)(2)

6 33,023,817 33,023,797 57.13 57.13 150,000 0.45

(B) Public Shareholding3(1) Institutions

(a) Mutual Funds / UTI 19 2,458,626 2,458,626 4.25 4.25 -- --

(b) Financial Institutions / Banks 1 2,000 2,000 0.00 0.00 -- --

(c)Central Governent / State Govern-ment (s)

-- -- -- -- -- -- --

(d) Veture Capital Funds -- -- -- -- -- -- --(e) Inurance Companies -- -- -- -- -- -- --(f) Foreign Institutional Investors 25 9,013,456 9,013,456 15.59 15.59 -- --(g) Foreign Venture Capital Investors -- -- -- -- -- -- --

32 3332 33

(h) Any Other (specify) -- -- -- -- -- -- --Sub-Total (B)(1) 45 11,474,082 11,474,082 19.85 19.85 NA NA

(2) Non-institutions -- -- --(a) Bodies Corporate 394 2,939,551 2,939,551 5.09 5.09 -- --

(b)Individuals - (i) Individual shareholders holding nominal sharecapital up to Rs.1 lakh.

16429 1,863,756 1,609,336 3.22 3.22 -- --

(ii) Individual shareholders holding nominal share capital in excess of Rs.1 lakh

73 5,059,535 4,460,456 8.75 8.75 -- --

(c) Any Other (specify) -- -- -- -- -- -- --(ci) Non Resident Indians 370 151,667 151,667 0.26 0.26 -- --(cii) HUF 459 54,929 54,929 0.10 0.10 -- --(ciii) Director -- -- -- -- -- -- --(civ) Trust 1 1 1 0.00 0.00 -- --(cv) Clearing Members 68 78,034 78,034 0.13 0.13 -- --(cvi) Foreign Nationals 2 423,722 0 0.73 0.73 -- --

- Foreign Companies 4 2,734,286 2,734,286 4.73 4.73 -- --Sub-Total (B)(2) 17,800 13,305,481 12,028,260 23.02 23.02 NA NATotal Public Shareholding (B)=(B)(1)+(B)(2)

17,845 24,779,563 23,502,342 42.87 42.87

TOTAL (A)+(B) 17,851 57,803,380 56,526,139 100.00 100.00 150,000 0.26

(C)

Shares held by Custodians and against which Depository Receipts have been issued GRAND TOTAL (A)+(B)+(C)

17,851 57,803,380 56,526,139 100.00 100.00

Total B = B(1) + B (2) : 17,992 24,809,502 23,532,281 42.90 42.90 Total ( A + B ) : 17,999 57,833,319 56,556,078 100.00 100.00C Shares Held by Custodians, against

which Depository Receipts have been issued

-- -- -- -- --

GRAND TOTAL ( A + B + C) : 17,999 57,833,319 56,556,078 100.00 100.00

Shareholding of 1% or more holding

S.No Name As on 31/03/2009 Category 1% & Above

1 ONMOBILE SySTEMS INC 25,403,867 FP 43.95

2 ARVIND RAO 5,340,517 IPR 9.24

3 DEUTSCHE SECURITIES MAURITIUS LIMITED 2,568,183 FII 4.44

4 ICICI PRUDENTIAL LIFE INSURANCE COMPANy LTD 2,273,288 LTD 3.93

5 J.CHANDRAMOULI 2,233,913 IPR 3.86

6 SMALLCAP WORLD FUND, INC 2,230,000 FII 3.86

7 WARD FERRy MANAGEMENT LIMITED A/C WF ASIAN SMALLER 1,627,000 FII 2.81

8 JADE DRAGON (MAURITIUS) LIMITED 1,618,994 FC1 2.80

9 FIL TRUSTEE COMPANy PRIVATE LIMITED A/C FIDELITy E 804,738 MUT 1.39

TOTAL 44,100,500

34 3534 35

Last Financial year Trade details:

BSE and NSE:

Month wise - Price – High and Low

BSE NSE

Month High (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

April 2008 744.70 509.00 745 525

May 2008 704.00 615.25 712 601.25

June 2008 691.80 450.00 640.2 512

July 2008 558.00 451.00 556.1 485

August 2008 562.40 474.00 568.6 476.1

September 2008 535.00 400.10 570.5 392.2

October 2008 505.00 201.05 505.5 200.1

November 2008 248.70 190.00 247.8 190

December 2008 270.25 202.20 272 200.1

January 2009 258.90 205.50 258.95 204.25

February 2009 274.50 185.20 258.7 201.1

March 2009 327.90 223.00 324.95 224.05

OnMobile Global Limited Vs BSE

OnMobile Global Limited Vs NSE

Investor Grievances and Share Transfer

The Company has an Investor Grievances committee of the Board to

examine and redress shareholders’ and investor complaints. The status on

share transfers is reported to the Board by the Company Secretary. Details

of complaints received and their nature is provided above. For shares

transferred in physical form, the Company gives adequate notice to the

seller before registering the transfer of shares. The Company Secretary

receives the share transfers and reports the same to the committee at

their meeting. For matters regarding shares transferred in physical form,

share certificates, dividends, change of address, etc., Shareholders should

communicate with Karvy Computershare Private Limited, our registrar and

share transfer agent. The address is given in the section on Shareholder

information. For shares transferred in electronic form, after confirmation

of sale / purchase transaction from the broker, shareholders should

approach the depositary participant with a request to debit or credit the

account for the transaction. The depository participant will immediately

arrange to complete the transaction by updating the account. There is no

need for separate communication to register the share transfer. For the

year under review the summary of the investor grievances/complaints

are as below:

Sl No.

Description Received Resolved Pending

1. Status of Applications lodged for Public Issue (s) 40 40 0

2. Withdrawal of Application(s) 4 4 0

3. Reason for Rejection (Non Allotment) 0 0 0

4. Non Receipt of Refund Order 288 288 0

5. Non Receipt of Refund Credit 90 90 0

Total 422 422 0

Dematerialization of Shares

The Company’s shares are admitted into both the depositories viz.,

National Securities Depository Ltd (NSDL) and Central Depository Services

(India) Limited. As of March 31, 2009, 97.78% of the Company’s shares

are held in electronic form.

34 3534 35

Chart Depcting the Dematerialization of Shares

CERTIFICATE OF COMPLIANCE FROM AUDITORS AND/OR INDEPENDENT COMPANy SECRETARy AS STIPULATED

UNDER CLAUSE 49 OF THE LISTING AGREEMENT OF THE STOCK EXCHANGES IN INDIA

CERTIFICATE FROM THE AUDITOR

C E R T I F I C A T E

To the members of OnMobile Global Limited

We have examined the compliance of conditions of corporate governance

by OnMobile Global Limited (the “Company”) for the year ended March

31, 2009 as stipulated in Clause 49 of the Listing Agreement of the said

company with the relevant Stock Exchanges.

The compliance of conditions of corporate governance is the responsibility

of the management. Our examination is limited to procedures and

implementation thereof, adopted by the Company for ensuring the

compliance of the conditions of the Corporate Governance. It is neither

an audit nor an expression of opinion on the financial statements of the

Company.

In our opinion and to the best of our information and according to

the explanations given to us and the representation made by the

management, we certify that the Company has complied with the

conditions of Corporate Governance as stipulated in the abovementioned

Listing Agreement.

We further state that such compliance is neither an assurance as to the

future viability of the Company nor the efficiency or effectiveness with

which the management has conducted the affairs of the company.

For Deloitte Haskins & Sell

Chartered Accountants

V. Srikumar

Place: Mumbai Partner

Date: April 30, 2009 M. No.: 84494

CERTIFICATE FROM THE COMPANy SECRETARy

We have examined all relevant records of M/s. OnMobile Global Limited

(the Company), for the purpose of certifying compliance of the conditions

of Corporate Governance under Clause 49 of the Listing Agreement(s)

entered into with Indian Stock Exchanges for the financial year ending

March 31, 2009.

The compliance of the conditions of Corporate Governance is the

responsibility of the management. Our examination was limited to

the review of procedures and implementation thereof adopted by the

Company for ensuring compliance of the conditions of Corporate

Governance as stipulated in the said clause. This certificate is neither an

assurance as to the future viability of the Company nor of the efficacy or

effectiveness with which the management has conducted the affairs of

the Company.

On the basis of our findings recorded in the annexed report from the

examination of the records produced and explanations and information

furnished to us, in our opinion the Company has complied with the

conditions of corporate governance as stipulated in the clause 49 of the

Listing Agreement as on March 31, 2009.

Hegde & Hegde

Company Secretaries

Place: Bangalore P.G.HEGDE

Date: April 30, 2009 C.P.No.640

36 3736 37

Dear Members,

The Directors take pleasure in presenting the 9th Annual Report on the

business and operations of the Company together with the Audited

Financial Statements and Accounts for the year ended 31st March, 2009.

RESULTS OF OPERATIONS

(Rs. Millions)

FINANCIAL HIGHLIGHTS Of OnMobile Global Limited (unconsolidated)

PARTICULARS 2008-09 2007-08

Net Revenue 3,271.10 2,307.63

Earning before other income, depreciation, finance charges and tax

1,185.92 917.12

Other Income 236.09 68.85

Depreciation 420.53 249.18

Finance Charges 0.03 17.09

Earnings before tax 1,001.45 719.70

Earnings after tax 706.81 475.68

Equity Share Capital 578.33 574.06

Reserves and Surplus 6,067.64 5,364.60

Networth 6,646.26 5,940.07

Investments 2,298.39 4,610.75

Gross Block 1,961.38 1,301.56

Net Block 1,015.42 776.07

Net Current Assets 3,453.30 757.97

Cash and Cash Equivalents 2,771.10 1,436.41

No. of Equity shares 57,833,319 57,406,139

Earnings per share (Diluted) (In Rs.) 11.8 9.2

Business Performance / Financial Overview

Standalone Financials:

During 2008-09, the Company recorded net revenue of Rs. 3271.10

million, an increase of 42% over the previous year of Rs. 2,307.64 million.

The Earnings after tax of the Company increased from Rs. 475.68 million

in 2007-08 to Rs. 706.81 million in 2008-09, an increase of 49%. The

diluted earnings per share (EPS) increased from Rs. 9.2 per share to Rs.

11.8 per share.

Consolidated Financials:

During 2008-09, the Company recorded consolidated net revenue of Rs.

4063.57 million, an increase of 55% over the previous year of Rs. 2618.16

million. The Consolidated Earnings after tax of the Company increased

from Rs. 603.10 million in 2007-08 to Rs. 851.97 million in 2008-09,

an increase of 41%. The consolidated diluted earnings per share (EPS)

increased from Rs. 11.6 per share to Rs. 14.3 per share.

New Products & Services deployed in the year 2008-2009OnMobile’s innovations focused on enhancing the consumer’s Mobile

User Experience for existing services and also created new opportunities

for growth.

1. Say and Search

Using Telisma’s Speech Recognition engine, OnMobile launched ‘Say

and Search’ that enabled users to simply say the name of the song

and get the content of their choice. First introduced in Ringback

Tones, this enhancement contributed a surge in adoption and use

of the product with millions of requests served every month. Search

is fast becoming an important and strategic technology asset for

Content and Service discovery.

2. Phone Book 2.0

Providing an integrated interaction history along with the user’s

contact information is Phonebook 2.0. This next generation OnMobile

product won the Global Android Challenge in 2008. Apart from

being a secure, contextual phone book, it offers social networking

opportunities to the consumers. A version of Phonebook 2.0 product

is available for download on the Google Android Marketplace and

has been downloaded more than 150,000 times in just 2 months.

3. OnMobile Developer Network

Ozone 3.0, the 3rd generation of the versatile Multi-modal Platform

MMP2500, has been developed using VoiceXML and other Open

Industry Standards-based technologies. Combined with the SDK,

Ozone is now available for Application Developers to create exciting

new Speech-Recognition based services to cater to the growing

need for voice portal services in India and other developing markets.

Partners can quickly and easily develop these applications in many

Indian and International languages, using the teliSpeech technology

that is a part of the platform.

4. SMS/USSD

Besides Voice, Text (including both SMS and USSD) are popular ways

for communication for mobile users. We have developed technologies,

so compelling services can be developed and deployed easily and

effectively, by us and other developers.

5. Mob Music

Mob Music is an innovative 3G Music product, where the music

comes to your mobile instead of the users having to search and

Directors’ Report

36 3736 37

download it to their phones. Additional info like news, free tracks,

artist bio, customized playlist and more are available. Users can also

share their playlists and create communities. This product has been

launched with a leading Operator in Australia in partnership with the

music labels.

6. Mobile Paparazzi

Directly click and share the photo & video from your mobile! With

Mobile Paparazzi users can share their cherished moments by sending

them to any other mobile or to one of the many Social Network and

Picture sharing websites. Mobile Paparazzi captures on the impulse

that’s generated when they take a memorable picture.

7. Mobile Reader

Mobile reader brings magazines, news papers and info snacks on

the mobile to its customers. It is a mobile kiosk/ storefront that

allows consumers to Discover (News-stand), Purchase (Subscribe) &

Consume (Read) magazines on the move! This product is available for

3G data enabled networks and supported on wide range of handsets

from leading OEMs like Nokia, Sony Ericsson, Motorola, Samsung, LG

& Blackberry.

Significant Customer wins in the year 2008-20091. Successful migration of Airtel RBT

India’s largest telecom carrier Bharti Airtel awarded the RBT

replacement in one of its regions to OnMobile. OnMobile successfully

migrated Four Million active customers to the new system, making it

one of the largest migration activity of its kind in the world.

2. Messaging Solutions @ Idea

OnMobile’s Messaging Platform now forms the core of Idea’s 55456

SMS short code service. The SMS applications include Cricket, Info

Services, Contests, Music & Bollywood related content, Games,

Devotional and many more. The Messaging Platform also handles

several USSD based services and applications.

3. Phone Backup @ Grameen Phone, Bangladesh and Vodafone, India

OnMobile’s Phone Backup solution has been successfully deployed

in Grameen Phone, Bangladesh and in Vodafone, India. This enables

the Operator’s consumers to securely backup their precious mobile

content onto secure servers hosted in the Operator’s network and

retrieve them in case the user loses the mobile or upgrades to a new

device.

4. CRBT deployment in Vodafone, Romania

Marking its first deployment of a Ringback Tone solution in the

European market, Vodafone Romania launched an improved version

of the service to its consumers using OnMobile CRBT Solution and

One-Touch RBT technology.

5. Cox Communications (NAB)

Appropriations

A. Dividend

The telecommunication industry, in general, and mobile value added

services (MVAS), in particular, has witnessed a tremendous growth

over the past few years and the industry associations / independent

research organization indicators suggest a significant growth in the

coming years. Accordingly, keeping in view the Company’s growth

plans and the need to finance the growth plans through internal

accruals, the directors do not recommend any dividend for the year

ended March 31, 2009.

The register of members and the share transfer books will remain

closed from July 28, 2009 to July 31, 2009, both days inclusive. The

Annual General Meeting of the Company has been scheduled for

August 01, 2009.

B. Transfer to Reserves

We propose to retain Rs. 1907.88 million in the Profit and Loss

Account.

Liquidity

The Company ensures that it has adequate cash to meet its strategic

objectives. As on March 31, 2009 the Company had liquid assets

including investments in fixed deposits of Rs. 2452.85 million. The

Company has invested these funds with banks.

Changes to the Share Capital

During the year under review, the Company allotted 427,180 shares

of face value Rs. 10 each on the exercise of stock options under its

various Employee Stock Option Plans, which increased the number

of issued, subscribed and paid-up equity shares from 57,406,139

to 57,833,319. The issued and paid up equity share capital of the

Company as on the date of this report stands at Rs. 578,333,190/-

consisting of 57,833,319 equity shares of face value Rs. 10/- each.

Initial Public Offering

The details pertaining to the utilization of IPO proceeds till March

31, 2009 is specified in the notes to accounts section of the Annual

Report.

38 3938 39

Significant Events this year

A. Acquisition of Telisma S A

During the year the Company has vide resolution of the Board of

Directors dated April 30, 2008 and the share purchase agreement

signed by and between the Company and the shareholders of Telisma

S.A. (“Telisma”) on May 13, 2008 and the Founder’s agreement

signed by and between the Company and the Founders of Telisma

on May 13, 2008, acquired 203,445,874 shares of Telisma on July 1,

2008 for a total consideration of Euros 11.78 Million ( aggregating to

Rs 801.28 Million including Rs 3.69 Million of taxes payable towards

transfer of shares) payable as below:

1. Euros 10.78 Million in Cash

2. Euros 0.64 Million (converted into a Rupee liability of Rs 42.64

Million) in form of equity shares subsequent to an earn out valuation

adjustment as mentioned in the share purchase agreement, payable

to the founders of Telisma and

3. Euros 0.36 Million in form of equity shares subsequent to an earnout

valuation adjustment as mentioned in the share purchase agreement,

payable to the Minority vendors of Telisma.

The consideration of Euros 1 million consisting of 2 and 3 above is

included in the deferred payment liability in the Balance Sheet.

Telisma S.A. provides specialized advice and services in the

communication, telematic, and interactive services fields and provides

a wide range of Software services, in particular voice recognition

software services, for telecom companies. Further, Telisma has its

software solutions focused for major mobile and landline operators.

B. Restructuring of the European Operations (Merger of Subsidiaries)

With a view to streamline the operations of the Company’s

Subsidiaries in Europe it was considered appropriate to restructure

the holding structure of the Company’s subsidiaries in Europe by

transferring its holding in the two of its wholly owned subsidiaries,

namely, Vox mobili SA and Telisma SA in favor of a newly incorporated

(incorporated during the year) step down Subsidiary in Netherlands -

“OnMobile Europe B.V”.

Further, the Company has initiated steps to merge its two subsidiaries

in France (Vox mobili SA and Telisma SA) into one.

Necessary approvals were obtained by the Company from the

respective Boards of Directors and the FIPB (Foreign Investment

Promotion Board) and the RBI (Reserve Bank of India) for the above

restructuring activity.

C. Purchase of Intellectual Property from Music On Solutions Private

Limited

During the year under review the Company’s Board deliberated and

approved a proposal to purchase the Intellectual Property rights of

a Platform from a Company named “Music On Solutions Private

Limited” (“Music On”).

Music On is a Retail MVAS platform that enables various Mobile

phone operators to showcase MVAS (Mobile Value added services) to

their customers at their retail chain of stores. This platform is a white

label platform that helps customers discover, preview and experience

various value added services like Music, Videos, Ring back tones

(RBT), Ringtones, Wallpapers, games etc., easily and quickly. The

platform enables the sale of rich media music and videos to music

phones at the retail stores. This opens a new distribution option

for content owners who previously depended on the sale of CD’s

for Rich media distribution. The platform is provided as a complete

managed service to the operators. The end consumers depending on

the handset they carry can choose to transfer the content either over

a USB cable, Bluetooth or via WAP (OTA).

The Company had bought the Intellectual Property of Music On

for a consideration of Rs.42.9 million to be paid over four quarters

effective from January 30, 2009.

The Company has also agreed to pay a variable consideration based

on the product revenue earned and the net margin on the service.

The founders of Music On would be working with the Company as

employees of the Company to create and manage the Music On

Platform as “retail VAS” group within the Company.

D. Investment in Ver se Innovation Private Limited (Company’s

Subsidiary)

During the year the Company made an additional investment of Rs.

33 million vide resolution of the Board of Directors dated October 31,

38 3938 39

2008, pursuant to a capital commitment made of Rs 66 million as

per the terms and conditions of the subscription cum shareholder’s

agreement entered into with Ver se and its promoters in the year

2007 - 08.

Subsidiaries

As on March 31st 2009, the Company has the following Subsidiaries:

1. OnMobile Australia Pty. Ltd.

2. OnMobile Singapore Pte. Ltd.

3. PT. OnMobile Indonesia

4. Vox mobili S.A.

5. Vox mobili Inc.

6. Ver se Innovation Private Limited


8. Telisma SA

9. OnMobile Europe B.V.

As per Section 212 of the Companies Act, 1956, we are required to

attach the directors’ report, balance sheet, and profit and loss account

of our subsidiaries. The Company had applied to the Government of India

seeking exemption from such an attachment as the Company presents

the audited consolidated financial statements in the Annual Report.

The Government of India has granted exemption from complying with

Section 212 vide their letter dated June 19, 2009, ref. no. 47/48/2009.

Accordingly, the annual report does not contain the financial statements

of these subsidiaries. The company will make available the audited

annual accounts and related information of the Subsidiary companies,

where applicable, upon request by any investor of the Company. These

documents will also be made available for inspection during business

hours at our registered office. The Company has given the necessary

details requested by the Government of India along with the statement

regarding subsidiary companies under section 212 of the Companies Act,

1956 elsewhere in the Annual Report for this Financial year 2008-2009.

Considering the decision to optimize tax benefits, the Company had

changed its business model in Australia last year from a subsidiary model

to a branch model. Accordingly, the Australian subsidiary is in the process

of winding up. A Liquidator was appointed by the subsidiary and the same

would be wound up as per the regulations prescribed in Australia. The

Company proposes to do necessary reporting to the Authorised Dealer

under FEMA Guidelines.

New Locations

The Company continued its expansion internationally during this year

as well. The Company had significant new deployments in Indonesia,

Malaysia, and Bangladesh. The Company had signed various important

global contracts during the year under review. As part of the Company’s

global expansion, the Company now also has branch offices in South

Africa Nepal and Romania.

Material Changes for the period between End of the Financial year and the Date of the Report There have been no Material Changes for the period between end of the

financial year 2008-09 and the date of this report. However the Company

intends to approach the share holders for their approval for the earnout

allotments to the founders and employees of Telisma SA.

QUALITy The Company is committed to the eight guiding Quality Management

principles of Customer Focus, Leadership, People Involvement, Process

Approach, System Approach to Management, Continual Improvement,

Fact-Based Decision-Making and Mutually Beneficial Supplier

Relationships.

The Company uses an ISO framework for Information Security and aspires

to be ISO 27001 compliant in the near future. The Company’s various

products/services are subjected to periodic and rigorous assessments by

reputed external assessors.

The Company has embarked on various strategic improvement initiatives

last year:

• InformationSecurityGovernance

• RiskAssessment

• AssetManagement

• BusinessContinuityManagement

• HumanResourceSecurity

• Usageof‘Scrum’,anAgileSoftwareDevelopmentMethodologyfor

our software development lifecycle

• Asuiteofworkflow tools toensure timelydeliveryof increasingly

large number of deliverables and to provide enhanced operational

metrics

About ISO/IEC 27001:

The ISO/IEC 27001 is an information security management system (ISMS)

standard published by the International Organization for Standardization

and the International Electro Technical Commission.

40 4140 41

ISO/IEC 27001 provides an ISMS model for adequate and proportionate

security controls to protect information assets and give confidence to

interested parties. This sets the standard for handling the Confidentiality,

Integrity and Availability of an Information Asset.

About Agile Software Development:

Agile software development is a conceptual framework for software

engineering that promotes development iterations throughout the life-

cycle of the project. This approach helps to minimize risk associated with

developing software in short amounts of time.

AWARDS AND RECOGNITION/BRANDING

Industry Recognition

Voice & Data recognized the Company as India’s Best MVAS Company and

accorded the V&D100 award for 2008. The V&D100 Awards is popularly

recognized by the Indian communications industry as its most reliable

chronicle. The Company had also received this award in the year 2007.

Other Recognitions

During the year, Mr. Arvind Rao, CEO and Managing Director of the

Company won the award for the Start-Up Entrepreneur of the year 2008

of the Ernst & young Tenth Entrepreneur Awards 2008.

The Annual Report and Accounts of the Company for the year ended March

31, 2008, have been adjudged as the second best amongst the entries

received under the Category ‘Information Technology, Communication

and Entertainment enterprises’ (Category ‘V’) of the ‘ICAI (Institute of

Chartered Accountants of India) Awards for Excellence in Financial

Reporting’.

The Company has again been recognized as one of the 50 fastest growing

technology companies in India by Deloitte Touche Tohmatsu and received

‘Technology Fast 50 India award again in the year 2008 program.

The Company has been recognized as one of the 500 fastest growing

technology companies in Asia Pacific by Deloitte Touche Tohmatsu and

received ‘Technology Fast 500 Asia Pacific award in the 2008 program.

CORPORATE SOCIAL RESPONSIBILITy

The Company, as a responsible corporate entity, believes firmly in

leveraging its mobile platforms in the operators, to serve the society at

large.

As a responsible Corporate Citizen, the Company is committed to

contributing to the society, environment and community. The focus areas on

which the Company strived to ‘Make a Difference’ were the environment,

differently abled and underprivileged children. We translated this into

action by providing non-financial support. The Company partnered with

Spastic Society, Shristi Academy, Maya Organic and CRy for various

initiatives. Support for setting up kiosk was provided for them for sale of

their products to employees.

The Company also supported “Gift a tree “initiative in association with

SAP Green on “World environment Day”. Further, the Company has built

awareness programs on AIDS, Cancer (through our Health & wellness

newsletter) and Sexual Harassment at regular intervals.

The year under review saw the Company launching some innovative

initiatives on mobile such as:

1. Awareness campaign for free and fair elections

2. AIDS awareness campaigns

3. ‘Learn English’ services

INFRASTRUCTURE

As of March 31, 2009, the Company has obtained on lease, office spaces

at Bangalore and Mumbai. Further, the Company owns an office space

in Mumbai. Apart from this the Company has offices at Delhi, Sydney,

Kuala Lumpur, Jakarta, Paris, Dhaka, Singapore, Seattle, Bucharest,

Johannesburg, Kathmandu and London.

HUMAN RESOURCE MANAGEMENT

OnMobile has always believed in building a culture of innovation and

creativity where our employees are inspired to achieve excellence in their

area of functioning. As OnMobile grows globally, expanding its footprint

through its own and acquired offices, we continue to endeavor to foster

a common culture among our globally diversified workforce.

During the year 2008-09 the Company has added 198 Full Time Employee

(FTE) + Contract employees across various functions like Product, Sales &

Marketing, Delivery & Operations, Engineering etc. As on March 31, 2009

employee strength was 1,054. Including the employees in our subsidiary

our total head count is 1,227 employees.

Today, we are a multicultural company, having Latin American, Europeans

and Asians of multiple nationalities as employees at OnMobile.

Our mission is to be the most respected VAS Company in the world, thus

we need to hire the best. Our goal is to attract the best talent around

the globe. We have been hiring diverse workforce. We believe in hiring

individuals with attitude and aptitude to lead the changes that take place

in the telecommunications industry each day.

We continue to tap into the campus talent pool, attracting the best and

brightest from the country’s top Engineering colleges.

40 4140 41

As the Company continues to scale on the people front, it has focused

on enhancing the learning and development opportunities offered to

the team members. In the year 2008-09 the Company has offered 3,383

training days of domain, soft skill and leadership training programs. The

annualized attrition % for confirmed FTE for the year 2008-09 is 15.7%

as compared to 10.8% in 2007-08.

OnMobile has always believed in high performance work culture.

The year 2008-09 is an indication of creating this culture by enforcing

“performance” as a critical differentiator. This paved the way for attrition

of employees who were unable to adapt to this work culture. We are also

planning to introduce several HR practices to retain high performers.

RESEARCH AND DEVELOPMENT/EDUCATION AND KNOW-HOW

INITIATIVES

While India has been the main market, the Company is fast expanding

into many other developing and developed markets.

The Research and development (R&D) efforts are focused on

• Reachingouttoasmanyusersaspossibleacrossmultiplechannels,

given the different capabilities of handsets and networks;

• Makingtheservicesaffordable,particularlygiventhelow-ARPUand

challenging recharge patterns, in the developing markets;

• Servingatotally-newsetofsubscribers,whohavejoinedthemobile

network;

• Making the serviceseasy touse,with Localization,EasierContent

Discovery and Personalization.

CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of

corporate governance. The Company meets the standards and guidelines

set by the Securities and Exchange Board of India on Corporate

Governance and have implemented all the stipulations prescribed. A

detailed report on corporate governance pursuant to the requirements of

Clause 49 of the Listing Agreement forms part of the Annual Report. The

certificate(s) from the auditors of the Company, Deloitte Haskins & Sells,

Chartered Accountants, and independent practicing Company Secretary

Mr. Hegde confirming compliance of conditions of corporate governance

as stipulated under the aforesaid Clause 49 are annexed to the Corporate

Governance Report.

MANAGEMENT DISCUSSION AND ANALySIS REPORT

In accordance with the Listing Agreements, the Management Discussion

and Analysis Report is presented in the separate section forming part of

the Annual Report.

DIRECTORS

Mr. Naresh Malhotra and Mr. Sridar A Iyengar, Directors retire by rotation

and being eligible offer themselves for re-appointment at the forthcoming

Annual General Meeting of the Company.

Brief resumes of the directors offering for re-appointment are included in

the notice for the Annual General Meeting.

Since the last Directors’ Report, Mr. Vikram Kirloskar has resigned from

the Board on August 08, 2008. Mr. Hatim Tyabji was appointed as an

Alternate Director for Mr. Henry Huntley Haight IV for the Board and

Committee Meetings dated January 29 and 30, 2009 respectively and

automatically vacated office as Mr. Henry Huntley Haight IV attended the

subsequent Board and Committee Meetings.

Further, during the year under review the Company appointed Mr. Sanjay

Uppal as the Chief Operating Officer and President of the Company. Mr.

Uppal joined the Company on December 09, 2008. The details of the

OnMobile Leadership Team, which includes certain key employees of

the Company, have been specified in the “OnMobile Leadership Team”

section of this Annual Report.

AUDITORS

The statutory auditors of the Company, M/s. Deloitte Haskins & Sells,

Chartered Accountants, who retire as statutory auditors of the Company

at the conclusion of the forthcoming Annual General Meeting, offer

themselves for re-appointment and have also confirmed that their

appointment, if made, will be within the limits under Section 224(1B) of

the Companies Act, 1956. The auditor’s report is self explanatory and the

observations made therein have been commented upon by the Board in

the notes to accounts.

RESPONSIBILITy STATEMENT OF THE BOARD OF DIRECTORS

Pursuant to Section 217(2AA) of the Companies Act, 1956, the directors

to the best of their knowledge and belief confirm that:

42 4342 43

i. in the preparation of the annual accounts, the applicable

accounting standards have been followed along with proper

explanation relating to material departures;

ii. they have selected and applied consistently and made judgments

and estimates that are reasonable and prudent so as to give a

true and fair view of the state of affairs of the Company as at

the end of the financial year and of the profit of the Company for

that period;

iii. they have taken proper and sufficient care for the maintenance of

adequate accounting records in accordance with the provisions

of the Companies Act, 1956 and for safeguarding the assets of

the Company and for preventing and detecting fraud and other

irregularities;

iv. they have prepared the annual accounts on a going concern

basis.

PARTICULARS OF EMPLOyEES The information as are required to be provided in terms of section 217(2A)

of the Companies Act, 1956 read with the Companies (Particulars of

Employees) Rules, 1975, have been included as an annexure A to this

report.

CONSERVATION OF ENERGy AND TECHNOLGy ABSORPTION The Company, being a service provider organization, most of the

information as required under Section 217(1)(e) of the Companies Act,

1956, read with the Companies (Disclosure of particulars in the report

of the Board of Directors) Rules, 1988, as amended is not applicable.

However, the Company endeavors to effectively utilize and conserve

energy by using improved technology in its infrastructure such as lightings

and paper usage.

FIXED DEPOSITS In terms of the provision of Section 58A of the Companies Act, 1956 read

with the Companies (Acceptance of Deposits Rules) 1975, the Company

has not accepted any fixed deposits during the year under review.

EMPLOyEE STOCK OPTION PLAN (ESOP) The Company had approved following ESOP Schemes i.e. the Employee

Stock Option Plan-I, 2003, Employee Stock Option Plan -II, 2003, Employee

Stock Option Plan -III, 2006, Employee Stock Option Plan -I, 2007,

Employee Stock Option Plan -II, 2007 and Employee Stock Option Plan

-I, 2008, ESOP Plan-II, 2008, ESOP Plan-III, 2008 and ESOP Plan-IV, 2008

for granting stock options to its employees. All the schemes endeavor to

provide incentives and retain employees who contribute to the growth

of the Company. During the year the Company’s shareholders approved

ESOP Plan - II, 2008, ESOP Plan-III, 2008 and ESOP plan-IV, 2008. The

ESOP plans-II, 2008 and ESOP Plan-IV, 2008 are for the employees of the

Company’s Subsidiaries “Vox Mobili S.A.” and “Telisma S.A.”. Disclosure

in compliance with the Securities and Exchange Board of India (Employee

Stock Option Scheme and Employee Stock Purchase Scheme Guidelines,

1999), as amended, is presented as Annexure B to this Directors Report.

The Company accounted the above options using the intrinsic value

method and thus, the difference between the fair value of the underlying

shares in the year of grant and the options exercise value was charged

to the profit and loss account. Accordingly, the compensation charge

thereon in the current year is Rs. 0.06 Million (Previous year-Rs.1.41

Million). If the Company had accounted the option under fair value

method, amortizing the stock compensation expense thereon over the

vesting period, the reported profit for the year ended March 31, 2009

would have been lower by Rs. 26.12 Million (Previous year- Rs. 27.00

Million) and Basic and diluted EPS would have been revised to Rs.11.8

(Previous year- Rs. 9.4) and Rs 11.4 (Previous year- Rs. 8.7) respectively

as compared to Rs. 12.2 (Previous year- Rs 9.9) and Rs 11.8 (Previous

year- Rs. 9.2) without such impact.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Description year ended

March 31, 2009 March 31, 2008

Foreign exchange earnings 163.66 95.26

Foreign exchange outgo 597.70 425.73

ACKNOWLEDGMENTS

The Board of Directors takes this opportunity to express their appreciation

to the customers, shareholders, investors, vendors, and bankers who have

supported the Company during the year. The directors place on record

their appreciation to the OnMobilians at all levels for their contribution to

the Company. The Directors would like to make a special mention of the

supportextended by the various departments of the Government of India,

particularly the Software Technology Parks, the Service tax and Income

tax Departments, the Customs and Excise departments, the Ministry of

Commerce, the Department of Telecommunications, the Reserve Bank

of India, Ministry of Company Affairs, Securities and Exchange Board of

India and look forward to their support in all future endeavors.

For and on behalf of the board of directors

Arvind Rao Chandramouli Janakiraman

Chairman and Managing Director Director

Place: Bangalore

Date: June 19, 2009

42 4342 43

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44 4544 45

ESOP Plan II - 2003

Description Details

Total number of options under the plan (each option represents one share after adjusting for bonus issues of the Company)

1,482,000

The Pricing Formula (without bonus adjustment)

Rs.10

Variation in terms

There was a clarificatory amendment to the Plan provided in July 24, 2006 by the Shareholders of the Company such that the Vesting Schedule under the Plan shall be as follows:

(i) of all the Stock Options granted to the Optionee for the first time under the Plan(s), 25% of such Options shall be deemed to vest at the end of twelve (12) months from the date of employment or engagement of the Optionee and remaining 75% of such Options shall be deemed to vest from the 13th month from the date of employment or engagement of the Optionee at a rate of 1/36th per month for the next thirty six (36) months of the Vesting Period; AND (ii) of all the Stock Options granted to the Optionee, other than a Founder Director of the Company, to whom Options have already been granted once or more than once under the Plan, 25% of such Options shall be deemed to vest at the end of twelve (12) months from the date of such Grant and the remaining 75% of such Options shall be deemed to vest from the 13th month from the date of such Grant at a rate of 1/36th per month for the next thirty six (36) months of the Vesting Period.

Options granted during the year Nil

Weighted average price per option granted during the year

Not Applicable

Options vested (including those exercised) (as of March 31, 2009)

1.482,000

Options exercised during the year Nil

Money raised on exercise of options Nil

Options forfeited during the year Nil

Options lapsed during the year Nil

Total number of options in force at the end of the year (including unvested Options)

Nil

Grant to senior management and independent directors during the year

Nil

Employees receiving 5% or more of the total number of options granted during the year

Nil

Diluted EPS pursuant to issue of shares on exercise of options calculated in accordance with AS 20

11.8

ANNExURE B

ESOP Plan I - 2003

Description Details


13,338,000


Rs.10

Variation in terms There was a clarificatory amendment to the Plan provided in July 24, 2006 by the Shareholders of the Company such that the Vesting Schedule under the Plan shall be as follows:

(i) of all the Stock Options granted to the Optionee for the first time under the Plan(s), 25% of such Options shall be deemed to vest at the end of twelve (12) months from the date of employment or engagement of the Optionee and remaining 75% of such Options shall be deemed to vest from the 13th month from the date of employment or engagement of the Optionee at a rate of 1/36th per month for the next thirty six (36) months of the Vesting Period; AND (ii) of all the Stock Options granted to the Optionee, other than a Founder Director of the Company, to whom Options have already been granted once or more than once under the Plan, 25% of such Options shall be deemed to vest at the end of twelve (12) months from the date of such Grant and the remaining 75% of such Options shall be deemed to vest from the 13th month from the date of such Grant at a rate of 1/36th per month for the next thirty six (36) months of the Vesting Period

Options granted during the year (each option represents one share after adjusting for bonus issues of the Company)

Nil


Not Applicable

Options vested (including vested and exercised) (as of March 31, 2009)

12,687,038

Options exercised during the year 391,625

Money raised on exercise of options: 301,250

Options forfeited during the year 148,213



1,196,247

Grant to senior management and independent directors during the year*

Nil

Employees receiving 5% or more of the total number of options granted during the year**

Nil


11.8

44 4544 45

ESOP Plan III- 2006

Description Details


800,371


Fair Market Value shall be a percentage of the fair value of the shares, as determined by the Compensation Committee from time to time. Notwithstanding, anything contained above, the Exercise Price shall not be less than the nominal value of the shares.

Variation in terms Nil



Not Applicable

Options vested (including those vested and exercised) (as of March 31, 2009)

165,282

Options exercised during the year 35,555

Money raised on exercise of options 8,634,000




511,888

Grant to senior management and independent directors during the year*

Nil


Nil


11.8

ESOP Plan I- 2007

Description DetailsTotal number of options under the plan (each option represents one share after adjusting for bonus issues of the Company)

975,000



Variation in terms NilOptions granted during the year 97,498Weighted average price per option granted during the year

Rs. 453.04


49,327

Options exercised during the year NilMoney raised on exercise of options NilOptions forfeited during the year 365,550Options lapsed during the year NilTotal number of options in force at the end of the year (including unvested Options)

135,278


Nil


Nil


11.8

ESOP Plan II- 2007

Description Details


74,360

The Pricing Formula





Not Applicable


Nil






Nil


Nil


Nil


11.8

ESOP Plan I- 2008


26,000

The Pricing Formula



Rs. 298.54


Nil

46 4746 47

Options exercised during the year NilMoney raised on exercise of options NilOptions forfeited during the year 26,000Options lapsed during the year NilTotal number of options in force at the end of the year (including unvested Options)

Nil


Nil


Nil


11.8

ESOP Plan II- 2008

Description Details


100,000

The Pricing Formula



Options granted during the year 100,000


Rs. 298.54


Nil



Options forfeited during the year Nil



100,000


22,000


67,200


11.8

Grant to senior management and independent directors during the year under this plan

Name No. of options

BALAINE Laurent 22,000

Employees receiving 5% or more of the total number of options

granted during the year under this plan

Name No. of Options

BALAINE Laurent 22,000

SOUFFLET Frederic 17,000

Le FLOUR Eric 17,000

COGNE Laurent 5,600

MARE Fabrice 5,600

ESOP Plan III- 2008

Description Details


115,000

The Pricing Formula



Options granted during the year 748,240


Rs. 298.54


Nil






723,200


283,850


283,850

OthersOptions granted at 3 year vesting and - options granted at 4 year vesting


11.8

*Grant to senior management and independent directors during

the year under this plan

Name No. of Options

Sanjay Uppal 180,000

Debraj Tripathy 103,850

46 4746 47

**Employees receiving 5% or more of the total number of options


Name No. of Options

Sanjay Uppal 180,000

Debraj Tripathy 103,850

ESOP Plan IV- 2008


173,953

The Pricing Formula



Rs. 298.54


Nil

Options exercised during the year NilMoney raised on exercise of options NilOptions forfeited during the year NilOptions lapsed during the year Nil


173,953


12,220


99,203


11.8

Grant to senior management and independent directors during

the year under this plan

Name No. of Options

Nicolas Frattaroli 12,220

Employees receiving 5% or more of the total number of options


Name No. of Options

MATOS David 18,200

SAPPE Julien 18,200

STROPPA Florent 14,950

CHEBASSIER Alain 13,000

FRATTAROLI Nicolas 12,220

VIEILLEVIGNE Eric 12,220

48 4948 49

1. INDUSTRy OVERVIEWIndian Telecommunication (Telecom) IndustrySince the Indian telecom sector was liberalized in 1994, it has witnessed phenomenal growth. Valued at over USD 100 billion today, it is contributing approximately 13% to the GDP. In a landmark achievement, India crossed the 400-million mark in telephone connections at the end of January 2009 from just 10 million a decade ago. The country is the second-biggest market for wireless services (lagging only China), adding close to 10 million mobile subscribers every month. Geographical coverage of mobile telephony has gone up from 13%, a couple of years ago to 39% now. From two operators in each circle in 1995, there are now 8 pan- India operators offering the Indian consumer unprecedented choice and low tariffs.

49

0

The wireless sector has been supported by higher disposable incomes, falling tariffs, increased affordability of handsets and a progressive regulatory regime. Notwithstanding the industry’s rapid growth and development, both the mobile and fixed-line density remain low, indicating sound growth prospects over the medium term. Despite the economic slowdown, the telecom industry continues on a dynamic growth path. External interest in the industry remains high, and cross-border investment has gathered pace. Analysts are optimistic about the sector’s future growth given the wide spectrum of socio-economic categories from which demand for telecom services is emerging. The qualitative impact a mobile has on life and the quantitative impact on one’s profession are key to rising demand in the sector.

With saturation in urban and metro markets, industry players need to acquire new subscribers by expanding in semi-urban and rural areas and sell more services to existing subscribers. As the new subscriptions will largely happen at the bottom of the pyramid, they will lead to a reduction in the Average Revenue Per User (ARPU). The decrease can also be attributed to the structure of the Indian mobile market where 92% of the subscriber base is on pre-paid connection. This again implies that most of the subscribers added are from the bottom of the pyramid with low usage resulting in low ARPU. With new licenses being offered, the number of Operators in the already crowded market is set to go up, which will bring with it further price cuts in airtime and for basic

messaging. In this scenario, Mobile Value Added Services (MVAS) is a potential long term-revenue stream. Not only does it lead to an increase in the ARPU, it also acts as a differentiator between operators. Besides, consumers today seek more from their communication devices than just mobility and connectivity and MVAS serves this very need.

Mobile Value Added Services (MVAS)

Mobile Value Added Services (MVAS) are enhanced services which add value to basic teleservices. These are not part of the basic voice offer and are availed separately by the end user. The size of the MVAS market (as of June 2008) is Rs. 5780 crores.

It currently contributes over 10-14% of the total revenue of mobile telecom service providers. This is expected to rise to over 30% in the next 5-7 years.

Based on the need fulfillment of the end user, MVAS can be put into three broad categories:

Entertainment VAS – E.g. – Jokes, Ringtones, Caller Ring Back Tones (CRBT), Mobile Radio. This drives the VAS market in terms of volume as well as revenue.

Information VAS – E.g. – Movie reviews, News, Astrology, Stock updates. This is gradually getting popular depending on relevance.

mCommerce VAS (Transactional services) – E.g. - Mobile Banking, Mobile payments. This is currently in the embryonic stage.

2. OPPORTUNITIES AND CHALLENGESOpportunities The Department of Telecom (DoT) has projected that the country will have a billion mobile phones by 2014. India’s population is expected to be 1.26 billion in the same year, and with mobile penetration at 1.01 billion, the mobile teledensity would be upwards of 80%. This probably reflects the world’s largest new growth opportunity over the next five years, surpassing even China’s potential. To reach this figure, it would be imperative to redefine spectrum allocation and pricing policies, conduct 3G auctions earlier and review M&A norms.

Management Discussion and Analysis

48 4948 49

Competition is set to intensify further with the commencement of services by new UASL 1 and 3G licensees. Analysts believe 3G wireless broadband is going to mark a quantum leap in wireless communication in the country. Services like high speed internet access and video calls on the mobile will become possible through 3G. The development of 3G networks will also provide impetus to rural development initiatives such as e-governance, e-health and e-education. Rural areas will be a major growth driver for the industry. India’s rural teledensity currently stands at less than 13%, while teledensity in major urban centres has reached 82%. However, it is expected that initially, the additional spectrum will be used to address the current congestion concerns and the 3G related data services will take some time to make a significant impact.

The above scenario is expected to provide a major boost to the MVAS market. Operators are investing heavily in reaching out to customers more effectively to make them aware of various services being offered to them. Increase in user base, price decline in MVAS services, new technology adoption (like 3G, NGN) by operators and the entry of Mobile Virtual Network Operators (MVNOs) are the some of the factors that will propel the MVAS market to grow to Rs. 16520 crores by June 2010. Development of regional and linguistic content including vernacular news portals, devotional ringtones, etc will give a further boost to the MVAS market. Entertainment VAS is expected to remain the VAS driver for the next few years. Information VAS is going to be the key to address the growing rural market. Mobile marketing, mobile banking and location based services (providing relevant and timely information to users based on their location) are some of the MVAS that are likely to grow significantly in the coming years.

Consumers in other Emerging Markets exhibit similar characteristics and usage behavior relative to their Indian counterparts. This includes high percentage or prepaid consumers, local and regional language constraints, low ARPU’s, handsets purchased independent of the mobile connection and limited adoption of data services. Replicating the successes with VAS in India, the selection of products offered and the best practices gained from the current deployments into these Emerging Market countries provide an opportunity for International growth.

In developed countries like Europe and North America, subscriber growth has slowed down dramatically and mobile penetration in some countries has exceeded 100% of the population. In these conditions where airtime prices are under severe pressure and subscriber retention is critical, Data and Value Added Services are the primary tools for the Operator to differentiate their service offering. App Stores that enable consumers to directly download mobile applications opens a new market opportunity.

ChallengesMeeting ever changing needs and tastes of customers including language needs across regions will provide a major challenge to both telecom operators as well as MVAS players. MVAS will have to be made more relevant to the emerging set of users. There is an urgent need to develop new technology and consolidate the industry.

High cost, limited awareness of services, language barriers and limited availability of local content are some of the factors that prevent MVAS from growing even faster. A stringent regulatory framework for VAS has become critical not only to encourage content creators and protect their copyrights, but also to encourage investment particularly Foreign Direct Investment in the sector.

Currently, the MVAS market in India is focused around entertainment, music and sports. It is usually the younger demographic that uses such services. Thus, there is a need to focus on other VAS such as Information VAS and Transaction VAS so that the consumer base extends to all sections of the population. Security concerns persist in the usage of mCommerce and adequate measures need to be taken before this service can take off in a big way. With growing number of operators, the task of aligning with operators across circles would prove to be another big challenge for MVAS players.

With new VAS services being introduced every week, ensuring consumer awareness has become that much more of a challenge. As SMS is used as the main channel for generating awareness for these new applications, consumers are not fully aware of the services given that the SMS is sent in English. High cost of content is another challenge that makes content-intensive services less cost efficient.

3. OUTLOOKOver 92 customers (telecom operators, media houses, mCommerce players, data service providers) in 22 countries rely on the Company to bring VAS to over 600 million consumers. The Company has offices in Mumbai, Delhi, Bangalore, Singapore, Paris, Jakarta, London, Kuala Lumpur, Dhaka, Seattle and Sydney. Its long term relationships with blue-chip operators, a business model that aligns with the interests of its customers, continuous innovation and understanding of consumer tastes and preferences give it an edge over its competitors. Through strategic global acquisitions including that of Telisma S.A in 2008, constant technical and process innovation, end-to-end solutions, wide product portfolio, time-to-market speed and assured quality, OnMobile is strongly positioned to lead the fast growing MVAS market around the world and become one of the leading global providers of MVAS.

4. RISKS AND CONCERNSThere is a separate section on Risk Management in the Annual Report.

5. INTERNAL CONTROL SySTEMS AND THEIR ADEQUACyThis is covered in the Risk Management Section.

The consolidated financial statements relate to OnMobile Global Limited, referred to as “the Company” and its subsidiaries, together referred to as “the Group”.

The consolidated results for the Fy 2008-09 are not directly comparable to the consolidated results for the Fy 2007-08 as:

50 5150 51

a) It includes full year consolidation of Vox mobili as against only 7 months in Fy 2007-08

b) Includes results of OnMobile Europe B.V. formed during the year

c) Includes results of Telisma S. A. acquired during the year.

CONSOLIDATED RESULT OF OPERATIONSIn Rs. Million except EPS

Particulars Fy 2008-09 % of Total Revenue Fy 2007-08 % of Total Revenue Growth %

Revenue 4,063.57 2,618.16 55

Cost of Sales and Services 777.43 19 396.52 15 96

Manpower Cost 1,203.59 30 641.40 24 88

Administration and Other Expenses 801.28 20 531.89 20 51

Earnings before Other Income, Depreciation and Amortization, Finance Charges and Taxes

1,281.27 32 1,048.35 40 22

Other Income 310.09 8 74.69 3 315

Depreciation and Amortization 439.67 11 255.64 10 72

Finance Charges 0.55 0 17.09 1 (97)

Earnings before Tax 1,151.14 26 850.31 32 35

Provision for Taxation 299.17 7 247.21 9 21

Earnings after Tax 851.97 19 603.10 22 41

EPS – Basic 14.8 12.6

EPS – Diluted 14.3 11.6

RevenueRevenue is derived from Telecom Value Added Services, sale of user Licenses and other services. Revenue from Telecom Value Added Services including royalty income is recognized on provision of services in terms of revenue sharing arrangements with the telecom operators. Revenue from sale of user licenses for software applications is recognized when the applications are functionally installed at the customer’s location as per the terms of the contracts and revenue from other services including maintenance services is recognized proportionately over the period during which the services are rendered as per the terms of contract.

The revenue for the Fy 2008-09 was Rs. 4,064 million as against Rs. 2618 million for Fy 2007-08, thus recording an impressive growth of 55%. The increase in revenue is attributable to

Increase in the number of customers, both domestic and international

Launch of new products and innovative features

Expansion of the subscriber base of the existing customers; and

Acquisition of Telisma S. A.

The total number of customers added during the Fy 2008-09 was 57 for the Group.

39 for the Company; 2 domestic telecom operators, 8 international telecom operators and balance in media, M-commerce and others.

18 for the subsidiaries.

Cost of Sales and ServicesCost of Sales and Services consists of amount incurred towards content fee, royalty and cost of hardware and software development charges.

Content fee and royalty is paid to content providers such as music label companies, royalties agencies, sports licensing authorities and other content licensors from whom the group sources and aggregates content, pursuant to licensing agreements with them. Cost of hardware and software development charges primarily represents cost of software packages, tools and services procured by the group for providing / enhancing the quality of its services to the customers.

During the Fy 2008-09, the cost of sales and services has increased by 96% to Rs. 777 Million from Rs. 397 Million incurred in Fy 2007-08. The break up is as follows:

Particulars Fy 2008-09 % of Total Revenue Fy 2007-08 % of Total Revenue Increase %

Content Fee and Royalty 513.18 13 231.78 9 121

Cost of Hardware and Software Development Charges 264.25 7 164.74 6 60

Cost of Sales and Services 777.43 19 396.52 15 96

50 5150 51

The increase is due to

Changes in contractual terms of payment for some services.

Investment in new initiatives for which there is no corresponding revenue.

Manpower CostsManpower costs comprises of salaries including bonus paid to employees, contribution made to various employee welfare funds and expenses incurred towards welfare of the employees .

During the Fy 2008-09, the group incurred a manpower cost of Rs 1,204 million as against Rs 641 million in the Fy 2007-08 thus, representing an increase of 88% over the previous year. The increase in the employee

strength in Fy 2008-09 contributed to increase in the manpower cost

in the current year. The total employee strength as on March 31, 2009

was 1,227 which included a net addition of 198 employees during the

financial year.

During the year, there was an increased and sustained focus on

improving the existing employee productivity and optimization of human

resources.

Administration and Other Expenses In the Fy 2008-09, the administration and other expenses increased by

51% to Rs. 801 million as against Rs. 532 million incurred in Fy 2007-08.

The break up of the expenses is given below:

Particulars Fy 2008-09 % of Total Revenue Fy 2007-08 % of Total Revenue Increase%

Rent and Other Facilities Cost 189.38 5 118.95 5 59

Travelling and Conveyance 149.01 4 90.19 3 65

Legal, Professional and Consultancy Charges 118.10 3 69.88 3 69

Communication Charges 90.17 2 56.67 2 59

Others 254.62 6 196.21 7 30

Total 801.28 20 531.89 20 51

The reasons for the increase in the expenses are as follows:

Rent and other facilities cost: The Group has added new office premises in Mumbai, Bangladesh and Europe to accommodate the increased business activity.

Travelling and Conveyance/ Communication charges: There has been an increase in business activity especially, as the group expands its geographical presence internationally.

Legal, professional and consultancy charges: The Group had engaged consultants during the year for advise on acquisition/ proposed acquisitions/ strategy road maps.

During the Fy 2008-09, there was an increased focus in optimization of costs resulting in several measures being initiated all across the group without compromising on the quality of services rendered to the customers. This is reflected as a steady % of administration and other expenses on revenue being maintained, in the current year vis-à-vis the previous year.

Earnings before Other Income, Depreciation and Amortization,

Finance Charges and Taxes (EBIDTA) The group earned an EBIDTA of Rs. 1,281.27 million in the Fy 2008-09 as compared to Rs. 1,048.35 million, representing a 22% growth over the previous year.

Other IncomeOther Income primarily consists of Interest earned on Fixed Deposits and dividends yielded on mutual funds. There has been a substantial increase in the other income earned in the current Fy 2008-09, Rs 310 million as

compared to Rs 75 million of Fy 2007-08. This is due to the availability of investible surplus funds in the current Fy on account of the money raised in the Initial Public Offer, which is pending utilization for the purposes mentioned in the prospectus.

During the Fy 2008-09, the investment policy of the Company was reviewed and keeping in mind the volatile market conditions, it was decided to shift all the surplus funds of the Company invested in mutual funds to fixed deposits in Bank. Hence, as on March 31, 2009, the company has no investments in mutual funds.

However the subsidiaries continue to invest in money market securities.

Depreciation and Amortization The group provided a sum of Rs. 440 million and Rs. 256 million toward depreciation for the Fy 2008-09 and Fy 2007-08, respectively, thus representing a growth of 72% over the previous year. The increase in depreciation is due to investment in expanding business activity.

Depreciation on assets is provided on a monthly basis using the straight line method based on the useful life of the assets. Also, currently expenditure incurred on research and development is not being capitalized.

The depreciation as a percentage of average gross block is 23% and 27% for the years ended March 31, 2009 and 2008, respectively.

Finance ChargesThe finance charges represent interest payable toward the finance lease entered into by the Company for procurement of computer and electronic equipments and interest paid towards loan to meet working capital requirements.

52 5352 53

Earnings before Tax The Earnings before Tax of Rs. 1,151 million in the current Fy 2008-09, as compared to Rs. 850 million earned during the previous year, represents a 35% growth over the previous year.

Provision for Taxation The amount provided for taxation in the current year is Rs 299 million as against Rs 247 million provided in Fy 2007-08, thus representing 7% and 9% of revenue, respectively.

The tax expense has decreased as % of revenue due to: Increase in dividend income as a % of total profit in the current

Fy 2008-09 as compared to the previous Fy 2007-08. Dividend income from mutual funds is exempt under Section 10(35) of the Income Tax Act, 1961.

Carry forward losses of subsidiaries, resulting in nil tax expense for the subsidiaries.

Earnings after TaxThe Earnings after Tax of Rs. 852 million in the current Fy 2008-09, as compared to Rs. 603 million earned during the previous year, represents a 41% growth over the previous year.

FINANCIAL CONDITIONShare CapitalThe authorized share capital of the group is Rs 7,500 million, comprising of 74,500,000 equity shares of Rs 10/- each and 500,000 preference shares of Rs 10/- each.

Currently as at March 31, 2009, the group has 57,833,319 equity shares of Rs 10/- each as issued, subscribed and paid up capital which increased from 57,406,139 equity shares of Rs 10/- each as at March 31, 2008. The increase was consequent to allotment of 427,180 fully paid up equity shares of Rs.10/- each in pursuance of stock options exercised in May 2008, July 2008, November 2008 and March 2009 (adjusted for Bonus issue in the ratio of 12:1).

Reserves and SurplusA summary of the reserve and surplus is given below:

In Rs. Million

Particulars As at March31, 2009 As at March31, 2008Securities Premium 4,181.65 4,185.43Foreign Currency Translation Reserve

50.72 23.22

Profit and Loss Account 2,178.80 1,326.83Total 6,411.17 5,535.48

The reduction to the share premium account of Rs. 4 million during the year is the net adjustment on account of issue on bonus shares.

‘Foreign Currency Translation Reserve’ represents exchange differences arising out of consolidation in case of non-integral operations. In case of “Integral operations”, these exchange differences are included under Exchange Loss / Gain and charged to the Profit and Loss.

The balance retained in the Profit and Loss account as at March 31, 2009 was Rs. 2,178.80 million.

The Total Net worth of the group as March 31, 2009 is Rs. 6,990 million with a book value of each share being Rs 121. The corresponding numbers for the previous Fy are Rs 6,111 million and Rs 106, respectively.

LOAN FUNDSLoan funds represent: During the year, the Company has entered into a finance lease

arrangement for procurement of computer and electronic equipments and the secured loans represent the amount payable towards the finance lease.

During the year, one of the subsidiaries has taken a loan to meet its working capital requirement.

Deferred Payment LiabilityDeferred payment liability represents amount payable towards the investment in subsidiaries.

As at March 31, 2008, the total amount payable of Rs 279 million was towards Vox mobili S. A. acquired during the Fy 2007-08. During the current Fy 2008-09, the movement in Deferred Payment Liability is given below:

Reduction due to payment of Rs 245 Million towards liability to Vox mobili S.A.

An additional liability of Rs 67 Million towards acquisition of Telisma S. A., and

An additional liability of Rs 28 Million towards acquisition of Intellectual Property from Music On.

The total deferred liability as at March 31, 2009 stands at Rs 129 million.

Deferred Tax Liability and AssetDeferred tax liabilities and assets are recognized for the future tax consequences of temporary differences between carrying values of the assets and liabilities and their respective tax bases and are measured using enacted tax rates applicable on the Balance Sheet date. Deferred tax assets are recognized subject to management’s judgement that realization is virtually certain.

The deferred tax liability of the company as on March 31, 2009 is Rs 68 million as compared to Rs. 39 million as on March 31, 2008.

The deferred tax asset represent deferred asset of one of the subsidiaries and as on March 31, 2009 is Rs 0.95 million as compared to Rs. 21 million as on March 31, 2008.

Goodwill on consolidationGoodwill on consolidation represents the excess of cost to the Company of its investments in the subsidiary over its share of the equity of the subsidiary, at the date on which the investment in the subsidiary company was made.

52 5352 53

The Goodwill as on March 31, 2009 is Rs 2,108 million as compared to Rs. 1,368 million as on March 31, 2008. Increase in Goodwill is on account of acquisition of Telisma S.A. during the Fy 2008-09.

Fixed AssetsA statement of movement in fixed assets is given below:

Gross Block In Rs. million As at March31, 2009 As at March31, 2008Movement on account of

acquisitionMovement on account of

additions/ deletions

Leasehold Improvements 35.14 34.46 - 0.68

Buildings 106.75 105.22 - 1.52

Office Equipment 7.58 3.91 1.19 2.49

Computer and Electronic Equipment 1,441.23 966.21 30.56 444.46

Furniture and Fixture 19.18 13.21 4.63 1.35

Motor Car 13.74 11.36 - 2.38

Leased Assets 48.21 - - 48.21

Software 821.59 200.83 567.71 53.05

Intellectual Property 42.9 - - 42.90

Capital Work-in- Progress 71.51 113.39 (41.88)

Total 2,607.84 1,448.60 604.08 555.16

The Company incurred an amount of Rs. 602 million (Rs. 767 million in the previous year) as capital expenditure in the Fy 2008-09. Addition to the gross block mainly comprises of

Addition to computers and electronic equipments resulting from expanding operations and

Addition to software resulting from acquisition of Telisma S.A.

The decrease in capital expenditure is on account of sharp focus by the group on improving asset productivity.

Also, the entire capital expenditure of the Company has been funded out of the proceeds of the Initial Public Offer.

InvestmentsInvestments as at March 31, 2009 of Rs 87 million comprise of only short term investments of subsidiaries in money markets.

The decrease in investment as compared to Rs 3194 million as on March 31, 2008 is on account of shifting the investible surplus of the Company in mutual funds to bank deposits during the year. This has been done keeping in view the volatile market conditions and pursuing an extra cautious approach.

Sundry DebtorsThe Sundry debtors (net of provision for doubtful debts) amount to Rs 1,445 million as on March 31, 2009 as against Rs 990 million as on March 31, 2008. The unbilled revenue as of March 31, 2009 and 2008 amounted to Rs 604 million and Rs 319 million, respectively.

The age profile of the debtors (net of provision) is given below:

As at March 31 2009 2008

Less than 6 months 1,384 794

More than 6 months 61 196

Cash and Bank BalancesThe cash and bank balance as on March 31, 2009 was Rs.2,855 million as

against a balance of Rs 1,459 million as on March 31, 2008. The increase

in balance is due to the shift of investments of the Company from mutual

funds to bank fixed deposits during the Fy 2008-09. The cash balance as

on March 31, 2009 includes Rs 2,453 million invested in fixed deposits

with Public Sector and highly rated Private Sector Banks of India.

Loans and Advances The loans and advances outstanding as on March 31, 2009 is Rs 1,686

million as compared to Rs 947 million outstanding as on March 31, 2008

thus representing an increase of Rs 738 million.

The increase is resulting from: Increase in advances recoverable in cash or kind for values to be

received on account of advances to content vendors.

Increase in rental deposits as the Company has added new office

premises in Mumbai, Bangladesh and Europe

Increase in Research Tax credit. (In accordance with French

fiscal rules, the subsidiaries Vox mobili S.A. and Telisma S.A.,

are entitled to special tax rebate/refund calculated based on the

social costs of the Research and Development staff).

Increase in deposit with statutory authorities in connection with

demand notices relating to KST, KVAT and CST.

Increase in advance income tax and tax deducted at source.

Current Liabilities and ProvisionsThe current liabilities and provisions outstanding as on March 31, 2009 is

Rs 2,018 million as compared to Rs 2,461 million as on March 31, 2008 thus representing a decrease of Rs 443 million.

54 5554 55

The decrease of Rs 443 million is the net result of:

Decrease in Sundry creditors due to payment of liability of Rs 940 million to erstwhile Holding company toward proceeds of Initial Public Offer,

Increase in Sundry Creditors for capital items and expense.

Increase in Income tax provisions.

7. Segment-wise/product-wise revenueThe Group is engaged in providing value added services in telecom business globally and is considered to constitute a single segment in the context of primary segment reporting as prescribed by Accounting Standard 17 - “Segment Reporting”.

The secondary segment is identified to geographical locations and the Group’s significant operations are carried out of India.

The segmentation of revenue by geography is as follows:

Particulars Fy 2008-09 % of Total Revenue

Fy 2007-08% of Total Revenue

Growth %

India 3,134.47 77 2,212.44 85 42

Outside India 929.10 23 405.73 15 129

Total Revenue 4,063.57 2,618.17 55

8. Material developments in human resources

The most important resource for any organization are its people. OnMobile recognizes the importance of human capital and values it highly. The Company’s strong management team and motivated and talented employees are its biggest strength. OnMobile believes that it is of paramount importance to provide training and development

opportunities to its employees to enhance their skills and experience, which in turn enables the Company to achieve its business objectives. It has therefore put in place sound policies to ensure growth and progress of its employees. In 2008-09, the Company offered 3,383 training days of domain, soft skills and leadership training programmes. OnMobile also has a robust recruitment policy to attract and retain the best talent. As a retention strategy, the Company has issued ESOPs. As on March 31, 2009, the Company had 1,227 employees (including full time and contract employees).

During the year, Sanjay Uppal was appointed as the President and Chief Operating Officer. His previous assignment was with Citrix Systems Inc., where he was Vice-President, Application Networking. He has also been associated with Caymas Technologies and Hewlett-Packard. Shampa Kochhar has been appointed as the Vice President of Human Resources. She has previously worked at senior positions with AOL India, Spice Telecom and Citibank.

9. Cautionary statementStatements in the Management Discussion and Analysis describing the industry’s projections and estimates (which are based on reliable third party sources) as well as Company’s objectives, estimates, projections and expectations may be “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the Company’s operations include economic developments within the country, demand and supply conditions in the industry, changes in Government regulations, tax laws and other factors such as litigation and labour relations.

54 5554 55

What is Risk Management?

Risk management is the discipline of identifying, monitoring and limiting

risks. Risk can be defined as the volatility of unexpected outcome or

in other words, risk is exposure to uncertainty. Therefore risk has two

components: The uncertainty and the exposure to that uncertainty and

risk management is the process by which the abovementioned uncertainty

and exposures are identified, measured and controlled.

The company believes that it is imperative to manage risk optimally to

compete and grow and that the time has come for an affirmative action

on risk management.

The paragraphs below discuss the risks that the company is exposed to

and the steps taken to manage the same.

1. Revenue Concentration

Revenue concentration can be classified as client concentration,

geographic concentration, product concentration and industry

concentration.

Client concentration: The Company derives a significant portion

of its revenue from a few major carrier customers, as these carrier

customers continue to dominate the market share of the Indian

telecommunications industry. For the Fy 2008-09, the five largest

customers, accounted for approximately 70% of the total net revenue

as against 77% for the Fy 2007-08. As a result of this concentration,

any loss of a major carrier customer or renegotiation of contracts

on terms unfavorable to the company or any significant decreases

in spending by some or all of the end-user subscribers of the top

five customers on the company’s services may affect the company’s

revenue, profitability and results of operations.

Geographic concentration: The Company derives a significant portion

of its revenue from India as its top customers consist of the major

telecommunications operators in India. The Company derived 77%

of its total revenue from India in Fy 2008-09 as against 85% in Fy

2007-08. Concentration of revenue from any country exposes the

company to the risks specific to the country’s economic condition,

global trade policies, local laws, and political environment.

Product concentration: The Company currently depends on music

related services, including ringback tones, ringtone downloads and

music messaging applications, for approximately 54% of its revenue.

The company expects to continue to derive a significant portion of

its revenue from these application services in the next few years.

This exposes the company to risks relating product concentration. A

decrease in the popularity of music related services among mobile

phone users, or a failure by the company to maintain, improve, update

or enhance such services in a timely manner, enter into new markets,

or successfully diversify its products and services could affect the

company’s business, financial condition and results of operations.

Industry concentration: The company is a leading provider of

telecommunications value added software products and services

in India with an expanding international presence. Its products are

primarily targeted at end-user telecommunications subscribers and

hence expose the company to the risk of industry concentration.

The company’s revenue may be affected by competition and pricing

pressures and decisions implemented in the telecommunications

industry.

The company endeavors to de-risk from these by ensuring that the

revenues from any one of Customer, Product or Geography is below

a threshold value. This is done with geographical expansion and

product innovation, through organic and inorganic means.

Mitigation of risk through organic route involves expansion of

the company’s geographic presence to new carrier customers by

leveraging its expertise and track record in India. In Fy 2008-09,

the company entered into contracts with 8 new wireless carriers

in Indonesia, Malaysia, Pakistan, Bangladesh and Sri Lanka for

management of telecommunications value added services.

The company believes that the telecommunication value added

services industry is evolving rapidly due to the development of more

sophisticated handsets, advanced network infrastructure, increasing

consumer acceptance and the availability of rich and varied content

and services for end-users. Thus, it is imperative for the company to

focus on developing and launching innovative new products that tap

into consumer preferences across the markets it serves. The company

also takes advantage of the its leading market position in India to

launch, test and develop innovative applications and services with its

existing carrier customers, thereby expanding the breadth of services,

as well as extend these new applications and services in new

international markets as they become commercially viable. Examples

of innovative new products launched by the company during the Fy

2008-09 are M-Search, cross operator press * to copy and others. As

we expand to other markets, we intend to replicate the best practices

from one market to other relevant markets.

Risk Management

56 5756 57

The company has a pipeline of software products under development

and expects to supplement these with products and technology that

it may acquire.

Mitigation of risk through inorganic route involves continually

seeking new growth and acquisition opportunities in its existing line

of business as well as related businesses to expand its geographic

presence and product offerings. For example, in December 2006, the

company acquired a majority stake in ITfinity, a mobile technology

software specialist with an expertise in the development of mobile

data products based in Mumbai, which subsequently merged with it

in May 2007. In September 2007, the company acquired Voxmobili

S.A., a Paris-based global provider of personal data management,

wireless synchronization and embedded client solutions. In July 2008,

the company acquired Telisma S.A., a French company, which provides

specialized advice and services in the communication, telematic, and

interactive service fields and provides a wide range of Software

services, in particular voice recognition software services, for telecom

companies. The company will pursue similar opportunities in other

regions to strengthen and grow its business, including investment

in or acquisition of minority or majority stakes in companies which

support its business and product strategy.

2. White labeled application and service provider

Majority of the Company’s contracts with its customers are on a

revenue-sharing basis, which means that it earns revenues only if

the customers’ end-users use the services offered by the company. As

a result, the company’s revenue is subject to uncertainties that are

beyond its control, such as

• marketacceptanceof itsapplicationservicesby itscustomers’

end-user subscribers

• thesubscriberchurnrateand

• Dependenceon thepricingof the services, product placement

and marketing / promotion activities conducted by its customers

either jointly with the company or solely.

None of the contracts obligate the company’s customers to market

or distribute any of its applications or services to their end-user

subscribers. Without the appropriate marketing, promotion and

pricing of the services by the customers, the subscribers may not be

aware of, or may cease to use, or decrease usage of, the company’s

applications and services thus affecting the financial performance of

the company.

Generally in the past, the company has enjoyed good positioning on

its customers’ menus and websites due to its continued focus on the

development of innovative products, a creative user interface and a

good understanding of consumer needs. The company has had a track

record of creating, developing and successfully launching innovative

software product applications such as M-search, cross operator Press

* to copy, OnMobile Developer Network and others, which validates

the above.

The company believes that it should continue to focus and invest

in research and development so as to remain at the forefront of

developments in the telecommunication industry and to develop new

and differentiated products and services / upgrade or improve the

existing ones, for each of its customers. The same is being translated

into action, as is reflected in the increase in the size and investment

in Research and Development team. The number of employees and

expenditure incurred on Research and Development as on March 31,

2009 was 399 and Rs.497million as against 262 and Rs. 164million

as on March 31, 2008.

3. Intellectual Property

The company’s success also depends on its proprietary technology

and know-how i.e intellectual property. The company’s intellectual

property includes its registered intellectual property rights, including

patents and patent applications made in relation to various inventive

products and processes and registered, as well as unregistered rights

in intellectual property including copyrights in relation to software.

The company believes that Intellectual property protection is also a

key for continued business success.

The company relies on a combination of patent, copyright,

trademark and trade secret laws and restrictions on disclosure,

such as confidentiality provisions and non-disclosure agreements,

to protect its intellectual property rights. As of march 31, 2009, it

has two registered trademarks. The trademark and logo “OnMobile”

is registered with the Trademarks Registry in Mumbai, India and

trademark “OnMobile – True Mobility” is registered with the United

States Patent and Trademark Office. The company has applied to

register 4 other trademarks with the Trademarks Registry in India

and has filed 32 patent applications (includes patents filed under

the Patents Co-operation Treaty (PCT) filings) with the Indian Patents

Office and under the PCT. Additionally the company enters into

confidentiality agreements with its customers when it discloses

56 5756 57

proprietary information to them and confidentiality agreements /

invention assignment agreements with certain of its employees and

consultants.

The company will continue to make significant investments in the

creation of Intellectual Property and safeguarding of the same

both operationally and legally which would include monitoring

unauthorised use of the company’s technology and applications and

resorting to litigation to enforce its intellectual property rights.

4. Legal and Statutory Compliances

An important element of the company’s growth and business strategy

is expansion of its geographic presence by targeting markets in which

it does not currently provide services, organically through setting up

branches and subsidiaries and inorganically through acquisitions.

However, it has limited experience in global expansion, and thus

is exposed to the following risks, in relation to legal and statutory

compliances in India and countries outside India:

• legal uncertainties or unanticipated changes in regulatory

requirements, liability, export and import restrictions, tariffs and

other trade barriers;

• Uncertaintiesoflawsandenforcementrelatingtotheprotection

of intellectual property.

• burdensorcostofcomplyingwithawidevarietyofforeignlaws

and regulations, including unexpected changes in regulatory

requirements and ;

• foreignexchangecontrolsthatmightpreventthecompanyfrom

repatriating income earned in countries outside India;

Any of the foregoing risks would expose the company to the risk of

penal action by the local Governments and statutory authorities of

India and countries outside India which could impact the brand and

reputation of the Company.

In order to mitigate above mentioned risks, the company has a team

of legal experts positioned at the head-office who review all the

legal agreements/ contracts entered into by the company. Also in

all countries including India, where the company has operations,

external consultants and service providers in the areas of payroll,

accounting, audit , legal and others, based out of those countries,

are engaged to ensure that all the legal and statutory compliances

of the country is adhered to. Also before a service is launched in

a new country/location, a detailed study which involves acquiring

knowledge of the local laws, regulations and statutes is conducted

jointly with our tax consultants.

A well-designed framework consisting of checklists and proper

reporting mechanisms incorporating inclusion of Statutory and

Regulatory compliances as a scope of the internal audit every quarter

ensures that the company in adhering to the compliances.

5. Financial Reporting and Internal controls

The financial statements of the company are prepared in accordance

with Indian Generally Accepted Accounting Principles comprising

of mandatory Accounting Standards prescribed by the Company

Accounting Standards Rules, 2006. The preparation of the financial

statements in conformity with GAAP requires that the management

makes estimates and assumptions that affect the reported amounts of

assets and liabilities, disclosure of contingent liabilities as at the date

of the financial statements and the reported amounts of revenue and

expenses during the reported period. Actual results could differ from

these estimates; hence these estimates carry inherent reporting risks.

Also absence of well defined internal controls across the organisation

could affect the efficiency of operations and utilization of resources.

To mitigate the above risks, the Company has a well defined

organizational structure, documented policy guidelines, defined

authority matrix and internal controls to ensure efficiency of

operations, compliance with internal policies and applicable laws

and regulations as well as protection of resources. Moreover, the

Company continuously upgrades these systems in line with the best

available practices. The adequacy of the internal control systems is

also verified extensively by the internal auditors every quarter. The

report is placed before the audit committee for their review and

discussion. The audit committee meets the auditors separately every

quarter, in absence of the management, to ensure independence of

the auditors and to discuss the Company’s accounting principles and

policies as applied to its financial reporting. Also the audit committee

reviews the scope of internal audit on a timely basis.

The internal control system is also supplemented by regular reviews

by management and extensive audits undertaken by consultants at

the request of the management. The Company has also put in place

an extensive budgetary and other control and review mechanism,

whereby the management regularly reviews actual performance with

reference to the budget and forecasts.

58 PB

6. Foreign exchange

Currently the company transacts its business primarily in Indian Rupees and, to a lesser extent, in Singapore dollars, U.S. dollars, Euros, Indonesian Rupiah, Malaysian Ringets, Great Britain Pounds, Bangladesh Taka and Australian dollars. In financial year 2008-09, it derived approximately 23 % of its total net revenue from its overseas business as compared to 15% in financial year 2007-08. However, to the extent these currencies depreciate against the Indian Rupee, the revenue that the company reports in Indian Rupees will be negatively affected. Conversely, an appreciation of these currencies against the Indian Rupee would increase its revenue reported in the Indian Rupee and would also increase its expenses incurred in those currencies. In other words, fluctuations of exchange rate impact the profitability of the company thus exposing it to foreign exchange risk.

While the company has not engaged in exchange rate hedging activities in the past due to the size of its operations, it intends to continue to maximize the available opportunity of natural hedging to mitigate these risks in the future. The Company monitors net foreign exchange exposure and does not enter into any speculative transaction. Also, the gains or losses on foreign exchange transactions are reported to, and reviewed by the Audit Committee every quarter.

7. Fixed assets

The company operates as a “one-stop-shop” for its customers by providing end-to-end managed service solutions. Such end-to-end solutions include hardware and software platforms, application development, infrastructure management and customer support, including software maintenance, hardware support and help desk services. Consequentially, the service deployments with major carrier customers involve complex hardware systems and software applications deeply embedded within the carrier’s network infrastructure and integrated into the carrier’s billing, provisioning, service management, customer care and other core network systems. This requires the company to invest in a huge amount of capital assets. The total capital expenditure during the year ending March 31, 2009 was more than Rs 600 million as against Rs 850 million as on March 31, 2008. Moreover, the assets which are in the nature of servers and cards are located at the customer sites. Though the title to the assets belongs to the company, it is exposed to the risk of diluted physical control over the assets and natural calamities/ theft that might occur at the sites over which the company has little control.

To mitigate the above risks, the company has taken the following steps. It has insured all the assets which are maintained at the various customer sites. Also the company is ensuring the all the assets which are located at the customer’s sites are clearly demarcated from the customer assets. The management has conducted a physical verification of servers and cards in the past and henceforth will conduct physical verification of all servers and cards once every three financial years.

8. People

A successful technical and business team enables the company to continue identifying and developing innovative products and solutions, deepen and expand customer relationships and pursue acquisitions to grow its business. Hence, future success and ability of the company to maintain a competitive position and implement its business strategy are dependent to a large degree on its ability to identify, attract, train and retain people with skills that enable the company to keep pace with growing demands and evolving industry standards.

In the current scenario, qualified individuals are in high demand and competition for qualified engineers and personnel in the industry is fiercely intense. Hence, recruitment and retention of best talent across the globe is a key challenge.

The company intends to continue identifying, attracting, training and retaining highly skilled qualified engineers and personnel. It believes in hiring individuals with vision, creativity and the energy to lead the changes that take place in the telecommunications industry each day. Consequentially, the company continues to tap into the campus talent pool, attracting the best and brightest from the country’s top Engineering colleges.

Also, the company offers its employees a unique blend of an informal work environment and a corporate culture that encourages personal empowerment and it has always believed in creating an environment where the employees feel safe and secure.

Training is one of the means of continuously enhancing the skills, knowledge and attitudes of its employees to make them more effective in their current and future roles. The company has and will continue to make significant investments in the technical and product training of its people. It also proposes to focus on assessment of competencies and building leadership skills for a large number of its employees to enable them to be effective managers in this process of growth that the company is going through.

9. Investment mix

During the financial year 2007-08, the Company completed a Public Issue of 10,900,545 Equity Shares of Rs. 10/- each for cash at a price of Rs. 440/- each aggregating to Rs. 4,79.62 Crores out of which, Rs. 378.99 Crores was on Primary issue of equity shares.

The IPO proceeds are being and will be utilized towards the objects as mentioned in the prospectus. The surplus funds including the cash generated through operations are invested in high quality interest bearing liquid instruments including money market mutual funds, deposits with banks, for the necessary duration. The Audit Committee of the company constantly reviews its investment policy and ensures adherence to the same.

59

Auditors’ Report

TO THE MEMBERS OF ONMOBILE GLOBAL LIMITED

We have audited the attached Balance Sheet of ONMOBILE GLOBAL LIMITED (the “Company”) as at March 31, 2009, the Profit and Loss

Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These financial statements are the

responsibility of the Management of the Company. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in India. These Standards require that we plan and perform the

audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes, examining on a test basis,

evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by the Management as well as evaluating the overall financial statements presentation. We believe that our audit provides

a reasonable basis for our opinion.

As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of Section 227 (4A) of the Companies

Act, 1956, we give in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order.

Further to our comments in the Annexure referred to above, we report that:

(a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our

audit;

(b) in our opinion, proper books of account as required by law have been kept by the Company, so far as it appears from our examination of the

books;

(c) the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of

accounts;

(d) in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in compliance with the

Accounting Standards referred in section 211(3C ) of the Companies Act, 1956;

(e) On the basis of the written representations from the directors, taken on record by the Board of Directors, none of the directors are disqualified as

on March 31, 2009 from being appointed as a director under Section 274 (1)(g) of the Companies Act, 1956;

(f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes

thereon give the information required, by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the

accounting principles generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2009;

(ii) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

For Deloitte Haskins & SellsChartered Accountants

V. SRIKUMARPlace: Mumbai PartnerDate: April 30, 2009 Membership No. 84494

60

(i) The nature of the Company’s business/activities during the year are such that the provisions of clauses ii, iii (b) to (d), (f), (g), vi, viii, x, xi, xii, xiii,

xiv, xv, xvi, xviii and xix of paragraph 4 of the Companies (Auditor’s Report) Order, 2003 are not applicable to the Company for the current year.

(ii) In respect of its fixed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the management in accordance with a phased programme designed to cover all the items over a

period of three years, which in our opinion is reasonable having regard to the size of the Company and nature of its assets. According to

the information and explanations given to us, no material discrepancies were noticed on such verification.

(c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such

disposal has, in our opinion, not affected the going concern status of the Company.

(iii) According to the information and explanations given to us, during the year the Company has not granted or taken any loans, secured or unsecured to

or from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956.

(iv) In our opinion and according to the information and explanations given to us, there are adequate internal controls procedure commensurate with

the size of the company and the nature of its business for the purchase of fixed assets and for the sale of services and we have not observed any

continuing failure to correct major weaknesses in such internal controls. The Company’s operations during the year did not entail purchase of

inventory or sale of goods.

(v) In respect of contracts or arrangements entered in the register maintained in pursuance of Section 301 of the Companies Act 1956, to the best of

our knowledge and belief, and according to the information and explanations given to us,

(a) The particulars of contracts or arrangements referred to Section 301 that needed to be entered into the register, maintained under the said

section have been entered.

(b) According to the information and explanation given to us, where each such transaction, excluding loans reported under paragraph

(iii) above, is in excess of Rs. 5 lakhs in respect of any party, having regard to the explanation that the transactions involved services received

of specialized nature, these have been made at prices which are prima facie reasonable

(vi) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the management have

been commensurate with the size of the Company and the nature of its business.

(vii) With respect to statutory dues:

(a) According to the information and explanations given to us except for certain delays in depositing Employee State Insurance

dues, the Company has been regular in depositing undisputed statutory dues, including Investor Education and Protection Fund, Income

tax, Sales tax, Wealth tax, Service tax, Custom duty, Excise duty, Cess and any other material statutory dues with the appropriate authorities

during the year. There are no undisputed statutory dues outstanding for a period of more than six months from the date they became

payable as at the balance sheet date.

Annexure to the Auditors’ Report (Referred to in our report of even date)

61

(b) According to the information and explanations given to us, details of disputed value added tax dues which have not been deposited as at

the year-end on account any disputes are given below.

Name of statute Nature of the dues Amount (Rs.)Period to which the amount relates

Forum where dispute is pending

Karnataka Value Added Tax ActValue added tax, interest and penal interest

169,618,694 2002-03 to 2007-08Joint Commissioner of Commercial Taxes, Bangalore

(viii) According to the information and explanations given to us, and on an overall examination of the balance sheet of the Company, funds raised on

short term basis have, prima facie, not been used during the year for long term investment.

(ix) We have verified the end use of money raised by public issue is as disclosed in the note B1 to the schedule 17 of the financial statements.

(x) To the best of our knowledge and belief and according to the information and explanations given to us, no fraud on or by the Company was

noticed or reported during the year.

For Deloitte Haskins & SellsChartered Accountants

V. SRIKUMARPlace: Mumbai PartnerDate: April 30, 2009 Membership No. 84494

62

Balance Sheet

ONMOBILE GLOBAL LIMITEDIn Rs. Million

Schedule As at March 31, 2009 As at March 31, 2008

SOURCES OF FUNDS

Shareholders' Funds:

Share capital 1 578.33 574.06

Stock options outstanding 0.29 1.41

Reserves and Surplus 2 6,067.64 5,364.60

Loan Funds

Secured Loans 3 42.72 -

Deferred Payment Liability 128.58 278.64

(Refer Notes B (4) & (9) of Schedule 17)

Deferred Tax Liability (Net) 68.15 39.46

6,885.71 6,258.17

APPLICATION OF FUNDS

Fixed Assets: 4

Gross Block 1,961.38 1,301.56

Less: Accumulated Depreciation and Amortisation 945.96 525.49

Net Block 1,015.42 776.07

Capital Work-in-progress (including Capital Advances

Rs.18.77 Million (at March 31, 2008- Rs.19.04 Million) 118.60 113.38

1,134.02 889.45

Investments 5 2,298.39 4,610.75

Current Assets, Loans and Advances:

Sundry Debtors 6 994.37 782.76

Cash and Bank Balances 7 2,771.10 1,436.41

Other Current Assets 8 22.25 12.54

Loans and Advances 9 1,625.95 916.14

5,413.67 3,147.85

Less: Current Liabilities and Provisions:

Current Liabilities 10 1,025.64 1,692.34

Provisions 11 934.73 697.54

1,960.37 2,389.88


6,885.71 6,258.17

Significant Accounting Policies and Notes on Accounts 17

The Schedules referred to above and notes thereon form an integral part of the Balance Sheet.

As per our report of even date attached For Deloitte Haskins & SellsChartered Accountants

For and on behalf of the Board of Directors

V. Srikumar Partner

Arvind Rao Chief Executive Officer and Managing Director

Rajesh Moorti Chief Financial Officer

Chandramouli JDirector

D SrikiranCompany Secretary

Place: MumbaiDate: April 30, 2009


63

Profit and Loss Account

ONMOBILE GLOBAL LIMITEDIn Rs. Million, except per share data

ScheduleFor the year ended

March 31, 2009For the year ended

March 31, 2008REVENUETelecom Value Added Services 3,246.52 2,272.64 Software development 14.85 24.04 Other services 9.73 10.95 Total Revenue 3,271.10 2,307.63

EXPENDITURECost of sales and services 12 669.14 363.09 Manpower costs 13 738.54 512.64 Administration and other expenses 14 677.50 514.78 Total operating expenses 2,085.18 1,390.51

Earnings before other income, depreciation and amortisation, finance charges and tax 1,185.92 917.12 Other Income 15 236.09 68.85 Depreciation and amortisation 4 420.53 249.18

Earnings before finance charges and tax 1,001.48 736.79 Finance charges 16 0.03 17.09


Provision for taxation Current Year Tax 254.70 210.90 Earlier year provision - 6.90 Deferred tax (Note B (21) of Schedule 17) (Net) 28.69 15.04 Fringe Benefit Tax 11.25 11.18


Profit brought forward from previous year 1,201.07 755.31 Loss transferred on Amalgamation - (19.10)Provision for leave encashment (net of deferred tax) - (10.73)Transfer to capital redemption reserve - (0.09)

Balance carried to Balance Sheet 1,907.88 1,201.07

Basic and Diluted Earnings Per Share (Note B (20) of Schedule 17) - Earnings per share ( Basic)( Face value of equity share of Rs. 10/- each) 12.2 9.9 - Earnings per share ( Diluted)( Face value of equity share of Rs. 10/- each) 11.8 9.2


The Schedules referred to above and notes thereon form an integral part of the Profit and Loss Account.



V. Srikumar Partner







64

Cash Flow Statement


As at March 31, 2009 As at March 31, 2008

A. CASH FLOW FROM OPERATING ACTIVITIESNet profit before tax and extraordinary items 1,001.45 719.70 Adjustments for :Depreciation 420.53 249.18 Unrealised Foreign Exchange Loss/(Gain) 5.04 22.17 Loss/(Gain) on Sale of Fixed Assets (Net) (3.45) 1.57 Loss/(Gain) on redemption of Investment (Net) 12.28 (0.14)Provisions no longer required written back - (2.47)Provision for Doubtful debts 44.19 53.39 Dividend Income (131.69) (56.24)Interest Expense 0.03 17.09 Interest Income (100.15) 246.78 (9.65) 274.90Operating profit before working capital changes 1,248.23 994.60 (Increase)/decrease in Trade and other receivables (254.21) (293.02)(Increase)/decrease in Loans and Advances (305.64) (139.74)Increase/(decrease) in Current Liabilities and Provisions 321.11 (238.74) 282.01 (150.75)Cash generated from operations 1,009.49 843.85 Direct taxes paid (410.66) (309.92)Net cash from operating activities 598.83 533.93

B. CASH FLOW FROM INVESTING ACTIVITIESPurchase of fixed assets (677.56) (822.94)Sale of fixed assets (Including Capital Work-in-Progress) 16.67 9.07 Sale, Redemption/ (Purchase) of Securities (net) 3,135.58 (2,129.56)Investment in Subsidiaries (768.43) (1,079.64)Payment towards Deferred Liability (248.34) (2.50)Dividend Income 144.23 49.08 Interest received 77.90 9.65 Net cash used in investing activities 1,680.05 (3,966.84)

C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from issuance of Share Capital (net of refund of share application money)

4.48 3,793.81

Offer for sale Payable/ (Paid) to OnMobile Systems Inc (net of reimbursement of expenses)

(940.20) 992.71

Share Issue expenses (8.44) (72.45)Redemption of preference shares - (33.04)Proceeds from short term borrowings - 350.00 Repayment of short term borrowings - (350.00)Interest paid (0.03) (17.09)Net cash used in financing activities (944.19) 4,663.94

Net increase/(decrease) in cash and cash equivalents 1,334.69 1,231.03

Cash and cash equivalents (Opening Balance) 1,436.41 205.38 Cash and cash equivalents (Closing Balance) 2,771.10 1,436.41

1,334.69 1,231.03

Notes:1. The above Cash flow statement has been prepared under the “Indirect method” as set out in the Accounting Standard 3-“Cash Flow statement”. 2. Cash and Cash Equivalents include deposits of Rs. 11.09 Million (March 31, 2008 : Rs.264.49 Million) the use of which was restricted. 3. Cash and Cash Equivalents include unrealised foreign exchange gain of Rs. 4.47 Million (March 31, 2008 - Loss of Rs. 0.01 Million).



V. Srikumar Partner







65

Schedules to the Balance Sheet

ONMOBILE GLOBAL LIMITED

In Rs. Million


1. SHARE CAPITAL

Authorised:

74,500,000 ( at March 31, 2008 – 74,500,000) Equity Shares of Rs.10/- each 745.00 745.00

500,000 ( at March 31, 2008 – 500,000) Preference Shares of Rs. 10/- each 5.00 5.00

750.00 750.00

Issued, Subscribed and Paid-up:

57,833,319 ( at March 31, 2008 – 57,406,139) Equity Shares of Rs.10/- each fully paid up

578.33 574.06

578.33 574.06

Notes:

1) 25,403,867 ( at March 31, 2008 – 25,403,867) Equity Shares are held by the erstwhile Holding Company OnMobile Systems Inc., USA (formerly Onscan Inc.,USA).

2) During the year ended March 31, 2008-

- 567,749 Equity shares were issued to erstwhile shareholders of ITfinity Solutions Private Limited at the time of amalgamation (inclusive of 524,076 bonus shares). - the Company made a bonus issue in the ratio of 12 : 1 to the shareholders by capitalisation of Capital Redemption Reserve and Securities Premium account. - 423,722 Equity Shares have been issued to the promoters and employees of Vox Mobili, S.A. France as a part of Purchase consideration for its acquisition (inclusive of

391,128 bonus shares).

3) Preference shares issued during 2006-07 with rights to dividend ranking pari passu with the equity shares being convertible at any time on or before the occurrence of the Initial Public Offer (IPO) or on liquidity event as defined in the investors agreement, have been partly redeemed and the balance converted into equity shares of Rs. 10/- each fully paid up during the year ended March 31, 2008.

4) On February 19, 2008 the Company allotted 8,613,356 equity shares of Rs. 10/- each under an Initial Public Offer (IPO).

In Rs. Million

As at March 31, 2009 As at March 31, 20082. RESERVES AND SURPLUS Securities Premium account Opening Balance 4,163.53 1,230.06 Add: Received during the year 8.28 4,021.05 Less: Utilised towards Share issue expenses 8.44 245.80 Less: Goodwill on Amalgamation Adjusted - 358.52 Less: Redemption of Preference Shares - 32.95 Less: Utilised towards bonus issue 3.61 4,159.76 450.31 4,163.53

Capital Redemption Reserve Opening Balance - - Add: Additions during the year - 0.09 Less: Utilised towards bonus issue - - 0.09 -

Profit and Loss Account 1,907.88 1,201.07 6,067.64 5,364.60

In Rs. MillionAs at March 31, 2009 As at March 31, 2008

3. SECURED LOANS From other than banks Finance Lease obligation* 42.72 -

42.72 - Note: *Secured by underlying assets acquired under finance lease. Includes repayable within one year Rs.17.48 Million (at March 31, 2008- Rs.Nil)

66


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67



As at March 31, 2009 As at March 31, 20085. INVESTMENTS Long term investments - Non Trade ( unquoted) at cost Wholly owned subsidiaries:

OnMobile Singapore Pte. Ltd., Singapore 85,000 equity shares of Singapore $ 1 each, fully paid

2.29 2.29

OnMobile Australia Pty. Ltd., Australia 100,000 equity shares of Australian $ 1 each, fully paid

3.33 3.33

PT. OnMobile, Indonesia 1,000 equity shares of USD 100 each, fully paid

4.06 4.06

OnMobile Europe B.V., Netherlands 12,783,844 equity shares of Euro 1 each, fully paid

2,233.61 -

Vox Mobili S.A., France Nil (at March 31, 2008: 6,501,705) equity shares of Euro 0.05 each, fully paid

- 1,431.11

Phonetize Solutions Private Ltd , India 9,999 equity shares of Rs. 10/- each, fully paid

0.10 0.10

Other Subsidiaries: Ver se Innovation Private Ltd, India 26,030 (at March 31, 2008: 10,412) equity shares of Rs. 10/- each, fully paid

55.00 22.00

Total Long Term-Unquoted-(A) 2,298.39 1,462.89

Short term investments- Non Trade (quoted) at lower of cost and market value ABN AMRO Interval Fund Quarterly Plan H Interval Dividend Nil ( at March 31, 2008 –40,000,000) units, Net Asset Value Rs. Nil ( at March 31, 2008 – Rs. 403.93 Million)

- 400.00

ING Fixed Maturity Fund - 42 Institutional Dividend Nil ( at March 31, 2008 –30,010,048 ) units, Net Asset Value Rs. Nil ( at March 31, 2008 – Rs.301.55 Million)

- 300.10

HDFC FMP 90D January 2008 (VI) - Wholesale Plan Dividend Nil (at March 31, 2008 –50,000,000 ) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.505.15 Million)

- 500.00

Standard Chartered Fixed Maturity Plan - Quarterly Series 25 - Dividend Nil (at March 31, 2008 –100,86,574 ) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.100.90 Million)

- 100.87

Templeton Quarterly Interval Plan - Plan B - Institutional - Dividend Payout Nil (at March 31, 2008 –24,974,276) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.251.45 Million)

- 250.00

Birla Sunlife Qtrl Interval - Series 9 - Dividends Payout Nil (at March 31, 2008 –25,000,000 ) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.250.73 Million)

- 250.00

Birla Sunlife Qtrl Interval - Series 1 - Dividends Payout Nil (at March 31, 2008 –10,023,681 ) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.100.52 Million)

- 100.30

ICICI Prudential Interval Fund II Quarterly Interval Plan E Nil (at March 31, 2008 –29,186,524) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.293.28 Million) - 291.87

TATA Dynamic Bond Fund Option B - Dividend Nil (at March 31, 2008 –17,002,038) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.173.25 Million)

- 172.87

TATA Fixed Income Portfolio Fund Scheme A3 Institutional Nil (at March 31, 2008 –24,988,505) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.250.51 Million)

- 250.00

68



As at March 31, 2009 As at March 31, 2008 DWS QUARTERLY INTERVAL FUND - SERIES 1 - Dividend Plan Nil (at March 31, 2008 –10,000,000) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.100.43 Million)

- 100.00

ICICI Prudential - Flexible Income Plan Nil (at March 31, 2008 –14,205,826) units , Net Asset Value Rs. Nil (at March 31, 2008 – Rs.150.21 Million)

- 150.21

Birla Sun Life Liquid Plus - Instl. - Daily Dividend -Reinvestment Nil (at March 31, 2008 –5,120,516) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.51.25 Million)

- 51.24

Birla Sun Life Liquid Plus - Instl. - Daily Dividend -Reinvestment Nil (at March 31, 2008 –3,002,311) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.30.03 Million)

- 30.03

Fidelity Liquid Plus Inst - Daily Dividend Nil (at March 31, 2008 –5,011,320) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.50.12 Million)

- 50.12

JP Morgan India liquid fund -Dividend Plan-Reinvest Nil (at March 31, 2008 –5,000,813) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.50.05 Million) - 50.05

Mirae Asset Liquid Fund-Institutional-Dividend Plan (Daily) Nil (at March 31, 2008 –50,078) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.50.15 Million)

- 50.15

Principal Floating Rate Fund FMP Insti. Option - Dividend Reinvestment Daily Nil (at March 31, 2008 – 4,999,102) units, Net Asset Value Rs. Nil (at March 31, 2008 – Rs.50.05 Million)

- 50.05

Total Short Term Quoted- (B) - 3,147.86 Grand Total- (A+B) 2,298.39 4,610.75 Aggregate market value of short term quoted investments Rs. Nil (at March 31, 2008- Rs. 3,163.56 Million)


6. SUNDRY DEBTORS (Unsecured) Debts outstanding for a period exceeding six months Considered good 51.79 79.00 Considered doubtful 29.76 34.75

Other debts Considered good 604.97 465.78 Considered doubtful 15.95 18.63 Unbilled Revenue 337.61 237.99

1,040.08 836.15 Less: Provision for Doubtful Debts 45.71 53.39

994.37 782.76 Note: Sundry Debtors include dues from subsidiaries:

a) OnMobile Singapore Pte Ltd. 14.05 24.79b) OnMobile Australia Pty. Ltd. 0.08 5.80c) Vox Mobili S.A. 9.17 -

23.30 30.59

69


7. CASH AND BANK BALANCES Cash on hand 0.10 0.18 Balances with scheduled banks:

- In current account 301.27 1,414.49 - In deposit account 2,452.85 13.99

Balances with other banks (non scheduled banks): - Citibank Malaysia 4.63 1.52 - Citibank United Kingdom 1.27 4.84 - Citibank Australia 8.26 0.58 - Citibank Bangladesh 2.72 0.81

2,771.10 1,436.41

Notes: 1) Balances with Scheduled Banks- In Fixed Deposit Accounts are as follows:

a) ICICI Bank Limited 3.17 7.10b) Kotak Mahindra Bank Limited 117.77 6.41c) State Bank of India 750.30 -d) IDBI Bank Limited 404.70 -e) Punjab National Bank 40.70 -f) Hongkong and Shanghai Banking Corporation 230.00 -g) Bank of India 211.20 -h) Canara Bank 295.00 -i) Axis Bank Limited 400.00 -j) Citi Bank - 0.48k) Standard Chartered Bank 0.01 0.01

2,452.85 14.00

2) Maximum Balances Outstanding with Non Scheduled Banks are as follows:a) Citibank Malaysia 6.75 1.82b) Citibank United Kingdom 4.78 4.84c) Citibank Australia 11.18 2.61d) Citibank Bangladesh 7.19 0.88

3) Balances with banks include:a) Margin Money Deposit 10.73 9.58b) Deposit for Letter of Credit - 1.20c) Amounts in Escrow account 0.36 253.71


8. OTHER CURRENT ASSETS Accrued Dividend - 12.54 Accrued Interest 22.25 -

22.25 12.54



70


As at March 31, 2009 As at March 31, 20089. LOANS AND ADVANCES (Unsecured, Considered good)

Advances recoverable in cash or in kind or for value to be received Advances to employees 20.33 29.81 Advances to vendors 93.61 10.89 Prepaid Expenses 23.83 137.77 18.47 59.17 Deposits Rental Deposits 115.19 88.87 Deposits with body corporates 25.67 29.04 Deposits with Statutory authorities 183.53 324.39 27.48 145.39 Dues from Subsidiaries : - Loan 10.17 7.74 - Other advances 52.95 63.12 2.40 10.14 Advance Income tax and Tax deducted at source 1,099.97 701.44 Advance Fringe Benefit Tax (Net of Provision) 0.70 -

1,625.95 916.14 Notes:

1) Advances to employees include Rs.0.45 Million (at March 31, 2008 Rs.0.85 Million) as travel advance to directors. (Note B(11) of Schedule 17)

2) Deposits with statutory authorities include Rs.169.62 Million to VAT Authorities under direction of the Honorable High Court of Karnataka.

3) Dues from subsidiaries are as follows: a) OnMobile Singapore Pte. Ltd. 53.74 3.23 b) PT OnMobile Indonesia 9.35 6.91 c) OnMobile Europe B.V. 0.03 -

63.12 10.14


10. CURRENT LIABILITIESSundry creditors other than Micro and Small Enterprises (Note B(24) of Schedule 17) - for capital items- due to erstwhile Holding company 85.33 66.82- for capital items- due to subsidiary 156.15 -- for capital items- due to others 88.90 37.46- For expenses- due to Subsidiaries 53.81 17.82- for expenses- due to Others 557.06 941.25 499.11 621.21Due to erstwhile Holding company - 940.20 Share Application money (Refer Note B (2) of Schedule 17) 0.36 3.71 Deferred revenue 5.35 4.81 Other liabilities 78.68 122.41

1,025.64 1,692.34 Note:Sundry Creditors include due to a company in which a director is interested Rs. 4.25 Million (at March 31, 2008- Rs.0.77 Million). Maximum balance outstanding during

year Rs. 4.25 Million (Previous Year - Rs.0.77 Million).In Rs. Million

As at March 31, 2009 As at March 31, 200811. PROVISIONS

Income Tax 848.38 593.68 Fringe Benefit Tax (Net) - 0.18 Employee Benefits Gratuity 19.22 3.62 Leave Encashment 20.03 39.25 22.86 26.48 Other Provisions 47.10 77.20

934.73 697.54 Note:Fringe Benefit Tax paid at March 31, 2008- Rs.20.47 Million


71


For the year endedMarch 31, 2009

For the year endedMarch 31, 2008

12. COST OF SALES AND SERVICES Content fee and royalty 504.14 230.69 Cost of hardware and software development charges 165.00 132.40

669.14 363.09

In Rs. MillionFor the year ended


March 31, 200813. MANPOWER COST

Salaries, wages and bonus 662.39 433.00 Contribution to Provident fund and other funds 51.93 56.24 Workmen and staff welfare expenses 14.38 19.23 Employee Insurance 9.84 4.17

738.54 512.64



March 31, 200814. ADMINISTRATION AND OTHER EXPENSES

Power and Fuel 18.89 12.29 Rent 102.05 70.96 Insurance 1.10 0.37 Repairs - Machinery 9.47 - - Others 6.77 6.48 Office maintenance 28.25 25.37 Rates and taxes 7.99 3.75 Printing and stationery 4.95 3.19 Postage, courier and octroi 4.00 3.57 Communication charges 78.56 53.34 Training and Recruitment expenses 26.88 20.08 Travelling and conveyance 111.65 81.81 Legal, professional and consultancy charges 97.05 66.90 Commission to Non Whole time directors 4.79 5.00 Remuneration to Auditors 4.90 2.30 Marketing expenses 46.60 38.80 Business development expenses 37.35 32.23 Provision for Doubtful Debts 44.19 53.39 Brokerage and Commission 8.39 2.32 Bank charges 3.80 4.91 Loss on Sale of Assets - 1.57 Loss on Redemption of investments 12.28 - Exchange loss 16.73 25.22 Miscellaneous expenses 0.86 0.93

677.50 514.78



March 31, 200815. OTHER INCOME

Interest - From Banks 98.98 9.65 [Gross, Tax deducted at source Rs.17.43 Million (at March 31, 2008 : Rs.1.62 Million)] - From Subsidiaries 0.46 0.23 - From Others 0.72 - Dividend on investment 131.69 56.24 Profit on redemption of investments - 0.14 Provisions written back - 2.47 Profit on Sale of Fixed Assets (Net) 3.45 - Other Income 0.79 0.12

236.09 68.85



March 31, 200816. FINANCE CHARGES

Interest on Finance lease 0.03 - Interest on Short term loan - 17.09 0.03 17.09

Schedules to the Profit and Loss Account

72


17. SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

A. SIGNIfIcANT AccOuNTING pOLIcIES

1. Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting, in accordance with Indian Generally Accepted Accounting principles (“GAAp”). GAAp comprises mandatory Accounting Standards prescribed by the company Accounting Standards Rules, 2006. The management evaluates all recently issued or revised Accounting Standards on an ongoing basis.

2. use of Estimates

The preparation of the financial statements in conformity with GAAp requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Examples of such estimates includes provision for doubtful debts , future obligations under employee benefit plans, income taxes and the useful lives of fixed assets. contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reliably estimated. When no reliable estimate can be made, a disclosure is made as contingent liability. Actual results could differ from those estimates.

3. Revenue Recognition

Revenue from Telecom Value Added Services including royalty income, net of customer credits, is recognized on provision of services in terms of revenue sharing arrangements with the telecom operators.

Revenue from sale of user licences for software applications is recognized when the applications are functionally installed at the customer’s location as per the terms of the contracts.

Revenue from Other Services including maintenance services is recognized proportionately over the period during which the services are rendered as per the terms of contract.

Dividend on current investment is recognized on an accrual basis. profit on sale of investments is recorded on transfer of title from the company and is determined as the difference between the sale price and the then carrying value of the investment. Interest Income is recognised on an accrual basis.

4. fixed assets

fixed assets are stated at cost of acquisition including taxes, duties, freight and other incidental expenses relating to acquisition and installation.

capital work in progress is stated at cost and includes advances paid to acquire fixed assets and the cost of fixed assets that are not ready for their intended use at the Balance Sheet date.

5. Depreciation

Depreciation on assets is provided on a monthly basis using the straight-line method based on useful/commercial lives of these assets as estimated by the Management.

The useful/commercial lives are as follows:

category of Asset No. of years

Leasehold Improvements primary lease period

finance Lease Assets primary lease period

Building 61 years

Intellectual property 3 years

Office equipment 3 years

furniture & fixtures 3 years

computers & Electronic equipment 3 years

computer Software 3 years

Motor car 3 years

Individual assets costing less than Rs.5,000/- are depreciated in full in the year of purchase. The depreciation rates adopted are the same as or higher than the rates specified in Schedule XIV of the companies Act, 1956.

6. Investments

Short term investments are stated at lower of cost and market value.

Long term investments are stated at cost. provision is made for any diminution in value of long term investment which is other than that of a temporary in nature.

7. foreign currency transactions

Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transaction. Monetary assets and Monetary liabilities denominated in foreign currencies are translated at the exchange rate prevalent at the date of the Balance sheet. Exchange differences arising on foreign currency translations are recognized as income or expense in the year in which they arise.

8. Employee Benefits

a. Short term employee benefits including salaries, social security contributions, short term compensated absences (such as paid annual leave) where the absences are expected to occur within twelve months after the end of the period in which the employees render the related employee service, profit sharing

Schedules to the Financial Statements

73


and bonuses payable within twelve months after the end of the period in which the employees render the related services and non monetary benefits (such as medical care) for current employees are estimated and measured on an undiscounted basis.

b. Defined contribution plan

company’s contributions paid / payable during the year to provident fund are recognised in the profit and Loss Account.

c. Defined Benefit plan

Liabilities for gratuity funded in terms of a scheme administered by the Life Insurance corporation of India, are determined by Actuarial Valuation made at the end of each financial year. provision for liabilities pending remittance to the fund is carried in the Balance Sheet.

Actuarial gains and losses are recognized immediately in the statement of profit and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

d. Long term liability for Leave Encashment is provided based on actuarial valuation of the accumulated leave credit outstanding to the employees as on the Balance Sheet date.

9. Employee Stock Option plan

The company has formulated 9 Employee Stock Option plans (“ESOp”) - OnMobile Employees Stock Option plan – I 2003, OnMobile Employees Stock Option plan – II 2003, OnMobile Employees Stock Option plan – III 2006, OnMobile Employees Stock Option plan – I 2007, OnMobile Employees Stock Option plan – II 2007 , OnMobile Employees Stock Option plan – I 2008, OnMobile Employees Stock Option plan – II 2008, OnMobile Employees Stock Option plan – III 2008 and OnMobile Employees Stock Option plan – IV 2008.

The company has obtained legal opinion that the guidance note on Accounting for Employees Share based payments are not applicable to OnMobile Employee Stock Option plan – I 2003 and II 2003. Options granted in terms of OnMobile Employee Stock Option plan – III 2006, OnMobile Employees Stock Option plan – I 2007, OnMobile Employees Stock Option plan – II 2007, OnMobile Employees Stock Option plan – I 2008, OnMobile Employees Stock Option plan – II 2008, OnMobile Employees Stock Option plan – III 2008 and OnMobile Employees Stock Option plan – IV 2008 to which

the said guidance note is applicable, are accounted under intrinsic value method and accordingly, the difference between the fair value of the underlying shares and the exercise price, if any, is expensed to profit and loss account over the period of vesting.

10. Leases

Assets taken on lease where the company acquires substantially the entire risks and rewards incidental to ownership are classified as finance leases. The amount recorded is the lower of the present value of minimum lease rental and other incidental expenses during the lease term or the fair value of the assets taken on lease. The rental obligations, net of interest charges, are reflected as secured loan. Leases that do not transfer substantially all the risks and rewards of ownership are classified as operating leases and lease rentals are expensed to profit & Loss account on accrual basis.

11. Borrowing cost

Borrowing costs incurred for the acquisition of qualifying assets are recognised as part of cost of such assets when it is possible that they will result in future economic benefits to the company while other borrowing costs are expensed.

12. Income Tax

Income tax expense includes Indian and International income taxes. Income tax comprises of the current tax provision, net change in deferred tax asset or liability in the year and fringe benefit tax.

provision for current tax is made taking into account the admissible deductions/allowances and is subject to revision based on the taxable income for the fiscal year ending 31 March each year.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between carrying values of the assets and liabilities and their respective tax bases and are measured using enacted tax rates applicable on the Balance Sheet date.

Deferred Tax assets are recognized subject to management’s judgement that realization is reasonably/virtually certain.

The effect of changes in tax rates on deferred tax assets and liabilities is recognized in the income statement in the year of enactment of change.

fringe benefit tax is provided as per provisions of the Income Tax Act 1961.

fringe Benefit tax on stock options exercised during the year is being recovered from the beneficiaries and not charged to the profit and Loss Account.

74

13. cash flow Statement

cash flow Statement has been prepared in accordance with the Indirect method prescribed in Accounting Standard 3-“ cash flow statements ”. The cash flows from operating, investing and financing activities of the company are segregated.

14. Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal / external factors. An asset is treated as impaired when the carrying cost of assets exceeds its recoverable amount. An impairment loss is charged to profit and Loss Account in the year in which an asset is identified as impaired. The recoverable amount is greater of the asset’s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to the present value. A previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

15. Earnings per Share

In determining the Earnings per share, the company considers the net profit after tax. The number of shares used in computing Basic Earnings per share is the weighted average number of equity shares outstanding during the year. The number of shares used in computing Diluted Earnings per share comprises the weighted average number of equity shares considered for deriving Basic earnings per share and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year unless issued at a later date.

16. provisions and contingencies

provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect current best estimates.

B. NOTES ON AccOuNTS

1. utilization of proceeds from Initial public Offer (IpO)

The actual utilization of the proceeds of the Initial public Offer during 2007-08 issue of Rs. 3,544.54 Million (net of share issue expenses) is as under :

In Rs. Million

Sl No.

Expenditure Items Total cost to be financed from

Net proceeds (as disclosed in the

prospectus)

Actual utilisation up to March 31, 2009

1 purchase of equipment for offices at Bangalore, Mumbai and Delhi and various customer sites

1,805.21 562.39

2 Working capital requirements

50.00 50.00

3 Repayment of loan 350.00 350.00

4 General corporate purposes

1,339.33 1,050.01

Total 3,544.54 2,012.40

The unutilised funds as at March 31, 2009 have been temporarily invested in fixed Deposits with banks.

2. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and protection fund as per the provisions of the companies Act, 1956.

3. contingent liabilities and commitments

a. The company has been named as one of the 20 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b. Disputed Value Added Tax Rs. 339.24 Million (previous year: Rs. Nil ).

c. claims against the company not acknowledged as debts is Rs. 10.00 Million (previous year: Rs. Nil ).

d. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 73.44 Million (previous year: Rs. 82.64 Million).

4. Acquisition of Telisma S.A.

During the year the company has vide resolution of the Board of Directors dated April 30, 2008 and the share purchase agreement signed by and between the company and the shareholders of Telisma S.A. (“Telisma”) on May 13 , 2008 and the founder’s agreement signed by and between the company and the founders of Telisma on May 13, 2008 acquired 203,445,874 shares of

Telisma on July 1, 2008 for a total consideration of Euros 11.78

Million ( aggregating to Rs. 801.28 Million including Rs. 3.69


75

Million of taxes payable towards transfer of shares) payable under

the share purchase agreement as below:

a. Euros 10.78 Million in cash

b. Euros 0.64 Million (converted into a Rupee liability of Rs.

42.64 Million) in form of equity shares subsequent to an earn

out valuation adjustment as mentioned in the share purchase

agreement, payable to the founders of Telisma and

c. Euros 0.36 Million in form of equity shares subsequent to an earn

out valuation adjustment as mentioned in the share purchase

agreement, payable to the Minority vendors of Telisma.

Accordingly, the company has paid Euros 10.78 Million of

which Euros 0.90 Million are paid into an escrow account which

would be released to the founders at the end of 24 months on

satisfaction of certain conditions. The balance consideration of

Rs. 66.93 Million is included in the deferred payment liability in

the Balance Sheet.

5. Investment in OnMobile Europe B.V.

During the year the company has vide resolution of the Board of

Directors dated April 30, 2008 incorporated OnMobile Europe B.V.,

Netherlands, a Wholly owned Subsidiary with an investment of Rs. 1.22 Million ( Euros 0.02 Million) towards 18,000 equity shares.

6. Additional Investment in Ver se Innovation private Limited

During the year the company made an additional investment of Rs. 33.00 Million vide resolution of the Board of Directors dated October 31, 2008, pursuant to a capital commitment made of Rs. 66.00 Million by way of equity (including warrants) or any debt instrument including optionally convertible preference shares, term loans or any other such instrument or arrangement as maybe agreed by and between the parties as per the terms and conditions of the subscription cum shareholder’s agreement.

7. Group Restructuring plan

pursuant to a Group restructuring plan, during the year the company has transferred the share holdings in its wholly owned subsidiaries Vox Mobili S.A. and Telisma S.A. to a newly formed subsidiary OnMobile Europe B.V.

8. Investments, loans and advances to wholly owned subsidiaries and

employees

a. Investment in the wholly owned Subsidiaries has been made

considering strategic business expansion plan. In the opinion

of the management and considering intrinsic value and the

business potential of the subsidiaries, the investment has been

carried at cost.

b. The company has given loan to its wholly owned subsidiaries the

details of which are given below and which in the opinion of the

Management is realisable in full:

In Rs. Million

particularsAs at

March 31, 2009

As at March 31,

2008

Maximum amount due at any time during the

year 2008-09

Maximum amount due at any time during the

year 2007-08

Subsidiaries

- OnMobile Singapore pte. Ltd

1.98 1.59 1.98 1.59

-pT OnMobile Indonesia 8.19 6.15 8.19 6.15 Employees loan given in the ordinary course of the business and as per the service rules of the company - no repayment schedule or repayment beyond seven years

- - - -

- no interest or at an interest rate below which is specified in section 372A of the companies Act, 1956.

15.23 11.51 - -

9. Deferred payment liability also includes:

a. Euros 0.50 Million (Rs. 33.74 Million) being balance consideration

outstanding at the year end relating to acquisition of Vox Mobili

S.A. during 2007-08 and

b. Rs. 27.90 Million being balance consideration payable over

one year outstanding at the year end relating to acquisition of

Intellectual property Rights.


76

10. Details of purchase and sale of investments during the year

Name of the fund

purchased Sold (at cost)

No. of Shares / units

Amount (In Rs. Million)

No. of Shares / units


Long term Investments

OnMobile Europe B.V. 12,783,844 2,233.61 - -

Ver se Innovation private Limited 15,618 33.00 - -

Telisma SA 203,445,874 801.28 203,445,874 801.28

Vox Mobili SA - - 6,501,705 1,431.11

216,245,336 3,067.89 209,947,579 2,232.39

Short Term Investments

ABN AMRO Interval fund Quarterly plan H Interval Div - Red 789,043 7.89 40,789,043 407.89

ABN AMRO Interval fund Quarterly plan H Quarterly Div-Red -NfO switch 41,522,157 415.23 41,522,157 415.23

AIG Short Term fund Institutional Daily Dividend 79,981 80.05 79,981 80.05

AIG Short Term fund Institutional Weekly Dividend 150,570 150.77 150,570 150.77

Birla Sun Life Liquid plus - Instl. - Daily Dividend -Reinvestment 10,112,681 101.20 15,233,197 152.44

Birla Sunlife Qtrl Interval fund Series 9 - Dividend payout 15,000,000 150.00 40,000,000 400.00

BSL Interval Income-Retail-Monthly - Series 2-Dividend -payout 35,106,084 351.06 35,106,084 351.06

BSL Quarterly Interval-Series 1-Dividend -payout - - 10,023,681 100.30

canara Robeco Interval Series 2 - Quarterly plan 2 - Inst Dividend fund 25,583,931 255.84 25,583,931 255.84

DWS Quarterly Interval fund-Series 1 - Dividend plan 396,443 3.96 10,396,443 103.96

fidelity Liquid plus (Institutional) - Dividend 10,118,856 101.21 15,130,176 151.32

Templeton Qtrly Interval plan- plan B (Institutional) - Dividend payout 30,601,943 306.60 55,576,219 556.60

HDfc fMp 90D August 2008 (IX) (2) - Wholesale plan Dividend* , Option : payout 50,000,000 500.00 50,000,000 500.00

HDfc fMp 90D January 2008 (VI) - Wholesale plan Dividend* , Option : payout 50,000,000 500.00 100,000,000 1,000.00

IcIcI prudential flexible Income plan premium - Daily Dividend 235,981 2.50 14,441,807 152.70

IcIcI prudential Interval fund II Quarterly Interval plan E- Retail Dividend 1,166,011 11.66 30,352,535 303.53

IDfc Liquid fund - Daily Dividend 49,998 50.01 49,998 50.01

IDfc Liquid plus fund - Treasury plan - Inst plan B-Daily Div 5,965,555 60.07 5,965,555 60.07

IDfc Money Manager fund - Investment plan - Inst plan B-Daily Div. 15,307,915 153.16 15,307,915 153.16

ING fixed Maturity fund-42 Institutional Dividend - - 30,010,048 300.10

Birla Sunlife Liquid plus - Institutional Daily Dividend 41,734,735 417.49 44,737,046 447.52

JM High Liquidity fund - Super Institutional plan - Daily Dividend (92) 5,491,991 55.01 5,491,991 55.01

JM Interval fund - Quarterly plan 1 - Institutional Dividend plan 9,212,238 92.12 9,212,238 92.12

JM Money Manager fund Super plus plan - Daily Dividend (171) 15,596,390 156.03 15,596,390 156.03

Jp Morgan India Liquid fund - Super Inst. Daily div plan - reinvest 25,291,350 253.14 30,292,163 303.19

Jp Morgan India Liquid fund-Super Inst. Daily Dividend plan.-Reinvest 19,987,760 200.04 19,987,760 200.04

Kotak Quarterly Interval plan Series 3 - Dividend 15,333,945 153.34 15,333,945 153.34

Lotus India Liquid fund Institutional daily dividend 4,499,420 45.01 4,499,420 45.01

Lotus India Liquid plus fund -Institutional daily dividend 8,591,961 0.56 8,591,961 0.56

Lotus India Quarterly Interval fund - plan A - Dividend 20,440,848 204.52 20,440,848 204.52

Mirae Asset liquid fund- (Institutional)- Dividend plan 469,654 470.31 519,732 520.46

principal floating Rate fund fMp-Insti. Option - Dividend Reinvestment Daily 10,136,862 101.44 15,135,964 151.50

Schedules to the Financial Statements Schedules to the Financial Statements

77

Schedules to the Financial Statements Schedules to the Financial Statements

11. Loans and advances include In Rs. Million

particularsAs at

March 31, 2009 As at

March 31, 2008

Due from a company in which director is interested (Maximum balance outstanding during the year Rs 0.10 Million (previous year Rs.0.10 Million))

0.10 0.10

Due from a director of the company (Maximum balance outstanding during the year Rs 1.45 Million (previous year Rs 3.15 Million))

0.45 0.85

12. Remuneration to Directorsa. Managerial Remuneration to Whole time directors

In Rs. Million

particularsfor the year ended

March 31, 2009for the year ended

March 31, 2008

Salary and Allowances 6.72 13.29

Other Benefits 6.53 0.51

contribution to provident fund 0.34 0.43

13.59 14.23

The above remuneration excludes gratuity and leave encashment amounts as the same have been provided based on an actuarial valuation.

b. Managerial Remuneration to Non-Whole time directorsIn Rs. Million



March 31, 2008

Sitting fees 0.74 1.23

commission 4.79 5.00

Stock Options 0.06 0.23

5.59 6.46

Name of the fund

purchased Sold (at cost)

No. of Shares/unitsAmount

(In Rs. Million)No. of Shares/units


Reliance Monthly Interval fund - Series II Institutional Dividend plan. 10,056,248 100.61 10,056,248 100.61

Standard chartered fixed Maturity plan- Quarterly Series 25- Dividend 110,751 1.11 10,197,325 101.97

TATA Dynamic Bond fund Option B - Dividend 49,099,638 503.51 66,101,676 676.38

Templeton India Treasury Management account Institutional plan - Daily Dividend Reinvestment

39,985 40.01 39,985 40.01

Templeton India Treasury Management Account Super Institutional plan - Daily Dividend Reinvestment

100,190 100.26 100,190 100.26

Templeton India ultra Short Bond fund Institutional plan - Daily Dividend Reinvestment

4,023,550 40.31 4,023,550 40.31

Templeton India ultra Short Bond fund Super Institutional plan - Daily Dividend Reinvestment

25,027,411 250.74 25,027,411 250.75

TATA fixed Income portfolio fund Scheme A3 Institutional M - - 24,988,505 250.00

uTI Liquid plus fund 100,613 100.63 100,613 100.64

557,532,691 6,487.40 866,194,304 9,635.26

c. computation of net profit in accordance with Section 349 of the companies Act,1956 and commission payable to directors:

In Rs. Million



March 31, 2008

profit before taxation 1,001.45 719.70

Add:

Managerial remuneration 19.08 20.69

Loss on Sale of assets - 1.57

Loss on Sale of Investments

12.28 -

provision for Doubtful Debts

44.19 53.39

75.55 75.65

Less:

profit on Sale of investments

- 0.14

Excess provision reversed back

- 2.47

profit on Sale of fixed Assets

3.45 -

3.45 2.61

Net profit 1,073.55 792.74

Remuneration to whole time Directors:

Eligible under Section 309 107.36 79.27

Restricted to remuneration paid

13.59 14.24

commission to Non-whole-time directors

Eligible under Section 309 10.74 7.93

Restricted to commission payable

4.79 5.00

78

13. Auditors RemunerationIn Rs. Million


March 31, 2009 for the year ended

March 31, 2008

Statutory Audit fees 1.70 1.70

Tax Audit fees 0.20 0.20

Other attest services 1.50 0.30

Taxation matters 1.50 0.10

Out of pocket expenses - -

4.90 2.30

The above remuneration for the year ended March 31, 2008 does not include Rs. 4.49 Million (including service tax) towards services rendered for the initial public offer which was considered as a share issue expense and set off against the balance available in Securities premium account.

The company avails input credit for Service Tax and hence no Service Tax expense was accrued during the year

14. Employee Benefits:

I. Defined contribution plans

During the year the company has recognized the following amount in the profit and Loss Account:

In Rs. Million


March 31, 2009 for the year ended

March 31, 2008

Employer's contribution to provident fund*

31.61 22.99

*Included in contribution to provident and other funds (Refer Schedule 13)

II. Defined Benefit plans

Gratuity

In accordance with Accounting Standard 15 (Revised 2005) - “Employee Benefits”, actuarial valuation as on March 31, 2009 was done in respect of the aforesaid defined benefit plan of Gratuity based on the following assumptions:



March 31, 2008

Discount Rate 7% p.a. 8.25% p.a.

Expected Rate of Return on plan Assets

8% p.a 7.50% p.a.

Salary Escalation Rate10% p.a. for first 6 years and 7.0% p.a

thereafter

10% p.a. for first 4 years and 7% p.a

thereafter

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

change in present Value of Obligation: In Rs. Million

particulars As at March 31, 2009 As at March 31, 2008

present Value of Obligation 10.85 4.92

current Service cost 14.21 2.30

Interest on Defined Benefit Obligation

0.74 0.38

Benefits paid (0.66) -

Net Actuarial Losses / (Gains) Recognized in Year

1.20 3.25

past Service cost - -

Losses / (Gains) on “curtailments and Settlements”

- -

closing present Value of Obligations 26.34 10.85

change in the fair Value of Assets:In Rs. Million


Opening fair Value of plan Assets 7.24 1.82

Expected Return on plan Assets 0.54 0.17

Actuarial Gains / (Losses) - 0.16

Assets Distributed on Settlements - -

contributions by Employer - 5.09

Assets Acquired due to Acquisition - -

Exchange Difference on foreign plans

- -

Benefits paid (0.66) -

closing fair Value of plan Assets 7.12 7.24

Details of investment composition of plan Assets has not been provided by the fund managers and hence not given.

Reconciliation of present Value of Defined Benefit Obligation and the fair Value of plan Assets:

In Rs. Million


closing present Value of funded Obligations

26.34 10.86

closing fair Value of plan Assets (7.12) (7.24)

closing funded Status - -

unrecognized Actuarial (Gains) / Losses

- -

unfunded Net Asset / (Liability) recognised in Balance Sheet

19.22 3.62

Amount recognized in the Balance Sheet:In Rs. Million


closing present value of obligations 26.34 10.86

closing fair Value of plan Assets (7.12) (7.24)

Liability Recognised in the Balance Sheet

19.22 3.62


79


Expenses recognized in the profit and Loss Account:In Rs. Million



March 31, 2008

current Service cost 14.21 2.30

past Service cost - -

Interest cost 0.74 0.38

Expected Return on plan Assets (0.55) (0.17)

Actuarial (Losses) / Gain 1.26 3.09

Losses / (Gains) on “curtailments and Settlements”

- -

Excess provision pertaining to previ-ous year adjusted in the current year

(2.97) -

Total Expenses to be recognized in the profit and Loss Account

12.69 5.60

III. Other long term benefits

Leave Encashment

cost of compensated absences expensed in the profit and Loss Account:

In Rs. Million



March 31, 2008

Leave Encashment 2.55 21.42

During the previous year on adoption of the Accounting Standard-15(Revised 2005)-”Employee Benefits”, the transitional liability of Rs. 16.17 Million in respect of unutilised leave salary liability as on April 01, 2007 was adjusted against opening balance of surplus in profit and Loss account, net of deferred tax adjustment of Rs 5.44 Million.

15. finance Lease:

The lease transactions of the company represent lease of electronic equipments on a non-cancellable basis.

The minimum lease payments and their present value as at March 31, 2009 under the various agreements are given below:

In Rs. Million

particularspresent value of Minimum Lease

paymentsfuture Interest

Minimum Lease payments

Amount repayable not later than 1 year

17.48 1.54 19.02

Amount repayable later than 1 year and not later than 5 years

25.24 7.47 32.71

42.72 9.01 51.73

16. Operating lease:

The company is obligated under non-cancellable operating lease for office space.

Total rental expense and future lease payments under non-cancellable operating lease for office space are as follows:

In Rs. Million



March 31, 2008

Rental expense charged to profit and Loss account

97.59 64.46

future lease payments

Not later than 1 year 108.63 74.01

Later than 1 year and not later than5 years

239.32 200.99

80

17. Employee Stock Option plans

Details of ESOp introduced to which the guidance note as issued by Institute of chartered Accountants of India (IcAI) is applicable

plan Board approval date

Share holder's approval date Total options appropriated

Terms of Vesting

OnMobile Employees Stock Option plan – I 2003

31-Oct-03 Extra Ordinary General Meeting held on March 5, 2001, November 29, 2003 and December 30, 2003

1,026,000 25% of such Options granted would vest at the end of twelve (12) months from the date the Optionee becomes an employee of the company and the remaining 75% would vest at a rate of 1/36th per month for the next thirty six (36) months from the first vesting.

OnMobile Employees Stock Option plan – II 2003

4-Dec-03 114,000

Number of options granted, exercised and forfeited during the year under the above plans are given below:



March 31, 2008

Options granted outstanding at the beginning of the year 1,736,085 130,113

Granted during the year - 32,923

Exercised during the year 391,625 23,188

forfeited during the year 148,213 6,303

Increase in Options consequent to issuance of bonus shares - 1,602,540

Options granted outstanding at the end of the year 1,196,247 1,736,085

Grants outstanding which are vested as at Balance Sheet date including increase due to issuance of bonus shares 935,155 599,079

Details of ESOp introduced to which the guidance note as issued by the Institute of chartered Accountants of India (IcAI) is applicable

planBoard approval

dateShare holder's approval date

Total options appropriated

Terms of Vesting

OnMobile Employees Stock Option plan – III 2006 24-Jul-06 24-Jul-06 61,567

25% of such Options granted would vest at the end of twelve (12) months from the date the Optionee becomes an employee of the company and the remaining 75% would vest at a rate of 1/36th per month for the next thirty six (36) months from the first Vesting.

OnMobile Employees Stock Option plan – I 2007 12-Jul-07 17-Aug-07 975,000

25% of the Options granted would vest at the end of twelve (12) months from the date of the grant and the remaining 75% would vest at a rate of 1/36th per month for the next thirty six (36) months from the first Vesting.

OnMobile Employees Stock Option plan-II 2007 12-Jul-07 17-Aug-07 74,360 65%, 30%, 3% and 2% of the options granted would vest at the end of one year, two years, three years and four years from the grant date, respectively.

OnMobile Employees Stock Option plan – I 2008 18-Mar-08 18-Apr-08 26,000 100% of the Options would vest over a period of four years.

OnMobile Employees Stock Option plan II 2008 31-Oct-08 1-Aug-08 100,000 100% of the options granted would vest at the end of two years.

OnMobile Employees Stock Option plan III 2008 31-Oct-08 1-Aug-08 748,240

for 297,170 Options 50% of the options granted would vest at the end of one year and 25% of the options would vest on a monthly basis at the end of each of second and third years from the grant date respectively and for the balance 451,070 Options granted under the plan the vesting would be 25% of the Options would vest at the end of one year and the rest of the options shall vest at the rate of 1/36th of the options shall vest every month for the next three years.

OnMobile Employees Stock Option plan IV 2008 26-Sep-08 31-Oct-08 173,953 100% of the options granted would vest at the end of one year.



81




March 31, 2008Options granted outstanding at the beginning of the year

1,209,538 -

Granted during the year 1,145,691 1,253,101 Exercised during the year 35,555 - forfeited during the year 675,355 43,563 Options granted outstanding at the end of the year

1,644,319 1,209,538

Weighted average remaining contractual life (years) at the year end

2 4

Weighted average exercise price per option (after adjusting for Bonus issue)

Rs. 356 Rs. 322.34

Range of exercise price (after adjusting for bonus issue)

Rs 216 to Rs 680 Rs 210 to Rs 592

The company accounted the above options using the intrinsic value method and thus, the difference between the fair value of the underlying shares in the year of grant and the options exercise value was charged to the profit and loss account. Accordingly, the compensation charge thereon in the current year is Rs.0.06 Million (previous year-Rs.1.41 Million)

The guidance note issued by the Institute of chartered Accountants of India requires the disclosure of pro forma net results and EpS both basic & diluted, had the company adopted the fair value method. Had the company accounted the option under fair value method, amortising the stock compensation expense thereon over the vesting period, the reported profit for the year ended March 31, 2009 would have been lower by Rs. 26.12 Million (previous year- Rs. 27.00 Million) and Basic and diluted EpS would have been revised to Rs.11.8/- (previous year- Rs. 9.4/-) and Rs. 11.4/- (previous year- Rs. 8.7/-) respectively as compared to Rs. 12.2/- (previous year- Rs. 9.9/-)and Rs. 11.8/- (previous year- Rs. 9.2/-) without such impact.

The fair value of stock based awards to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected term of the options to be 2 years (previous year-4.8 years), a “Nil” (previous year-1%) expected dividend rate on the underlying equity shares, volatility in the share price of 61% (previous year-Range of 21% to 59%) and a risk free rate of 7%(previous year-8%). The company’s calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

18. Segment Reporting:

The company is engaged in providing value added services in telecom business globally and is considered to constitute a single

segment in the context of primary segment reporting as prescribed

by Accounting Standard 17 - “Segment Reporting”.

The Secondary segment is identified to Geographical locations and

the company’s significant operations constituting more than 90%

of the total operations are carried out of India. Details of Secondary

segment by Geographical locations are given below:

In Rs. Million



March 31, 2008

I Revenue (by location of customer)

In India 3,107.44 2,212.37

Outside India 163.66 95.26

II Total carrying amount of Segmental Assets, by Geographical location

In India 2,523.55 3,229.35


III cost incurred for purchase of tangible & intangible assets, by Geographical location

In India 637.44 810.94


19. Transactions with Related parties:

I. List of Related parties and relationship:

Sl No.

Relationship Related parties

(i) controlling Enterprises

Holding company OnMobile Systems Inc., uSA (up to february 18, 2008)

Subsidiaries OnMobile Singapore pte. Ltd.

OnMobile Australia pty. Ltd.

pT OnMobile Indonesia

Vox Mobili S.A.

Telisma S.A. (w.e.f. July 1, 2008 )

OnMobile Europe B.V. (w.e.f. July 23, 2008 )

phonetize Solutions private Limited

Ver se Innovation private Limited

(ii) Other related parties with whom the company had transactions

Key Management personnel Arvind Rao

chandramouli Janakiraman

Enterprises owned or significantly influenced by key management personnel/Directors or their relatives

OnMobile Systems Inc., uSA (w.e.f february 19, 2008)

Mobile Traffik private Limited

Riff Mobile private Limited

82

II. Transactions with Related parties:In Rs. Million

Sl No

Nature of transactions Subsidiary companies Key Management personnel

Enterprises owned or significantly influenced by

Key Management personnel/Directors or their relatives

Total

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

1 Income from services

OnMobile Singapore pte. Ltd. 14.05 33.36 - - - - 14.05 33.36

OnMobile Australia pty. Ltd. - 5.65 - - - - - 5.65

Vox Mobili S.A. 9.17 - - - - - 9.17 -

23.22 39.01 - - - - 23.22 39.01

2 Business Development expenses

OnMobile Singapore pte. Ltd. - 14.25 - - - - - 14.25

OnMobile Australia pty. Ltd. 0.16 6.73 - - - - 0.16 6.73

pT OnMobile Indonesia 25.66 11.25 - - - - 25.66 11.25

Vox Mobili S.A. 11.53 - - - - - 11.53 -

37.35 32.23 - - - - 37.35 32.23

3 content cost

Riff Mobile private Limited - - - - 9.66 1.63 9.66 1.63

- - - - 9.66 1.63 9.66 1.63

4 cost of hardware and software development charges

Telisma S.A. 14.64 - - - - - 14.64 -

Vox Mobili S.A. 1.91 - - - - - 1.91 -

16.55 - - - - - 16.55 -

5 Remuneration (including other benefits)

Arvind Rao - - 10.09 8.84 - - 10.09 8.84

chandramouli Janakiraman - - 3.50 5.39 - - 3.50 5.39

- - 13.59 14.23 - - 13.59 14.23

6 Interest Income

OnMobile Singapore pte. Ltd 0.10 0.05 - - - - 0.10 0.05


0.46 0.23 - - - - 0.46 0.23

7 purchase of fixed Assets

OnMobile Singapore pte. Ltd. 4.02 - - - - - 4.02 -

Telisma S.A. 156.15 - - - - - 156.15 -

160.17 - - - - - 160.17 -

8 Investments made during the year in:

Telisma S.A. 801.28 - - - - - 801.28 -

OnMobile Europe B.V. 1.22 - - - - - 1.22 -

Ver se Innovation India private Limited 33.00 - - - - - 33.00 -

835.50 - - - - - 835.50 -

9 Investments sold during the year to:

OnMobile Europe B.V. 2,232.39 - - - - - 2,232.39 -

2,232.39 - - - - - 2,232.39 -

10 Annual Maintenance charge (prepaid)

Telisma S.A. 12.35 - - - - - 12.35 -

12.35 - - - - - 12.35 -


83


III. Balances with Related parties:In Rs. Million

Sl.No

Nature of transactions Subsidiary companies Key Management personnel


key management personnel/Directors or their relatives

Total

March 31,2009

March 31, 2008

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

11 Amount payable

OnMobile Singapore pte. Ltd 1.82 - - - - - 1.82 -



Telisma S.A. 180.35 - - - - - 180.35 -

Voxmobili S.A. 13.25 - - - - - 13.25 -

OnMobile Systems Inc. - - - - 85.33 1,007.02 85.33 1,007.02

Riff Mobile private Limited. - - - - 4.15 0.67 4.15 0.67

Mobile Traffik private Limited. - - - - 0.10 0.10 0.10 0.10

209.96 17.82 - - 89.58 1,007.79 299.54 1,025.61

12 Amount Receivable

A Loan



B Accrued interest



c Other Advances

Arvind Rao - - 0.43 0.85 - - 0.43 0.85

chandramouli Janakiraman - - 0.02 - - - 0.02 -



OnMobile Europe B.V.. 0.03 - - - - - 0.03 -

Mobile Traffik private Limited. - - - - 0.10 0.10 0.10 0.10

D Sundry Debtors

OnMobile Singapore pte. Ltd. 14.05 24.79 - - - - 14.05 24.79


Voxmobili S.A. 9.17 - - - - - 9.17 -

Notes:

1 Related party relationships are as identified by the company on the basis of information available and relied by the auditors.2 No amount has been written off or written back during the year in respect of debts due from or to related party.3 Reimbursement of expenses are not included above.

20. Earnings per ShareThe Earnings per share, computed as per the requirements of Accounting Standard 20 –“Earnings per Share” is as under:



March 31, 2008

profit after tax as per the profit and Loss Account (In Rs. Million) 706.81 475.68

Weighted Average number of Shares for Basic EpS 57,720,711 47,916,994

Add: Effect of convertible preference Shares and Stock Options outstanding 1,967,265 3,942,651

Weighted Average Number of equity shares for Diluted EpS 59,687,976 51,859,645

Rs. Rs.

Nominal value of equity shares 10.0 10.0

Earnings per Share

Basic 12.2 9.9

Diluted 11.8 9.2

84

21. Accounting for Taxes On Income

a) provision for taxation includes tax liabilities in India on the company’s global income as reduced by exempted income and any tax liabilities arising overseas on income sourced from those countries.

b) In accordance with the Accounting Standard 22 – “Accounting for Taxes on Income”, the company has created a deferred tax liability to the extent of Rs. 28.69 Million for the current year, which has been debited to the profit and Loss account. Details of Deferred Tax Asset and Liabilities are:

In Rs. Million

particulars Deferred Tax (Assets)/ Liabilities as

on April 1, 2008 current year (credit)/charge

Deferred Tax (Assets)/ Liabilities as on March 31, 2009

Difference between book and tax depreciation 65.66 36.44 102.10

Others (provision for gratuity, leave encashment etc.) (26.20) (7.75) (33.95)

39.46 28.69 68.15

22. The details of provisions under Accounting Standard 29 - “provisions, contingent liabilities and contingent assets” are as under:In Rs. Million

Nature of Expenseprobable outflow estimated within

provision outstanding as at

April 1, 2008

provision made during the year

provision utilised during the year

provision reversed during the year

provision outstanding as at March 31, 2009

Other provisions-customer credits 3 years 77.20 18.17 48.27 - 47.10

23. foreign currency Exposure

There are no outstanding forward exchange contracts entered into by the company as at March 31, 2009. foreign currency exposure as at March 31, 2009 that have not been hedged by derivative instrument or otherwise is as follows:

particularsAs at March

31, 2009Amount (In Rs. Million)

As at March 31, 2008

Amount (In Rs. Million)Nature of currency


Amount (foreign currency

In Million)


Amount (foreign currency

In Million) Due from: Debtors against export of services/goods

15.90 24.88 SGD 0.46 0.86

19.54 21.19 uSD 0.38 0.53

9.94 0.63 EuR 0.15 0.01 5.29 11.77 AuD 0.15 0.32

- 6.00 BDT - 10.22 Against loan (including interest accrued)

1.98 1.59 SGD 0.06 0.06 8.19 6.14 uSD 0.16 0.15

Against advances 51.76 1.64 SGD 1.51 0.06 9.10 2.63 uSD 0.18 0.07

13.26 - EuR 0.20 - 1.16 0.76 IDR 253.14 177.57

Due to: creditors against import of goods and services

1.82 - SGD 0.06 - 162.07 74.70 uSD 3.18 1.87

0.05 - AED 0.003 - 203.64 - EuR 3.02 -

19.38 10.78 IDR 4,287.50 2,452.55 0.15 7.04 AuD 0.004 0.19

Deferred payment Liability 58.03 278.64 EuR 0.86 4.42

24. During the year ,the company has circulated request to all suppliers to confirm their status under the Micro, Small and Medium Enterprises Development Act, 2006 and despite regular follow up the company has not received confirmations from any of the suppliers and hence disclosures relating to amounts unpaid as at the year end together with interest paid / payable under this Act have not been given.


85

25. The central Government vide notification dated March 31, 2009 has amended Accounting Standard-11 “Effect of changes in foreign Exchange Rates”,notified under the companies (Accounting Standard) Rules, 2006. The company has opted out of the option of adjusting the exchange difference on long term foreign currency monetary items to the cost of the assets acquired out of foreign currency monetary items.

26. Quantitative Details

The company is engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraphs 3 and 4c of part II of Schedule VI of the companies Act, 1956. further there are no traded goods during the year.

27. Value of imports calculated on cIf basisIn Rs. Million



March 31, 2008

capital goods (including software downloads) 382.98 295.49

28. Expenditure in foreign currencyIn Rs. Million



March 31, 2008

Business Development Expenses 37.35 32.23

Travel 23.36 13.14

content cost 19.88 7.60

Software and Software development charges 15.78 4.56

Annual maintenance charges (Including prepaid Expense) 16.94 11.71

Legal and professional 47.94 26.28

pre-issue expenses (charged to Securities premium account) - 21.42

payroll costs 31.48 8.92

Others 21.99 4.38

214.72 130.24

29. Earnings in foreign currencyIn Rs. Million



March 31, 2008

Master Services/professional Services 163.66 95.26

30. previous year’s figures have been regrouped/reclassified wherever necessary.

Arvind Raochief Executive Officerand Managing Director

Rajesh Moortichief financial Officer

Chandramouli J Director

D Srikirancompany Secretary

place: MumbaiDate: April 30, 2009


86


REGISTRATION DETAILS

Registration No. 27860

State code 08

Balance Sheet Date 31-03-09

cApITAL RAISED DuRING THE YEAR (Rs.).

public Issue Nil

Rights Issue N.A

Bonus Issue (issue of shares under ESOps as an adjustment for the previous bonus issue) 3,943,200

private placement 0

preferential offer of shares under Employee Stock Option plan Scheme(s)* 328,600

Total Liabilities 6,885,705,218

Total Assets 6,885,705,218

SOuRcES Of fuNDS (Rs.)

paid up capital 578,333,190

Reserves and Surplus 6,067,630,382

Stock options outstanding 293,334

Secured Loans 42,723,304

Net Deferred tax liability 68,154,000

Deferred payment liability 128,571,008

AppLIcATION Of fuNDS (Rs.)

Net fixed Assets 1,134,018,700

Investments 2,298,391,151

Net current Assets 3,453,295,367

Misc. Expenditure. Nil

Accumulated Losses Nil

pERfORMANcE Of THE cOMpANY (Rs.)

Turnover 3,271,095,968

Total Expenditure 1,656,791,094

Other Income 236,085,392

profit before Tax & Exception Items 1,001,455,232

profit after tax & Exception Items 706,811,007

Earnings per Share 12

Dividend Rate % N.A

GENERIc NAMES Of pRIMARY pRODucTS / SERVIcES Of THE cOMpANY

Item code No: (ITc code) 85243111

product Description

Software Development.

*Issue of shares arising on the exercise of the option granted to Employees under Company’s ESOP Plans.

Balance Sheet Abstract and Company’s General Business Profile

87

TO THE BOARD OF DIRECTORS’ ON THE CONSOLIDATED FINANCIAL STATEMENTS OF ONMOBILE GLOBAL LIMITED AND

ITS SUBSIDIARIES

1. We have audited the attached Consolidated Balance Sheet of OnMobile Global Limited (formerly OnMobile Asia Pacific Private

limited) (“the Company”) and it’s subsidiaries (“the group”) as at March 31, 2009; the Consolidated Profit and Loss Account and the Consolidated

Cash Flow Statement for the year then ended, both annexed thereto. These financial statements are the responsibility of the Management of the

Company and have been prepared by the management on the basis of separate financial statements and other financial information regarding

components. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the

audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test

basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. We did not audit the financial statements of subsidiaries as at March 31, 2009, whose financial statements reflect total assets of Rs. 988,015,069

and total revenues of Rs. 994,411,913 and net cash outflows of Rs. 36,089,350 for year ended on that date. These financial statements and other

financial information has been audited by the other auditors whose reports have been furnished to us, and our opinion is based solely on the report

of the other auditors.

4. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting

Standard (AS) 21, Consolidated Financial Statements, notified by Companies (Accounting Standard) Rules, 2006 and on the basis of the separate

audited financial statements of the Company and its subsidiaries included in the consolidated financial statements.

5. On the basis of the information and explanation given to us and on the consideration of the separate audit reports on individual financial

statements and on the other financial information of the components of the Company and its subsidiaries, we are of the opinion that the attached

consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the consolidated balance sheet, of the state of affairs of the Group as at March 31, 2009; and

b. in the case of the consolidated profit and loss account, of the consolidated results of operations of the group for the year then ended.

c. in the case of the consolidated cash flow statement, of the consolidated cash flows of the group for the year then ended.

For Deloitte Haskins & Sells

Chartered Accountants

V. Srikumar

Place: Mumbai Partner

Date: April 30, 2009 Membership No. 84494

Auditors’ Report

88


Schedule As at March 31, 2009 As at March 31, 2008

SOURCES OF FUNDS

Shareholders' Funds:

Share capital 1 578.33 574.06

Stock options outstanding 0.29 1.41

Reserves and Surplus 2 6,411.17 5,535.48

Loan Funds:

Secured Loans 3 42.73 -

Unsecured Loans 4 3.66 -

Deferred Payment Liability 128.57 278.64

(Refer Notes B (4 & 8) of Schedule 18)

Deferred Tax Liability 68.14 39.46

7,232.89 6,429.05

APPLICATION OF FUNDS

Goodwill on consolidation 2,107.82 1,367.93

Fixed Assets: 5

Gross Block 2,536.33 1,335.21

Less: Accumulated Depreciation and Amortisation 1,560.83 539.87

Net Block 975.50 795.34

Capital Work-in-progress (including Capital Advances

Rs. 22.25 Million (as at March 31, 2008 - Rs. 19.04 Million)71.51 113.39

1,047.01 908.73

Deferred Tax Asset 0.95 0.21

Investments 6 86.70 3,193.70

Current Assets, Loans and Advances:

Project Work in Progress - 10.61

Sundry Debtors 7 1,445.23 989.72

Cash and Bank Balances 8 2,855.11 1,458.84

Other Current Assets 9 22.38 12.54

Loans and Advances 10 1,685.71 947.35

6,008.43 3,419.06

Less: Current Liabilities and Provisions:

Current Liabilities 11 1,022.05 1,739.13

Provisions 12 995.97 721.45

2,018.02 2,460.58


7,232.89 6,429.05


Consolidated Balance Sheet

The Schedules referred to above and notes thereon form an integral part of the Balance Sheet.



V. Srikumar Partner







89

Consolidated Profit and Loss Account

ONMOBILE GLOBAL LIMITEDIn Rs. Million except per share data

Schedule For the year ended


March 31, 2008REVENUETelecom Value Added Services 3,724.72 2,459.47 Software development 282.49 146.05 Other services 56.36 12.64 Total Revenue 4,063.57 2,618.16

EXPENDITURECost of sales and services 13 777.43 396.52 Manpower costs 14 1,203.59 641.40 Administration and other expenses 15 801.28 531.89 Total operating expenses 2,782.30 1,569.81

Earnings before other income, depreciation and amortisation, finance charges and tax 1,281.27 1,048.35

Other Income 16 310.09 74.69 Depreciation and amortisation 5 439.67 255.64

Earnings before finance charges and tax 1,151.69 867.40

Finance charges 17 0.55 17.09


Provision for taxation - Current Year Tax 259.87 214.46 - Earlier year provision - 6.90 - Deferred tax (Note B (19) of Schedule 18) (net) 27.94 14.83 - Fringe Benefit Tax 11.36 11.02


Profit brought forward from previous year 1,326.83 756.18 Loss transferred on Amalgamation - (21.63)Provision for leave encashment (net of deferred tax) - (10.73)Transfer to capital redemption reserve - (0.09)

Balance carried to Balance Sheet 2,178.80 1,326.83

Basic and Diluted Earnings Per Share (Note B (18) of Schedule 18) - Earnings per share ( Basic)( Face value of equity share of Rs 10/- each) 14.8 12.6 - Earnings per share ( Diluted)( Face value of equity share of Rs 10/- each) 14.3 11.6


The Schedules referred to above and the notes thereon form an integral part of the Profit and Loss Account.



V. Srikumar Partner







90

Consolidated Cash Flow Statement

As at March 31, 2009 As at March 31, 2008A. CASH FLOw FROM OPERATING ACTIVITIES Net profit before tax and extraordinary items 1,151.14 850.31 Adjustments for : Depreciation 439.67 255.64 Unrealised Foreign Exchange Loss/(Gain) 32.55 50.89 Loss/(Gain) on Sale of Fixed Assets (Net) (3.45) 1.57 Loss/(Gain) on redemption of Investment (Net) 11.85 (0.14) Provisions written back (0.04) (2.47) Credit balances written back (5.34) - Provision for Doubtful debts 43.63 53.39 Preliminary expenses written off - 0.04 Dividend Income (133.18) (56.72) Interest Expense 0.55 17.09 Interest Income (100.34) 285.90 (9.75) 309.54 Operating profit before working capital changes 1,437.04 1,159.85 (Increase)/decrease in Trade and other receivables (443.35) (418.37) (Increase)/decrease in Loans and Advances (279.85) (141.00) Increase/(decrease) in Current Liabilities and Provisions 183.63 (539.57) 254.19 (305.18) Cash generated from operations 897.47 854.67 Direct taxes paid (416.65) (305.02) Net cash from operating activities 480.82 549.65

B. CASH FLOw FROM INVESTING ACTIVITIES Purchase of fixed assets (572.45) (836.21) Sale of fixed assets (including Capital Work-in-Progress) 20.04 9.07 Sale/ (Purchase) of Securities (net) 3,102.43 (2,158.60) Investment in Subsidiaries (734.21) (1,064.47) Payment towards Deferred Liability (248.34) (2.50) Dividend Income 145.72 44.18 Interest received 78.10 9.75 Net cash used in investing activities 1,791.29 (3,998.78)

C. CASH FLOw FROM FINANCING ACTIVITIES Proceeds from issuance of Share Capital (net of refund of share application

money) 4.63 3,793.81

Offer for sale Payable/ (Paid) to OnMobile Systems Inc (net of reimbursement of expenses)

(940.20) 992.71

Share Issue expenses (8.44) (72.45) Redemption of preference shares - (33.04) Proceeds from short term borrowings 0.27 350.00 Repayment of short term borrowings (0.86) (350.00) Interest paid (0.55) (17.09) Net cash used in financing activities (945.15) 4,663.94

Net increase/(decrease) in cash and cash equivalents 1,326.96 1,214.81 Cash and cash equivalents (Opening Balance) 1,458.84 211.61 Cash acquired on acquisition of Ver se Innovation Private Limited - 4.62 Cash acquired on acquisition of Vox Mobili S.A. - 27.80 Cash acquired on acquisition of Telisma S.A. 69.31 Cash and cash equivalents (Closing Balance) 2,855.11 1,458.84

1,326.96 1,214.81 Notes :1. The above Cash Flow Statement has been prepared under the “Indirect method” as set out in the Accounting Standard - 3- “Cash Flow Statement”.2. Cash and Cash Equivalent include deposits of Rs. 11.09 Million (March 31, 2008: Rs.264.49 Million) the use of which was restricted.3. Cash and Cash Equivalent include unrealised foreign exchange gain of Rs. 4.47 Million (March 31, 2008- Loss of Rs.0.01 Million).




V. Srikumar Partner







91

Schedules to the Consolidated Balance Sheet


As at March 31, 2009 As at March 31, 20081. SHARE CAPITAL Authorised:

74,500,000 ( at March 31, 2008 – 74,500,000) Equity Shares of Rs.10/- each 745.00 745.00

500,000 ( at March 31, 2008 – 500,000) Preference Shares of Rs.10/- each 5.00 5.00750.00 750.00

Issued, Subscribed and Paid-up: 57,833,319 ( at March 31, 2008 – 57,406,139) Equity Shares of Rs.10/- each

fully paid up. 578.33 574.06

578.33 574.06 Notes:

1) 25,403,867 ( at March 31, 2008 – 25,403,867) Equity Shares are held by the erstwhile Holding Company OnMobile Systems Inc., USA (formerly Onscan Inc.,USA).

2) During the year ended March 31, 2008:- 567,749 Equity shares were issued to erstwhile shareholders of ITfinity Solutions Private Limited at the time of amalgamation (inclusive of 524,076 bonus shares).- the Company made a bonus issue in the ratio of 12 : 1 to the shareholders by capitalisation of Capital Redemption Reserve and Securities Premium account.- 423,722 Equity Shares have been issued to the promoters and employees of Vox Mobili S.A., France as a part of Purchase consideration for its acquisition [inclusive of

391,128 bonus shares].

3) Preference shares issued during 2006-07 with rights to dividend ranking pari passu with the equity shares being convertible at any time on or before the occurrence of the Initial Public Offer (IPO) or on liquidity event as defined in the investors agreement, have been partly redeemed and the balance converted into equity shares of Rs 10/- each fully paid up during the year ended March 31, 2008.

4) On February 19, 2008 the Company allotted 8,613,356 equity shares of Rs 10/- each under an Initial Public Offer (IPO).In Rs. Million

As at March 31, 2009 As at March 31, 20082. RESERVES AND SURPLUS Securities Premium account Opening Balance 4,185.43 1,230.06 Add: Received during the year 8.28 4,042.94 Less: Utilised towards Share issue expenses 8.44 245.80 Less: Goodwill on Amalgamation Adjusted - 358.52 Less: Redemption of Preference Shares - 32.95 Less: Utilised towards bonus issue 3.62 4,181.65 450.30 4,185.43

Capital Redemption Reserve Opening Balance - - Add: Additions during the year - 0.09 Less: Utilised towards bonus issue - - 0.09 -

Foreign Currency Translation Reserve 50.72 23.22

Profit and Loss Account 2,178.80 1,326.83 6,411.17 5,535.48


3. SECURED LOANS From other than banks Finance Lease obligation* 42.73 -

42.73 - Note: *Secured by underlying assets acquired under finance lease. Includes repayable within one year Rs. 17.48 Million(at March 31,2008-Rs.Nil)

In Rs. Million


4. UNSECURED LOANS

Loan from others 3.39 -

Book Overdraft 0.27 -

3.66 -

92


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93




6. INVESTMENTS

Current Investments

Mutual Funds and other short term investments 86.70 3,193.70

86.70 3,193.70

In Rs. Million


7. SUNDRY DEBTORS (Unsecured)

Debts outstanding for a period exceeding six months:

Considered good 61.02 196.22

Considered doubtful 29.76 34.75

Other debts:

Considered good 780.66 474.85

Considered doubtful 15.95 18.63

Unbilled Revenue 603.55 318.66

1,490.94 1,043.11

Less: Provision for Doubtful Debts 45.71 53.39

1,445.23 989.72

In Rs. Million


8. CASH AND BANK BALANCES

Cash on hand 0.17 0.23

Cheques on hand - 0.09

Balance with Banks:

- In Current Accounts 372.09 1,444.53

- In Deposits Accounts 2,482.85 13.99

2,855.11 1,458.84

In Rs. Million


9. OTHER CURRENT ASSETS

Accrued Dividend - 12.54

Accrued Interest 22.38 -

22.38 12.54

94



10. LOANS AND ADVANCES (Unsecured, Considered good)

Advances recoverable in cash or in kind or for value to be received

Advances to employees 20.65 30.08

Advances to vendors 94.26 10.90

Prepaid Expenses 25.07 23.52

Others 89.20 229.18 26.30 90.80

Deposits

Rental Deposits 123.39 92.54

Deposits with body corporates 25.70 29.11

Deposits with Statutory authorities 205.40 354.49 33.41 155.06

Advance Income tax and Tax deducted at source 1,101.35 701.49

Advance Fringe Benefit Tax (Net of provisions) 0.69 -

1,685.71 947.35

Notes:

1) Advances to employees include Rs. 0.45 Million (at March 31, 2008 Rs. 0.85 Million) as travel advance to directors

2) Deposits with statutory authorities include Rs.169.62 Million to VAT Authorities under direction of the Honorable High Court of Karnataka.

In Rs. Million


11. CURRENT LIA BILITIES

Sundry Creditors

- for capital items- due to erstwhile Holding company 85.33 66.82

- for capital items- due to others 89.23 37.46

- for expenses- due to Others 670.62 845.18 543.23 647.51

Due to erstwhile Holding company - 940.20

Share Application money (Refer Note B (2) of Schedule 18) 0.45 3.80

Deferred revenue 60.80 11.66

Other liabilities 115.62 135.96

1,022.05 1,739.13

Note: Sundry Creditors include due to a Company in which a director is interested Rs.4.25 Million (at March 31, 2008- Rs.0.77 Million). Maximum balance outstanding during the year

Rs.4.25 Million (Previous year- Rs.0.77 Million).

In Rs. Million


12. PROVISIONS

Income Tax 849.34 594.14

Fringe Benefit Tax (Net) - 0.18

Employee Benefits 99.53 49.93

Other Provisions 47.10 77.20

995.97 721.45

Notes: Fringe Benefit Tax paid at March 31, 2008- Rs.20.47 Million


95


For the year ended March 31, 2009


13. COST OF SALES AND SERVICES

Content fee and royalty 513.18 231.78

Cost of hardware and software development charges 264.25 164.74

777.43 396.52

In Rs. Million



14. MANPOwER COST

Salaries, wages and bonus 990.33 528.75

Contribution to Provident fund and other funds 181.53 87.88

Workmen and staff welfare expenses 18.84 19.01

Employee Insurance 12.89 5.76

1,203.59 641.40

In Rs. Million



15. ADMINISTRATION AND OTHER EXPENSES

Power and Fuel 18.89 12.29

Rent 131.24 79.28

Insurance 1.44 0.37

Repairs

- Buildings 0.61 -

- Machinery 9.47 -

- Others 6.76 6.48

Office maintenance 39.25 27.38

Rates and taxes 22.65 7.38

Printing and stationery 5.02 3.26

Postage, courier and octroi 4.32 3.58

Communication charges 90.17 56.67

Training and Recruitment expenses 30.67 19.78

Travelling and conveyance 149.01 90.18

Legal, professional and consultancy charges 118.10 69.88

Commission to Non Whole time directors 4.79 5.00

Remuneration to Auditors 12.63 7.89

Marketing expenses 54.22 41.83

Provision for Doubtful Debts 43.63 53.39

Brokerage and Commission 12.42 6.52

Bank charges 6.63 5.58

Loss on Sale of Assets - 1.57

Loss on Redemption of investments 12.34 -

Exchange loss 19.78 31.77

Miscellaneous expenses 7.24 1.81

801.28 531.89

Schedules to the Consolidated Profit and Loss Account

96




16. OTHER INCOME

Interest

- Banks

[Gross, Tax deducted at source Rs.17.52 Million (As at March 31, 2008: Rs.1.62 Million)] 99.62 9.75

- From Others 0.72 -

Dividend on investment 133.18 56.72

Profit / (loss) on redemption of investments 0.49 0.14

Credit balances written back 5.34 -

Provisions written back 0.04 2.47

Profit on Sale of Fixed Assets (Net) 3.45 -

Exchange Gain - 1.47

Other Income 67.25 4.14

310.09 74.69

In Rs. Million



17. FINANCE CHARGES

Interest on Finance lease 0.03 -

Others 0.52 17.09

0.55 17.09

Schedules to the Consolidated Profit and Loss Account

97


18. SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of financial statements

The Consolidated Financial statements relate to OnMobile Global Limited (the Company) and its subsidiaries.

The Consolidated financial statements are prepared under the historical cost convention, on the accrual basis of accounting, in accordance with Indian Generally Accepted Accounting Principles (“GAAP”). GAAP comprises mandatory Accounting Standards prescribed by the Company Accounting Standards Rules, 2006.

The Management evaluates all recently issued or revised Accounting Standards on an ongoing basis.

2. Principles of consolidation

The financial statements of the Company and its subsidiaries after making adjustments for uniform accounting policies have been combined on a line by line basis by adding together like items of assets, liabilities, income and expense. The intra-group balances and intra-group transactions are eliminated.

The excess of cost to the Company of its investments in the subsidiary over it’s share of the equity of the subsidiary, at the date on which the investments in the subsidiary company was made, is recognized as ‘goodwill’ being an asset in the consolidated financial statements.

The following entities are considered in the consolidated financial statements.

Sl. No.

Name of entity Country of Incorporation

% of Ownership held as on March 31,

2009

% of Ownership held as on March 31,

20081 OnMobile Australia

Pty. Ltd.Australia 100 100

2 OnMobile Singapore Pte. Ltd. Singapore 100 100

3 Phonetize Solutions Private Limited India 99.99 99.99

4 PT OnMobile Indonesia Indonesia 100 1005 Vox mobili S.A. France 100 1006 Vox mobili Inc. USA 100 1007 Ver se Innovation

Private Ltd. India 51 518 Telisma S.A. France 100 -

(w. e. f. July 01, 2008)9 OnMobile Europe B.V. Netherlands 100 -

(w. e. f. July 23, 2008)

The consolidation for the year includes figures of OnMobile Europe B.V. formed during the year and of Telisma S.A. acquired during the year. Hence previous year figures are not comparable.

Losses incurred by Ver se Innovation Private Ltd over the minority shareholders paid up capital has been absorbed by the Company.

Pursuant to a group restructuring plan during the year the Company has transferred the shareholdings in its wholly owned subsidiaries Vox mobili S.A.and Telisma S.A. to a newly formed wholly owned subsidiary OnMobile Europe B.V.

3. Use of Estimates

The preparation of the financial statements in conformity with GAAP requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Examples of such estimates includes provision for doubtful debts, future obligations under employee benefit plans, income taxes and the useful lives of fixed assets. Contingencies are recorded when it is probable that a liability will be incurred, and the amount can be reliably estimated. When no reliable estimate can be made, a disclosure is made as contingent liability. Actual results could differ from those estimates.

4 Revenue Recognition

Revenue from Telecom Value Added Services including royalty income, net of customer credits, is recognized on provision of services in terms of revenue sharing arrangements with the telecom operators.

Revenue from sale of user licences for software applications is recognized when the applications are functionally installed at the customer’s location as per the terms of the contracts

Revenue from Other Services including maintenance services is recognized proportionately over the period during which the services are rendered as per the terms of contract.

Dividend on current investment is recognized on an accrual basis. Profit on sale of investments is recorded on transfer of title from the Company and is determined as the difference between the sale price and the then carrying value of the investment.

Interest Income is recognised on an accrual basis.

5. Fixed assets

Fixed assets are stated at cost of acquisition including taxes, duties, freight and other incidental expenses relating to acquisition and installation. Capital work in progress is stated at cost and includes advances paid to acquire fixed assets and the cost of fixed assets that are not ready for their intended use at the Balance Sheet date.

Schedules to the Consolidated Financial Statement

98

6. Depreciation

Depreciation on assets is provided on a monthly basis using the straight-line method based on useful/commercial lives of these assets as estimated by the Management.

The useful/commercial lives for the Group Companies are as

follows:

Category of Asset No. of years

Leasehold Improvements Primary lease period

Finance Lease Assets Primary lease period

Building 61 years

Intellectual Property 3 years

Office equipment 3 to 10 years

Furniture & Fixtures 3 to 10 years

Computers & Electronic equipment 3 to 5 years

Computer Software 1 to 3 years

Motor Car 3 to 5 years

Individual assets costing less than Rs.5,000/- are depreciated in full in the year of purchase. The depreciation rates adopted are the same as or higher than the rates specified in Schedule XIV of the Companies Act, 1956.

7. Investments

Short term investments are stated at lower of cost and market value

Long term investments are stated at cost. Provision is made for any diminution in value of long term investment which is other than that of a temporary in nature.

8. Foreign currency transactions

Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transaction. Monetary assets and Monetary liabilities denominated in foreign currencies are translated at the exchange rate prevalent at the date of the Balance sheet. Exchange differences arising on foreign currency translations are recognized as income or expense in the year in which they arise except in the case of non-integral operations where these translations are included in ‘Foreign Currency Translation Reserve’ shown under Reserves and Surplus.

On consolidation, assets and liabilities (other than non-monetary items) are translated at the exchange rate prevailing on the balance sheet date. Non-monetary items are carried at historical cost. Revenue and expenses are translated at yearly average exchange rates prevailing during the year in case the holding subsidiary relationship was in existence on the first day of the fiscal year. In case of subsidiaries formed or acquired during the year, the average exchange rate prevailing during the period since the holding subsidiary

relationship came into existence is taken. Exchange differences arising out of these transactions are included under Exchange Loss/ Gain and charged to the Profit and Loss account in case of “Integral operations”. However in case of non-integral operations, these exchange differences are included in ‘Foreign Currency Translation Reserve’ shown under Reserves and Surplus.


a) Short term employee benefits including salaries, social security contributions, short term compensated absences (such as paid annual leave) where the absences are expected to occur within twelve months after the end of the period in which the employees render the related employee service, profit sharing and bonuses payable within twelve months after the end of the period in which the employees render the related services and non monetary benefits (such as medical care) for current employees are estimated and measured on an undiscounted basis.

b) Defined Contribution Plan:

Company’s contributions paid / payable during the year to Provident Fund are recognised in the Profit and Loss Account

c) Defined Benefit Plan:

Liabilities for gratuity funded in terms of a scheme administered by the Life Insurance Corporation of India, are determined by Actuarial Valuation made at the end of each financial year. Provision for liabilities pending remittance to the fund is carried in the Balance Sheet.

Actuarial gains and losses are recognized immediately in the statement of Profit and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government bonds where the currency and terms of the Government bonds are consistent with the currency and estimated terms of the defined benefit obligation.

d) Long term liability for Leave Encashment is provided based on actuarial valuation of the accumulated leave credit outstanding to the employees as on the Balance Sheet date.

10. Employee Stock Option Plan

The Company has formulated 9 Employee Stock Option Plans (“ESOP”) - OnMobile Employees Stock Option Plan – I 2003, OnMobile Employees Stock Option Plan – II 2003, OnMobile Employees Stock Option Plan – III 2006, OnMobile Employees Stock Option Plan – I 2007, OnMobile Employees Stock Option Plan – II 2007 , OnMobile Employees Stock Option Plan – I 2008, OnMobile Employees Stock

Schedules to the Consolidated Financial Statement Schedules to the Consolidated Financial Statement

99

Option Plan – II 2008, OnMobile Employees Stock Option Plan – III 2008 and OnMobile Employees Stock Option Plan – IV 2008 .

The Company has obtained legal opinion that the guidance note on Accounting for Employees Share based payments are not applicable to OnMobile Employee Stock Option Plan – I 2003 and II 2003. Options granted in terms of OnMobile Employee Stock Option Plan – III 2006, OnMobile Employees Stock Option Plan – I 2007 , OnMobile Employees Stock Option Plan – II 2007, OnMobile Employees Stock Option Plan – I 2008, OnMobile Employees Stock Option Plan – II 2008, OnMobile Employees Stock Option Plan – III 2008 and OnMobile Employees Stock Option Plan – IV 2008 to which the said guidance note is applicable, are accounted under intrinsic value method and accordingly, the difference between the fair value of the underlying shares and the exercise price, if any, is expensed to profit and loss account over the period of vesting.

11. Leases

Assets taken on lease where the company acquires substantially the entire risks and rewards incidental to ownership are classified as finance leases. The amount recorded is the lower of the present value of minimum lease rental and other incidental expenses during the lease term or the fair value of the assets taken on lease. The rental obligations, net of interest charges, are reflected as secured loan. Leases that do not transfer substantially all the risks and rewards of ownership are classified as operating leases and lease rentals are expensed to Profit & Loss account on accrual basis.

12. Borrowing Cost

Borrowing costs incurred for the acquisition of qualifying assets are recognised as part of cost of such assets when it is possible that they will result in future economic benefits to the company while other borrowing costs are expensed.

13. Income Tax

Income tax expense includes Indian and International income taxes. Income tax comprises of the current tax provision, net change in deferred tax asset or liability in the year and fringe benefit tax.

Provision for current tax is made taking into account the admissible deductions/allowances and is subject to revision based on the taxable income for the fiscal year ending March 31 each year.

Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between carrying values of the assets and liabilities and their respective tax bases and are measured using enacted tax rates applicable on the Balance Sheet date. Deferred Tax assets are recognized subject to Management’s judgement that realization is reasonably/virtually certain. Vox mobili S.A. has a special tax credit on Research and Development costs

in accordance with the French fiscal rules. This tax credit is mainly calculated based on the social costs of the Research and Development staff.

The effect of changes in tax rates on deferred tax assets and liabilities is recognized in the income statement in the year of enactment of change.

Fringe benefit tax is provided as per provisions of the Income Tax Act 1961.

Fringe Benefit tax on stock options exercised during the year is being recovered from the beneficiaries and not charged to the Profit and Loss Account.

Research tax rebate:- In accordance with French fiscal rules, the subsidiaries Vox mobili

S.A.and Telisma S.A., is entitled to special tax rebate/refund calculated based on the social costs of the Research and Development staff. Such tax rebate is recognized as other income on accrual basis.

14. Cash flow Statement

Cash Flow Statement has been prepared in accordance with the

Indirect method prescribed in Accounting Standard 3- “Cash flow

statements ”. The cash flows from operating, investing and financing

activities of the Company are segregated.

15. Impairment of Assets

The carrying amounts of assets are reviewed at each Balance Sheet

date if there is any indication of impairment based on internal /

external factors. An asset is treated as impaired when the carrying

cost of assets exceeds its recoverable amount. An impairment loss

is charged to Profit and Loss Account in the year in which an asset

is identified as impaired. The recoverable amount is greater of the

asset’s net selling price and value in use. In assessing value in use,

the estimated future cash flows are discounted to the present value.

A previously recognized impairment loss is further provided or

reversed depending on changes in circumstances.

16. Earnings per Share

In determining the Earnings per share, the Company considers the

net profit after tax. The number of shares used in computing Basic

Earnings per share is the weighted average number of equity shares

outstanding during the year. The number of shares used in computing

Diluted Earnings per share comprises the weighted average number

of equity shares considered for deriving Basic Earnings per share

and also the weighted average number of equity shares that could

have been issued on the conversion of all dilutive potential equity

shares. Dilutive potential equity shares are deemed converted as of

the beginning of the year unless issued at a later date.


100

17. Provisions and Contingencies

Provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect current best estimates.

B. NOTES ON ACCOUNTS

1. Utilization of Proceeds from Initial Public Offer (IPO)

The actual utilization of the proceeds of the Initial Public Offer during 2007-08 issue of Rs. 3,544.54 Million net of share issue expenses is as under:

In Rs. Million

Sl. No.

Expenditure Items

Total cost to be financed from

Net Proceeds ( as disclosed in the

prospectus)

Actual utilization upto

March 31, 2009

1 Purchase of equipment for offices at Bangalore, Mumbai and Delhi and various customer sites

1,805.21 562.39

2 Working capital requirements 50.00 50.00

3 Repayment of loan 350.00 350.00

4 General corporate purposes 1,339.33 1,050.01

Total 3,544.54 2,012.40

The unutilised funds as at March 31, 2009 have been temporarily invested in Fixed Deposits with banks.

2. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act, 1956.

3. Contingent liabilities and Commitments

a. The Company has been named as one of the 20 defendants in a civil dispute for injunction pending adjudication. However, in the opinion of the management no liability would arise in this regard.

b. Disputed Value Added Tax Rs. 339.24 Million (Previous year: Rs. Nil ).

c. Claims against the Company not acknowledged as debts is Rs. 10.00 Million (Previous year: Rs. Nil ).

d. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 73.44 Million (Previous year: Rs. 82.64 Million).

4. Acquisition of Telisma S.A.

During the year the Company has vide resolution of the Board of Directors dated April 30, 2008 and the share purchase agreement signed by and between the Company and the shareholders of Telisma S.A. (“Telisma”) on May 13, 2008 and the Founder’s agreement signed by and between the Company and the Founders of Telisma on May 13, 2008 acquired 203,445,874 shares of Telisma on July 1, 2008 for a total consideration of Euros 11.78 Million (aggregating to Rs. 801.29 Million including Rs. 3.69 Million of taxes payable towards transfer of shares) payable under the share purchase agreement as below:

a. Euros 10.78 Million in Cash

b. Euros 0.64 Million (converted into a Rupee liability of Rs. 42.64 Million) in form of equity shares subsequent to an earn out valuation adjustment as mentioned in the share purchase agreement, payable to the founders of Telisma and

c. Euros 0.36 Million in form of equity shares subsequent to an earn out valuation adjustment as mentioned in the share purchase agreement, payable to the Minority vendors of Telisma.

Accordingly, the Company has paid Euros 10.78 Million of which Euros 0.90 Million are paid into an escrow account which would be released to the founders at the end of 24 months on satisfaction of certain conditions. The balance consideration of Rs. 66.93 Million is included in the deferred payment liability in the Balance Sheet.

5. Investment in OnMobile Europe B.V.

During the year the Company has vide resolution of the Board of Directors dated April 30, 2008 incorporated OnMobile Europe B.V., Netherlands, a Wholly owned Subsidiary with an investment of Rs. 1.21 Million ( Euros 0.02 Million) towards 18,000 equity shares.

6. Additional Investment in Ver se Innovation Private Limited

During the year the Company made an additional investment of Rs. 33.00 Million vide resolution of the Board of Directors dated October 31, 2008, pursuant to a capital commitment made of Rs. 66.00 Million by way of equity (including warrants) or any debt instrument including optionally convertible preference shares, term loans or any other such instrument or arrangement as may be agreed by and between the parties as per the terms and conditions of the subscription cum shareholder’s agreement.

7. During the year, OnMobile Australia Pty. Ltd. has gone into voluntary administration. Rodgers Reidy Chartered Accountants of Sydney, Australia were appointed as the liquidator/administrator with effect from September 9, 2008. OnMobile Australia Pty Limited will therefore continue under administration and be deregistered in due course.


101

8. Deferred Payment liability also includes:

a. Euros 0.50 Million (Rs. 33.74 Million) being balance consideration outstanding at the year end relating to acquisition of Vox mobili S.A. during 2007-08 and

b. Rs. 27.90 Million being balance consideration payable over one year outstanding at the year end relating to acquisition of Intellectual Property Rights.

9. Auditors Remuneration

a. Remuneration to the Auditors of the Company:In Rs. Million

ParticularsFor the year ended


March 31, 2008

Statutory Audit Fees 1.70 1.70

Tax Audit Fees 0.20 0.20

Other attest services 1.50 0.30

Taxation matters 1.50 0.10


Total 4.90 2.30

The above remuneration for the year ended March 31, 2008 does not include Rs. 4.49 Million (including service tax) towards services rendered

11. Details of purchase and sale of investments during the year

Name of the fundPurchased Sold (at cost)

No. of Shares / Units




Short Term InvestmentsABN AMRO Interval Fund Quartely Plan H Interval Div - Red 789,043 7.89 40,789,043 407.89 ABN AMRO Interval Fund Quartely Plan H Quarterly Div-Red -NFO switch 41,522,157 415.23 41,522,157 415.23 AIG Short Term Fund Institutional Daily Dividend 79,981 80.05 79,981 80.05 AIG Short Term Fund Institutional Weekly Dividend 150,570 150.77 150,570 150.77 Birla Sun Life Liquid Plus - Instl. - Daily Dividend -Reinvestment 10,112,681 101.20 15,233,197 152.44 Birla Sunlife Qtrl Interval Fund Series 9 - Dividend Payout 15,000,000 150.00 40,000,000 400.00 BSL Interval Income-Retail-Monthly - Series 2-Dividend -Payout 35,106,084 351.06 35,106,084 351.06 BSL Quarterly Interval-Series 1-Dividend -Payout - - 10,023,681 100.30 Canara Robeco Interval Series 2 - Quarterly Plan 2 - Inst Dividend Fund 25,583,931 255.84 25,583,931 255.84 DWS Quarterly Interval Fund-Series 1 - Dividend Plan 396,443 3.96 10,396,443 103.96 Fidelity Liquid Plus (Institutional) - Dividend 10,118,856 101.21 15,130,176 151.32 Templeton Qtrly Interval Plan- Plan B (Institutional) - Dividend Payout 30,601,943 306.60 55,576,219 556.60 HDFC FMP 90D August 2008 (IX) (2) - Wholesale Plan Dividend , Option : Payout

50,000,000 500.00 50,000,000 500.00

HDFC FMP 90D January 2008 (VI) - Wholesale Plan Dividend , Option : Payout

50,000,000 500.00 100,000,000 1,000.00

ICICI Prudential Flexible Income planPremium - Daily Dividend 235,981 2.50 14,441,807 152.70 ICICI Prudential Interval Fund II Quarterly Interval Plan E- Retail Dividend 1,166,011 11.66 30,352,535 303.53 IDFC Liquid Fund - Daily Dividend 49,998 50.01 49,998 50.01 IDFC Liquid Plus fund - Treasury plan - Inst Plan B-Daily Div 5,965,555 60.07 5,965,555 60.07 IDFC Money Manager Fund - Investment Plan - Inst Plan B-Daily Div. 15,307,915 153.16 15,307,915 153.16 ING Fixed Maturity Fund-42 Institutional Dividend - - 30,010,048 300.10 Birla Sunlife Liquid Plus - Institutional Daily Dividend 41,734,735 417.49 44,737,046 447.52 JM High Liquidity Fund - Super Institutional Plan - Daily Dividend (92) 5,491,991 55.01 5,491,991 55.01 JM Interval Fund - Quarterly Plan 1 - Institutional Dividend Plan 9,212,238 92.12 9,212,238 92.12 JM Money Manager Fund Super Plus Plan - Daily Dividend (171) 15,596,390 156.03 15,596,390 156.03 JP Morgan India Liquid fund - Super inst . Daily div plan - reinvest 25,291,350 253.14 30,292,163 303.19 JPMORGAN India Liquid Fund-Super Inst Daily Dividend Plan.-Reinvest 19,987,760 200.04 19,987,760 200.04 Kotak Quarterly Interval Plan Series 3 - Dividend 15,333,945 153.34 15,333,945 153.34 Lotus India Liquid fund Institutional daily dividend 4,499,420 45.01 4,499,420 45.01 Lotus India Liquid Plus fund -Institutional daily dividend 8,591,961 0.56 8,591,961 0.56 Lotus India Quarterly Interval Fund - Plan A - Dividend 20,440,848 204.52 20,440,848 204.52

for the initial public offer which was considered as a share issue expense and set off against the balance available in Securities Premium account. The Company avails input credit for Service Tax and hence no Service Tax expense was accrued during the year.

b. Remuneration to the Auditors of the Subsidiaries:In Rs. Million



March 31, 2008

Audit fees 7.70 5.59

Payment for other services 0.02 -


Total 7.72 5.59

10. Remuneration to Directors Remuneration paid to a Director of Ver se in terms of the appointment

is in excess of the limits specified in Schedule XIII to the Companies Act, 1956 by Rs. 1.93 Millions. The Company’s application for the payment of remuneration in excess of the limits specified in Schedule XIII is pending approval of the Central Government.


102

Name of the fundPurchased Sold (at cost)





Mirae Asset liquid Fund- (Institutional)- Dividend Plan 469,654 470.31 519,732 520.46 Principal Floating Rate Fund FMP-Insti. Option - Dividend Reinvestment Daily

10,136,862 101.44 15,135,964 151.50

Reliance Monthly Interval Fund - Series II Institutional Dividend Plan. 10,056,248 100.61 10,056,248 100.61 Standard Chartered Fixed Maturity Plan- Quarterly Series 25- Dividend 110,751 1.11 10,197,325 101.97 TATA Dynamic Bond Fund Option B - Dividend 49,099,638 503.51 66,101,676 676.38 Templeton India Treasury Management account Institutional Plan - Daily Dividend Reinvestment

39,985 40.01 39,985 40.01

Templeton India Treasury Management Account Super Institutional Plan - Daily Dividend Reinvestment

100,190 100.26 100,190 100.26

Templeton India Ultra Short Bond Fund Institutional Plan - Daily Dividend Reinvestment

4,023,550 40.31 4,023,550 40.31

Templeton India Ultra Short Bond Fund Super Institutional Plan - Daily Dividend Reinvestment

25,027,411 250.74 25,027,411 250.75

TATA Fixed Income Portfolio Fund Scheme A3 Institutional M - - 24,988,505 250.00 UTI Liquid Plus fund 100,613 100.63 100,613 100.64 Tata Floater Fund – Daily Dividend 2,928 0.03 260,862 2.62 Kotak Quarterly Interest Plan - - 649,753 6.50 Kotak Liquid (Regular) – Weekly Dividend 649,793 6.52 649,793 6.52 SICAV 3M – Sogemonplus 60 92.52 35 52.07 Sogemoneval 392 155.08 339 132.46 BMTN 3 43.86 3 63.79 Etoile Moné Euribor 1 7.26 1 7.26 Etoile Eonia 5 34.06 4 27.25

558,185,873 6,826.73 867,755,093 9,933.73

Change in Present Value of Obligation: In Rs. Million

Particulars As at March 31, 2009 As at March 31, 2008Present Value of Obligation 10.85 4.92 Current Service Cost 14.21 2.30 Interest on Defined Benefit Obligation

0.74 0.38

Benefits Paid (0.66) - Net Actuarial Losses / (Gains) Recognized in Year

1.20 3.25

Past Service Cost - - Losses / (Gains) on “Curtailments and Settlements”

- -

Closing Present Value of Obligations

26.34 10.85

Change in the Fair Value of Assets:In Rs. Million

Particulars As at March 31, 2009 As at March 31, 2008Opening Fair Value of Plan Assets

7.24 1.82

Expected Return on Plan Assets 0.54 0.17 Actuarial Gains / (Losses) - 0.16 Assets Distributed on Settlements

- -

Contributions by Employer - 5.09 Assets Acquired due to Acquisition

- -

Exchange Difference on Foreign Plans

- -

Benefits Paid (0.66) - Closing Fair Value of Plan Assets

7.12 7.24

Details of investment composition of Plan Assets has not been

provided by the Fund mangers and hence not given.


I. Defined Contribution Plans

During the year the Company has recognized the following amount in the Profit and Loss Account:

In Rs. Million



March 31, 2008

Employer's Contribution to Provident Fund*

31.61 23.25

*Included in Contribution to Provident and other funds (Refer Schedule 14)

II. Defined Benefit Plans

Gratuity In accordance with Accounting Standard 15 (Revised 2005) -

“Employee Benefits”, actuarial valuation as on March 31, 2009 was done in respect of the aforesaid defined benefit plan of Gratuity based on the following assumptions:

Particulars For the year ended March 31, 2009


Discount Rate 7% p.a. 8.25% p.a.Expected Rate of Return on Plan Assets

8% p.a 7.50% p.a.

Salary Escalation Rate 10% p.a. for first 6 years and 7% p.a

thereafter

10% p.a. for first 4 years and 7% p.a

thereafter

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.


103

employment benefits for its qualifying employees. The actuarial valuation was done based on the following assumptions:



March 31, 2008

Discount Rate 11% p.a. -

Salary Escalation Rate 10% p.a. -

Expenses recognized in the Profit and Loss Account:In Rs. Million



March 31, 2008

Current Service Cost 0.03 -

Interest Cost - -

Under provision in prior year 0.01 -

Foreign Exchange Difference - -

Total Expenses to be recognized in the Profit and Loss Account

0.04 -


Particulars As at March 31, 2009 As at March 31, 2008

Present value of obligations 0.04 -

Unrecognised actuarial loss - -


0.04 -

13. Finance Lease

The lease transactions of the Company represent lease of electronic equipments on a non-cancellable basis.

The minimum lease payments and their present value as at March 31, 2009 under the various agreements are given below:

In Rs. Million

ParticularsPresent value of Minimum Lease

PaymentsFuture Interest

Minimum Lease Payments

Amount repayable not later than 1 year

17.48 1.54 19.02

Amount repayable later than 1 year and not later than 5 years

25.25 7.47 32.72

Total 42.73 9.01 51.74

14. Operating lease

The Company is obligated under non-cancellable operating lease for office space.

Total rental expense and future lease payments under non-cancellable operating lease for office space are as follows:

In Rs. Million



March 31, 2008Rental expense charged to Profit and Loss account

98.04 71.15

Future lease payments Not later than 1 year 109.29 84.47Later than 1 year and not later than 5 years

239.90 253.26

Reconciliation of Present Value of Defined Benefit Obligation and the Fair Value of Plan Assets:

In Rs. Million


Closing Present Value of Funded Obligations

26.34 10.86

Closing Fair Value of Plan Assets (7.12) (7.24)

Closing Funded Status - -

Unrecognized Actuarial (Gains) / Losses

- -

Unfunded Net Asset / (Liability) recognised in Balance Sheet

19.22 3.62



Closing Present value of obligations 26.34 10.86

Closing Fair Value of Plan Assets (7.12) (7.24)


19.22 3.62

Expenses recognized in the Profit and Loss Account:In Rs. Million

ParticularsFor the year ended March 31, 2009


Current Service Cost 14.21 2.30

Past Service Cost - -

Interest Cost 0.74 0.38

Expected Return on Plan Assets (0.55) (0.17)

Actuarial (Losses) / Gain 1.26 3.09

Losses / (Gains) on “Curtailments and Settlements”

- -

Excess Provision pertaining to previous year adjusted in the current year

(2.97) -

Total Expenses to be recognized in the Profit and Loss Account

12.69 5.60

III. Other long term benefits

Leave Encashment Cost of compensated absences expensed in the Profit and Loss

account:In Rs. Million



March 31, 2008

Leave Encashment 15.60 26.12

During the previous year on adoption of the Accounting Standard-15 (Revised 2005)-”Employee Benefits”, the transitional liability of Rs. 16.17 Million in respect of unutilised leave salary liability as on April 01, 2007 was adjusted against opening balance of surplus in Profit and Loss account, net of deferred tax adjustment of Rs. 5.44 Million.

Contribution for Post Employee Benefits In accordance with PSAK 24 (Revision 2004) and Labour Law

no. 13/2003, PT OnMobile Indonesia has provided for post


104

15. Employee Stock Option Plans

Details of ESOP introduced to which the guidance note as issued by Institute of Chartered Accountants of India (ICAI) is applicable

Plan Board approval date

Share holder's approval date Total options

appropriated

Terms of Vesting

OnMobile Employees Stock Option Plan – I 2003

31-Oct-03 Extra Ordinary General Meeting held on March 5, 2001, November 29, 2003 and December 30, 2003

1,026,000 25% of such Options granted would vest at the end of twelve (12)

months from the date the Optionee becomes an employee of the

Company and the remaining 75% would vest at a rate of 1/36th per

month for the next thirty six (36) months from the first Vesting.

OnMobile Employees Stock

Option Plan – II 2003

4-Dec-03 114,000




March 31, 2008

Options granted outstanding at the beginning of the year 1,736,085 130,113

Granted during the year - 32,923

Exercised during the year 391,625 23,188

Forfeited during the year 148,213 6,303

Increase in Options consequent to issuance of bonus shares - 1,602,540

Options granted outstanding at the end of the year 1,196,247 1,736,085

Grants outstanding which are vested as at Balance Sheet date including increase due to issuance of bonus shares 935,155 599,079

Details of ESOP introduced to which the guidance note as issued by Institute of Chartered Accountants of India (ICAI) is applicable

Plan Board approval date

Share holder's approval date

Total options appropriated

Terms of Vesting

OnMobile Employees Stock Option Plan – III 2006

24-Jul-06 24-Jul-06 61,567 25% of such Options granted would vest at the end of twelve (12) months from the date the Optionee becomes an employee of the Company and the remaining 75% would vest at a rate of 1/36th per month for the next thirty six (36) months from the first Vesting.


12-Jul-07 17-Aug-07 975,000 25% of the Options granted would vest at the end of twelve (12) months from the date of the grant and the remaining 75% would vest at a rate of 1/36th per month for the next thirty six (36) months from the first Vesting.

OnMobile Employees Stock Option Plan-II 2007

12-Jul-07 17-Aug-07 74,360 65%, 30%, 3% and 2% of the options granted would vest at the end of one year, two years, three years and four years from the grant date, respectively.


18-Mar-08 18-Apr-08 26,000 100% of the Options would vest over a period of four years.

OnMobile Employees Stock Option Plan II 2008

31-Oct-08 1-Aug-08 100,000 100% of the options granted would vest at the end of two years.

OnMobile Employees Stock Option Plan III 2008

31-Oct-08 1-Aug-08 748,240 For 297,170 Options 50% of the options granted would vest at the end of one year and 25% of the options would vest on a monthly basis at the end of each of second and third years from the grant date respectively and for the balance 451,070 Options granted under the Plan the vesting would be 25% of the Options would vest at the end of one year and the rest of the options shall vest at the rate of 1/36th of the options shall vest every month for the next three years.

OnMobile Employees Stock Option Plan IV 2008

26-Sep-08 31-Oct-08 173,953 100% of the options granted would vest at the end of one year.


105




March 31, 2008

Options granted outstanding at the beginning of the year

1,209,538 -

Granted during the year 1,145,691 1,253,101

Exercised during the year 35,555 -

Forfeited during the year 675,355 43,563

Options granted outstanding at the end of the year

1,644,319 1,209,538

Weighted average remaining contractual life (years) at the year end

2 4

Weighted average exercise price per option (after adjusting for Bonus issue)

Rs. 356 Rs. 322.34

Range of exercise price (after adjusting for bonus issue)

Rs. 216 to Rs. 680 Rs. 210 to Rs. 592

The Company accounted the above options using the intrinsic value

method and thus, the difference between the fair value of the underlying

shares in the year of grant and the options exercise value was charged

to the profit and loss account. Accordingly, the compensation charge

thereon in the current year is Rs. 0.06 Million (Previous year - Rs. 1.41

Million).

The guidance note issued by the Institute of Chartered Accountants

of India requires the disclosure of pro forma net results and EPS both

basic & diluted, had the Company adopted the fair value method. Had

the Company accounted the option under fair value method, amortising

the stock compensation expense thereon over the vesting period, the

reported profit for the year ended March 31, 2009 would have been

lower by Rs. 26.12 Million (Previous year- Rs. 27.00 Million) and Basic

and diluted EPS would have been revised to Rs. 14.3 (Previous year-

Rs. 12.0) and Rs. 13.8 (Previous year- Rs. 11.1) respectively as compared

to Rs. 14.8 (Previous year- Rs. 12.6)and Rs. 14.3 (Previous year- Rs. 11.6)

without such impact.

The fair value of stock based awards to employees is calculated through

the use of option pricing models, requiring subjective assumptions which

greatly affect the calculated values. The said fair value of the options have

been calculated using Black-Scholes option pricing model, considering

the expected term of the options to be 2 years (Previous year-4.8 years), a

“Nil” (Previous year-1%) expected dividend rate on the underlying equity

shares, volatility in the share price of 61% (Previous year-Range of 21%

to 59%) and a risk free rate of 7%(Previous year-8%). The Company’s

calculations are based on a single option valuation approach, and

forfeitures are recognized as they occur. The expected volatility is based

on historical volatility of the share price during the year after eliminating

the abnormal price fluctuations.

16 Segment Reporting:

The Company is engaged in providing value added services in

telecom business globally and is considered to constitute a single

segment in the context of primary segment reporting as prescribed

by Accounting Standard 17 - “Segment Reporting”.

The secondary segment is identified to geographical locations and

the Company’s significant operations constituting more than 90%

of the total operations are carried out of India. Details of secondary

segment by geographical locations are given below:

In Rs. Million



March 31, 2008

I Revenue (by location of customer)

In India 3,134.47 2,212.44

In France 754.55 106.53

Rest of the World 174.55 299.20

II Total carrying amount of Segmental Assets, by geographical location

In India 2,419.95 3,233.80

In France 766.04 291.04


III Cost incurred for purchase of tangible & intangible assets, by geographical location

In India 482.12 811.56

In France 7.40 2.48


17. Transactions with related parties

I. List of Related parties and relationship:

Sl. No.

Relationship Related parties

(i) Controlling Enterprises

Holding Company OnMobile Systems Inc., USA (up to February 18, 2008)

(ii) Other related parties with whom the Company had transactions

Key Management Personnel

Arvind Rao


Virendra Kumar Gupta

Shailendra Sharma

Enterprises owned or significantly influenced by key management personnel/Directors or their relatives

OnMobile Systems Inc., USA (w.e.f February 19, 2008)

Mobile Traffik Private Limited

Riff Mobile Private Limited


106

II. Transactions with Related Parties:In Rs. Million

Sl. No.

Nature of transactions Key Management Personnel


Key Management Personnel/Directors or their relatives

Total

March 31,2009

March 31,2008

March 31,2009

March 31,2008

March 31,2009

March 31,2008

1 Content Cost

Riff Mobile Pvt. Ltd. - - 9.66 1.63 9.66 1.63

- - 9.66 1.63 9.66 1.63

2 Remuneration

Arvind Rao 10.09 8.84 - - 10.09 8.84

Chandramouli Janakiraman 3.50 5.39 - - 3.50 5.39

Virendra Kumar Gupta 2.29 1.78 - - 2.29 1.78

Shailendra Sharma 1.44 1.13 - - 1.44 1.13

17.32 17.14 - - 17.32 17.14

3 Amount Payable

OnMobile Systems Inc. - - 85.33 1,007.02 85.33 1,007.02

Riff Mobile Pvt. Ltd. - - 4.15 0.67 4.15 0.67

Mobile Traffik Pvt. Ltd. - - 0.10 0.10 0.10 0.10

Virendra Kumar Gupta 0.04 0.22 - - 0.04 0.22

0.04 0.22 89.58 1,007.79 89.62 1,008.01

4 Amount Receivable

Other Advances

Arvind Rao 0.43 0.85 - - 0.43 0.85

Chandramouli Janakiraman 0.02 - - - 0.02 -

Mobile Traffik Pvt. Ltd. - - 0.10 0.10 0.10 0.10

0.45 0.85 0.10 0.10 0.55 0.95

Notes:

1. Related party relationships are as identified by the Company on the basis of information available and relied by the auditors. 2. No amount has been written off or written back during the year in respect of debts due from or to related party. 3. Reimbursement of Expenses are not included above.

18. Earnings per Share The Earnings per share, computed as per the requirements of Accounting Standard 20 –“ Earnings per Share ” is as under:



March 31, 2008

Profit after tax as per the Profit and Loss Account (In Rs. Million) 851.97 603.10

Weighted Average number of Shares for Basic EPS 57,720,711 47,916,994

Add: Effect of Convertible Preference Shares and Stock Options outstanding 1,967,265 3,942,651

Weighted Average Number of equity shares for Diluted EPS 59,687,976 51,859,645

Rs. Rs.

Nominal value of equity shares 10.0 10.0

Earnings Per Share

Basic 14.8 12.6

Diluted 14.3 11.6

19. Accounting For Taxes On Incomea) Provision for taxation includes tax liabilities in India on the Company’s global income as reduced by exempted income and any tax liabilities

arising overseas on income sourced from those countries.

b) In accordance with the Accounting Standard 22 – “Accounting for Taxes on Income”, the Company has created a deferred tax liability to the extent of Rs. 28.69 Million and deferred tax asset to the extent of Rs. 0.74 Million for the current year, which has been debited to the Profit and Loss account. Details of Deferred Tax Asset and Liabilities are:


107

In Rs. Million

Particulars Deferred Tax (Assets)/ Liabilities

as on April 1, 2008 Current year (credit)/charge


Difference between book and tax depreciation 65.66 36.43 102.09 Others (Provision for gratuity, leave encashment etc.) (26.20) (7.75) (33.95)

39.46 28.68 68.14

In Rs. Million

ParticularsDeferred Tax (Assets)/ Liabilities

as on April 1, 2008 Current year (credit)/charge


Difference between book and tax depreciation 0.21 (0.21) - Others (Provision for gratuity, leave encashment etc.) (0.42) (0.53) (0.95)

(0.21) (0.74) (0.95)

20. The details of Provisions under Accounting Standard 29 - “Provisions, Contingent liabilities and Contingent assets” are as under:In Rs. Million

Nature of ExpenseProbable outflow estimated within

Provision outstanding as at April 1, 2008

Provision made dur-ing the year

Provision utilized during the year

Provision reversed during the year

Provision outstanding as at March 31, 2009

Other provisions- customer credits 3 years 77.20 18.17 48.27 - 47.10

21. Foreign Currency Exposure

There are no outstanding forward exchange contracts entered into by the company as at March 31, 2009. Foreign currency exposure as at March 31, 2009 that have not been hedged by derivative instrument or otherwise is as follows:

ParticularsAs at March 31, 2009

(In Rs. Million)As at March 31, 2008

(In Rs. Million)Nature of Currency

As at March 31, 2009 Amount (Foreign Currency

in Million)

As at March 31, 2008Amount (Foreign Currency

in Million)Due from: Debtors against export of services/goods

60.06 58.43 USD 1.18 1.41 - 0.89 GBP - 0.01

9.94 0.63 EUR 0.15 0.01 5.21 52.80 AUD 0.15 1.44

- 6.00 BDT - 10.22

Against advances 9.10 2.63 USD 0.18 0.07 13.26 - EUR 0.20 -

Due to:

Creditors against import of goods and services

162.07 74.70 USD 3.18 1.87 0.05 - AED 0.003 - 0.22 - EUR 0.003 -

Deferred Payment Liability 58.03 278.64 EUR 0.86 4.42

22. Research tax rebate accrued as other income for Vox Mobili S.A. and Telisma S.A., during the period amounted to Rs. 40.32 Million (Previous year: Rs. 3.49 Million) and total tax receivable outstanding at March 31, 2009 amounted to Rs. 80.03 Million (Previous year: Rs. 26.26 Million).

23. The Central Government vide notification dated March 31, 2009 has amended Accounting Standard-11 “Effect of changes in Foreign Exchange Rates”, notified under the Companies (Accounting Standard) Rules, 2006. The Company has opted out of the option of adjusting the exchange difference on long term foreign currency monetary items to the cost of the assets acquired out of foreign currency monetary items.

24. Previous year’s figures have been regrouped/reclassified wherever necessary.

Arvind RaoChief Executive Officerand Managing Director

Rajesh MoortiChief Financial Officer

Chandramouli J Director




108

ONMOBILE GLOBAL LIMITED2008-09 2007-08 2006-07 2005-06 2004-05

Ratios- Financial Performance

International Revenue/ Total Revenue (%) 23% 15% 1% 0% 0%

Domestic Revenue/ Total Revenue (%) 77% 85% 99% 100% 100%

Cost of Sales and Services/ Total Revenue (%) 19% 15% 18% 15% 15%

Manpower costs/ Total Revenue (%) 30% 24% 20% 13% 11%

Administrative and other expenses/ Total Revenue (%) 20% 20% 16% 15% 10%

Total Operating Expenses/ Total Revenue (%) 68% 60% 54% 43% 35%

Earnings before Interest, Tax, Depreciation and Amortisation / Total Revenue (%) 32% 40% 46% 57% 65%

Depreciation/ Total Revenue (%) 11% 10% 11% 10% 11%

Other Income/ Total Revenue (%) 8% 3% 3% 0% 0%

Finance charges/ Total Revenue (%) 0% 1% 0% 0% 0%

Profit Before Tax/ Total Income (%) 26% 32% 37% 47% 54%

Direct Tax/ Total Revenue (%) 7% 9% 13% 17% 20%

Direct Tax/ PBT (%) 26% 29% 33% 36% 37%

Profit After Tax from Ordinary Activities/ Total Income (%) 19% 22% 25% 30% 34%

Return On Capital Employed (PBIT/ Average Capital Employed) (%) 17% 21% 41% 120% 173%

Return on Average Networth (PAT/Average Net Worth) (%) 13% 15% 27% 77% 109%

Ratios Balance Sheet

Debt-Equity Ratio (%) 1% 0% 0% 0% 0%

Daily sales outstanding (Days) 104 108 115 108 87

Fixed Assets Turnover Ratio 3.88 2.88 3.97 3.88 3.19

Current Ratio 2.98 1.39 1.70 1.60 1.31

Cash and Equivalents/Total Assets (%) 31% 16% 8% 5% 10%

Depreciation/Average Gross Block(%) 23% 27% 31% 32% 30%

Ratios - Growth

Growth in Revenue (%) 55% 97% 61% 102% 137%

Operating Expenses Growth (%) 77% 118% 103% 145% 41%

Operating Profit Growth (%) 22% 72% 29% 78% 280%

Profit After Tax Growth (%) 41% 79% 36% 77% 225%

Earnings Per Share Growth (%) 17% -1% -34% 77% 225%

Per- Share Data (Period End)

Earning Per Share (Rs.)- Basic 14.8 12.6 12.7 19.1 10.8

Earning Per Share (Rs.)- Diluted 14.3 11.6 6.9 7.2 4.7

Book Value (Rs.) 121.1 127.5 76.1 34.3 15.2

Ratio Analysis (Consolidated Financials)

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PB 111

Notice is hereby given that the Ninth Annual General Meeting (AGM) of the Members of OnMobile Global Limited will be held on Saturday, August 01, 2009, at 10.30 A.M. at Hotel Royal Orchid, adjoining KGA Golf course, Airport Road, Bangalore – 560 008, to transact the following business:

ORDINARY BUSINESS

To receive, consider and adopt the audited Balance Sheet of the 1. Company as at March 31, 2009, and the Profit and Loss account for the financial year ended as on that date and the Reports of the Directors and Auditors thereon.

To appoint a Director in place of Mr. Naresh Malhotra who retires by 2. rotation and, being eligible offers himself for re-appointment.

To appoint a Director in place of Mr. Sridar A Iyengar who retires by 3. rotation and, being eligible offers himself for re-appointment.

To reappoint M/s. Deloitte Haskins & Sells, Chartered Accountants, as 4. statutory auditors of the Company from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to fix their remuneration, and to pass the following resolution thereof.

“RESOLVED that M/s. Deloitte Haskins & Sells, Chartered Accountants, be and are hereby re-appointed as the Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting, on such remuneration as may be determined by the Board of Directors in consultation with the Auditors.”

SPECIAL BUSINESS

Employee Stock Option Plan – I 2007: (Items 5 & 6)

5. To consider and if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:

RESOLVED that in part modification of the approval of the shareholders at the Annual General Meeting of the Company held on August 17, 2007 of ESOP Plan I 2007 and pursuant to the provisions of Section 81(1A) and other applicable provisions of the Companies Act, 1956 (including the statutory modifications or re-enactment thereof) and the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, for the time being in force including any amendments thereof, (hereinafter referred to as “SEBI ESOP Guidelines”), consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as “the Board”, which term shall be deemed to include any Committee including the Compensation Committee constituted by the Board to exercise its powers, including the powers conferred by this resolution) to amend the vesting period for the stock options granted/to be granted by the Company to the employees of the Company under ESOP Plan I 2007 as below.

Existing Clause 9.2 be replaced by insertion of the below clause:

“The options shall vest over a period of four years from the date of grant at the rate of 25% of the Options vesting at the end of

NOTICE

every one year during the said four year period (as mentioned in the table in the explanatory statement to this Notice) or such other vesting period as may be determined by the Board of Directors or any committees of the Board from time to time.”

RESOLVED FURTHER that the Board be and is hereby authorised to do all the things necessary and to take such action as may be necessary or expedient to amend or alter or adopt any modifications or redefine the ESOP Plan I 2007 in accordance with the SEBI ESOP Guidelines issued / to be issued by SEBI from time to time.


RESOLVED that in part modification of the approval of the shareholders at the Annual General Meeting of the Company held on 17th August 2007 of ESOP Plan I 2007 and pursuant to the provisions of Section 81(1A) and other applicable provisions of the Companies Act, 1956 (including the statutory modifications or re-enactment thereof) and the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, for the time being in force including any amendments thereof, (hereinafter referred to as “SEBI ESOP Guidelines”), consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as “the Board”, which term shall be deemed to include any Committee including the Compensation Committee constituted by the Board to exercise its powers, including the powers conferred by this resolution) to amend the plan to include grant of options to the employees of the Subsidiary Companies under ESOP Plan I 2007, and that the additional disclosures of the plan shall be as specified in the explanatory statement.

RESOLVED FURTHER that the Board be and is hereby authorised to do all the things necessary and to take such action as may be necessary or expedient to amend or alter or adopt any modifications or redefine the ESOP Plan I 2007 in accordance with the SEBI ESOP Guidelines issued / to be issued by SEBI from time to time.

RESOLVED FURTHER that the Board be and is hereby authorised to delegate all or any of its powers herein conferred to any one or more officials of the Company.

EMPLOYEE STOCK OPTION PLAN – III -2008: (Items 7 & 8)


RESOLVED that in part modification of the approval of the shareholders at the Annual General Meeting of the Company held on August 01, 2008 of ESOP Plan III 2008 and pursuant to the provisions of Section 81(1A) and other applicable provisions of the Companies Act, 1956 (including the statutory modifications or re-enactment thereof) and the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, for the time being in force including any amendments thereof, (hereinafter referred to as “SEBI ESOP Guidelines”), consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as “the Board”, which term shall be deemed to include any Committee including the Compensation Committee constituted by the Board to exercise its powers, including the powers conferred by this resolution) to amend the vesting period for the stock options granted/to be granted by the Company to the employees of the Company under ESOP Plan III 2008 as below.

112 113112 113

Existing Clause 9.2 be replaced by insertion of the below clause:

“The options shall vest over a period of four years from the date of grant at the rate of 25% of the Options vesting at the end of every one year during the said four year period (as mentioned in the table in the explanatory statement to this Notice) or such other vesting period as may be determined by the Board of Directors or any committees of the Board from time to time.”

RESOLVED FURTHER that the Board be and is hereby authorised to do all the things necessary and to take such action as may be necessary or expedient to amend or alter or adopt any modifications or redefine the ESOP Plan III 2008 in accordance with the SEBI ESOP Guidelines issued / to be issued by SEBI from time to time.


RESOLVED that in part modification of the approval of the shareholders at the Annual General Meeting of the Company held on 01st August 2008 of ESOP Plan III 2008 and pursuant to the provisions of Section 81(1A) and other applicable provisions of the Companies Act, 1956 (including the statutory modifications or re-enactment thereof) and the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, for the time being in force including any amendments thereof, (hereinafter referred to as “SEBI ESOP Guidelines”), consent of the Company be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as “the Board”, which term shall be deemed to include any Committee including the Compansation Committee constituted by the Board to exercise its powers, including the powers conferred by this resolution) to amend the plan to include grant of options to the employees of the Subsidiary Companies under ESOP Plan III 2008, and that the additional disclosures of the plan shall be as specified in the explanatory statement.

RESOLVED FURTHER that the Board be and is hereby authorised to do all the things necessary and to take such action as may be necessary or expedient to amend or alter or adopt any modifications or redefine the ESOP Plan III 2008 in accordance with the SEBI ESOP Guidelines issued / to be issued by SEBI from time to time.

RESOLVED FURTHER that the Board be and is hereby authorised to delegate all or any of its powers herein conferred to any one or more officials of the Company.

9. EMPLOYEE STOCK OPTION PLAN – II 2008:

To consider and if thought fit, to pass with or without modification(s), the following resolution as a Special Resolution:

“RESOLVED THAT in partial modification of the resolution passed on August 01, 2008 and in accordance with the provisions contained in the Articles of Association, the provisions of the Companies Act, 1956 (hereinafter referred to as the “Act”) and the provisions contained in the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (hereinafter referred to as the “SEBI Guidelines”) (including any statutory modification(s) or re-enactment of the Act or the SEBI Guidelines, for the time being in force) and subject to such other approvals, permissions and sanctions as may be necessary, the consent, approval and clarification of the members be and is hereby given to the Board of Directors of the Company (hereinafter referred to as the “Board” which term shall be deemed to include

any committee of the Board, including the Compensation Committee constituted by the Board) that the salient features of the Employees Stock Option Plans II, 2008, specifically the vesting period, the exercise period and the method of valuation of the stock option shall be as per the details specified in the Explanatory statement to this item annexed to this Notice as per section 173(2) of the Companies Act, 1956 and that the Board of Directors of the Company be and are hereby authorized to do the necessary acts and deeds to implement this resolution.

RESOLVED FURTHER THAT the new Equity Shares to be issued and allotted by the Company in the manner aforesaid shall rank pari passu in all respects with the existing Equity Shares of the Company.

RESOLVED FURTHER THAT the Board be and is hereby authorized to take necessary steps for listing of the securities/shares allotted under the Employee Stock Option Plan II, 2008 on the Stock Exchanges where the Shares of the Company are listed as per the provisions of the Listing Agreement with the concerned Stock Exchanges and other applicable guidelines, rules and regulations.

10. EMPLOYEE STOCK OPTION PLAN – IV 2008:


“RESOLVED THAT in partial modification of the resolution passed on August 01, 2008 and in accordance with the provisions contained in the Articles of Association, the provisions of the Companies Act, 1956 (hereinafter referred to as the “Act”) and the provisions contained in the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (hereinafter referred to as the “SEBI Guidelines”) (including any statutory modification(s) or re-enactment of the Act or the SEBI Guidelines, for the time being in force) and subject to such other approvals, permissions and sanctions as may be necessary, the consent, approval and clarification of the members be and is hereby given to the Board of Directors of the Company (hereinafter referred to as the “Board” which term shall be deemed to include any committee of the Board, including the Compensation Committee constituted by the Board) that the salient features of the Employee Stock Option Plan IV-2008 shall be as per the details specified in the Explanatory statement to this item annexed to this Notice as per section 173(2) of the Companies Act, 1956 and that the Board of Directors of the Company be and are hereby authorized to do the necessary acts and deeds to implement this resolution.

RESOLVED FURTHER THAT the new Equity Shares to be issued and allotted by the Company in the manner aforesaid shall rank pari passu in all respects with the existing Equity Shares of the Company.

RESOLVED FURTHER THAT the Board be and is hereby authorized to take necessary steps for listing of the securities/shares allotted under the Employee Stock Option Plan IV 2008 on the Stock Exchanges where the Shares of the Company are listed as per the provisions of the Listing Agreement with the concerned Stock Exchanges and other applicable guidelines, rules and regulations.

11. KEEPING REGISTER OF MEMBERS OUTSIDE THE REGISTERED OFFICE:


112 113112 113

“RESOLVED THAT pursuant to section 163 of the Companies Act, 1956 approval of the Company be and is hereby accorded to keep the register of member, index of members, returns and copies of the certificates and documents at the office of “M/S Karvy Computer Shares Private Limited, No.51/2, TKN Complex, Vanivilas Road, Opp: National College, Basavanagudi, Bangalore, the Registrar And Share Transfer Agents of the Company.

FURTHER RESOLVED THAT, the Board of Directors of the Company are hereby authorised to do all such acts and things as may be necessary to implement this resolution.”

12. OPENING OF OFFICE IN SRILANKA:


“RESOLVED THAT subject to the applicable laws, a Branch Office or a Subsidiary of the Company be opened in Srilanka, in such manner and in such mode and at such time as the Board of Directors of the Company may deem fit and proper to carry on inter alia the following business in Sri Lanka.

1. Development, implementation, operation and maintenance of IT Systems for rendering services to the Telecom Companies who in turn distribute these services to the end users;

2. The above involves the licensing of the Company’s principal products like Multi Modal Platforms.

3. Provisions of Managed Services, Telecom Carrier Products for the end users like ring tones, music cards, jokes, horoscope, songs, stock updates, Voice SMS, Missed call alerts, voice services, which are deployed on the above Multi-Modal Platform.

4. Provision of customer care services using voice platforms like auto dialer services etc.

5. Provision of Multi-Model Solution which integrates all the mobile delivery channels such as Voice, SMS, MMS and WAP.

6. Mobile content distribution, interactive media portals, and M-commerce solutions.

FURTHER RESOLVED that the Company shall not engage in any retail trade or export or import or investment business in Sri Lanka.”

13. ISSUE OF SHARES TO TELISMA S.A.


“RESOLVED THAT, pursuant to Section 81(1A) and other applicable provisions of the Companies Act, 1956 (the Act) and subject to the Regulations and Guidelines of Securities and Exchange Board of India (SEBI), Listing Agreement(s) entered into with the Stock Exchange(s), and in accordance with the Memorandum and Articles of Association of the Company and subject to the consent / approvals, if any, of any other authorities / institutions and subject to such terms and conditions as may be prescribed by any such authorities while granting such consents and approvals and which may be agreed to by the Board, and on such other terms and conditions as may be decided and deemed appropriate by the Board, the consent of the company be and is hereby accorded to the Board of Directors (herein referred

to as the Board which expression shall include any Committee of the Directors thereof) to create, issue and allot on preferential allotment basis up to 76,506 equity shares of the Company of Rs. 10/- each at a premium of Rs. 425.39/- per share (so that the total number of equity shares to be issued by the Company will not exceed 76,506 equity shares to the promoters and employees of Telisma S.A., the business of which has been acquired by the company in satisfaction of part consideration value of INR 6,66,22,220/- (equivalent to €500,000 payable to them pursuant to the Share Purchase Agreement entered into with them more particularly stated in the explanatory statement annexed hereto to the notice convening the meeting.

FURTHER RESOLVED THAT, the Board be and is hereby authorised to issue and allot such number of equity shares as are required to be issued and allotted to satisfy the above consideration value payable to them.

FURTHER RESOLVED THAT, the Board be and is hereby authorised to apply for and seek listing of the above equity shares on the Stock Exchange(s) with which the securities of the Company are already listed and to execute necessary listing agreement and other documents as may be required in connection therewith.

FURTHER RESOLVED THAT, the Board be and is hereby authorised, for the purpose of giving effect to this resolution, to do all such acts, deeds, matters and things including variation in the size, price and terms of the issue as it may, in its absolute discretion, deem necessary, proper or desirable and to settle any question, difficulty or doubts that may arise in regard to the offer, issue and allotment of shares and in complying with any requirements of Regulations thereof without being required to seek any further consent or approval of the shareholders in respect thereof.

FURTHER RESOLVED THAT, the Board be and is hereby authorised to agree to and accept such amendments, modifications, variations and alterations as the SEBI, Stock Exchange(s) or any other authority may stipulate in that behalf.

RESOLVED FURTHER THAT, the Board of Directors be and is hereby authorised to do all such acts and things to give effect to this resolution including variation in the quantum of issue, price and other terms and conditions as they may deem fit.”

Registered office: By Order of the Board of DirectorsNo. 26, Bannerghatta Road, For OnMobile Global LimitedJP Nagar, 3rd Phase, Sd/-Bangalore – 560 076, Srikiran DIndia. Company SecretaryDate: July 2, 2009Place: Bangalore

Notes:1. Explanatory Statement pursuant to Section 173(2) of the Companies

Act, 1956 is annexed hereto.

114 115114 115

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF AND THE PROXY NEED NOT BE A MEMBER OF THE COMPANY.

3. The instrument appointing the proxy must be deposited at the registered office of the Company not less than 48 hours before the commencement of the meeting.

4. Member/proxies should bring duly filled attendance slips sent herewith to attend the meeting.

5. The Register of Directors’ share holding, maintained under section 307 of the Companies Act, 1956, will be available for inspection by the members at the AGM.

6. The Register of contracts maintained under section 301 of the Companies Act, 1956, will be available for inspection by the members at the registered office of the Company.

7. The Register of Members and share transfer books will remain closed from July 28, 2009 to July 31, 2009 (both days inclusive).

Pursuant to Clause 49 of the listing agreement with the stock exchanges, following information is furnished about the Directors proposed to be appointed/re-appointed.

Item 2

Mr. Naresh Malhotra, Director, retires by rotation and being eligible, offers himself for re-appointment. A brief resume of Mr. Naresh Malhotra is given below:

Mr. Naresh K. Malhotra graduated with a Bachelor of Commerce degree from St. Xavier’s College, Calcutta University. He qualified as a Chartered Accountant in 1970. He has over 38 years of experience in India and overseas in various companies including Imperial Chemical Industries, Unilever, Colgate Palmolive, Bukhatir Investments, the U B Group, KPMG and Amalgamated Bean Coffee Trading Company. He has previously served as founding partner and Managing Director of corporate finance in KPMG in India. He is currently an Operating Partner at Sequoia Capital India Advisors. He has been appointed as an independent Director by the shareholders of our Company at the AGM held on August 17, 2007. Mr. Malhotra retires by rotation and being eligible offers himself for re-appointment at the forthcoming AGM to be held on August 01, 2009. Mr. Malhotra is on the Board of the following other Companies:

1. Blue Star Infotech Limited

2. Royal Orchid Hotels Limited

3. A B Holdings Private Limited

4. Balan Natural Foods Private Limited

5. Cotton County Retail Limited

6. Deriv IT Solutions Private Limited

7. Genesis Colors Private Limited

8. Printo Document Services Private Limited

9. Tarang Software Technologies Private Limited

10. Deriv TTE Solutions Private Limited

11. N.M. Properties and Consulting Private Limited.

Mr. Malhotra does not hold any shares in the Company, however, he has been granted 36,000 stock options in total as on April 30, 2009

The Board considers it in the interest of the Company to appoint Mr. Malhotra as a Director.

The Board of Directors of your Company recommends this resolution to be passed as an Ordinary Resolution, for your approval.

None of the Directors, except Mr. Malhotra, is interested or concerned in these Resolutions.

Item 3

Mr. Sridar A Iyengar, Director, retires by rotation and being eligible, offers himself for re-appointment. A brief resume of Mr. Sridar Iyengar is given below:

Mr. Sridar A. Iyengar is a fellow of the Institute of Chartered Accountants, England and Wales. He has over 38 years of experience in corporate finance and accounting. He has previously served as chairman and chief executive officer at KPMG, India operations. He is associated with Bessemer Venture Partners and is an independent director of various companies including Infosys Technologies Limited, ICICI Bank Limited and Rediff.com. He has been appointed as an independent Director by the shareholders of our Company at the AGM held on August 17, 2007. Mr. Sridar Iyengar retires by rotation and being eligible offers himself for re-appointment at the forthcoming AGM to be held on August 01, 2009. Mr. Sridar is on the Board of the following other Companies:

1. Infosys Technologies Limited2. ICICI Bank Limited3. Rediff.com India Limited4. Kovair Software Inc.5. Infosys BPO Limited6. Aver Q Inc7. Rediff Holding Inc.8. Career Launcher India Limited9. Mahindra Holidays & Resorts India Limited

Mr. Sridar Iyengar does not hold any shares in the Company, however, he has been granted 36,000 stock options in total as on April 30, 2009.

The Board considers it in the interest of the Company to appoint Mr. Sridar Iyengar as a Director.

The Board of Directors of your Company recommends this resolution to be passed as an Ordinary Resolution, for your approval.

None of the Directors, except Mr. Sridar Iyengar, is interested or concerned in these Resolutions.

EXPLANATORY STATEMENT UNDER SECTION 173(2) OF THE COMPANIES ACT, 1956

CLARIFICATORY RESOLUTIONS TO Employee Stock Option Plans (ESOP) of the Company – To be passed as separate Special Resolutions:

Items 5, 6, 7 , 8,

Reference is invited to the Employee Stock Option plans ESOP Plan I 2007 and ESOP Plan III 2008 of the Company approved by the Shareholders of the Company on August 17, 2007 and August 01, 2008.

Further, reference is also invited to the Employee Stock Option plans ESOP Plan II 2008 and ESOP Plan IV 2008 of the Company approved by the Shareholders of the Company on August 01, 2008 and October 31, 2008.

114 115114 115

Variation:

It is proposed to amend the ESOP Plan I 2007 and ESOP Plan III, 2008 pursuant to clause 7.4 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock purchase Scheme) Guidelines, 1999 to vary the terms & conditions of ESOP 2007 in terms of changes in the vesting period.

The Company had approved the following vesting schedule for the ESOP Plan I 2007 and ESOP Plan III 2008:

Existing Vesting Schedule: 25% to vest at the end of 1 year and the remaining to vest over a period of next three years at the rate of 1/36th every month.

New Vesting Schedule:

Vesting of Employee Stock Options granted under ESOP Plan I – 2007 and ESOP Plan III 2008 shall occur in tranches as follows or as may be determined by the Compensation committee of the Board from time to time:

Period Vesting Proportion

At the end of one year from the date of Grant 25%

At the end of two years from the date of Grant 25%

At the end of three years from the date of Grant 25%

At the end of four years from the date of Grant 25%

The maximum period of vesting may extend up to 4 years from the date of grant of options under the above plans.

Rationale: The variations are in terms of changing the vesting period from monthly vesting to yearly vesting. The Compensation committee of the Board had along with an external compensation agency reviewed the practices of various companies with respect to the vesting schedule for their stock option grants. Accordingly, as recommended by the Compensation committees of the Board, it was proposed to change the vesting schedule of the future grants to be made under the ESOP Plan I 2007 and ESOP Plan III 2008, as approved by the Compensation Committee This modification in the vesting schedule shall ensure retention of the talented workforce of the Company and would encourage the employees to consider the long term association with the Company. The

new vesting schedule shall not be applicable to the grants already made before the amendment to the vesting schedule, by the shareholders (or) the Board as the case may be.

Beneficiaries: The Employees of the company to whom stock options will be granted after the amendment as per the ESOP Plan I 2007 and ESOP Plan III 2008 will have effect of this amendment. Your Directors recommend the resolution for your approval.

Further, it is proposed to make use of the Employee Stock Option Plan I -2007 and Employee Stock Option Plan III – 2008 to make grants to the employees of the Company’s Subsidiary (ies).

ESOP Plan I 2007: Disclosures as required to be made under Clause 6.2 (h) (i) and (k) of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 that had been delegated by the members of the Company in their meeting held on August 01, 2008 to the Board of Directors, the same have been complied with by the Board in their meeting held on October 31, 2008.

ESOP Plan III 2008: Disclosures as required to be made under Clause 6.2 (e) (h) (j) and (k) of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 that had been delegated by the members of the Company in their meeting held on August 01, 2008 to the Board of Directors, the same have been complied with by the Board in their meeting held on October 31, 2008.

Items 9 and 10

The Company proposes to apply for the in-principal approval for the ESOP Plan II 2008 and ESOP Plan IV 2008. As per the requirements of the stock exchanges, it is required to get the approval of the Shareholders for the Salient features of the ESOP Plans II, and IV 2008 of the Company as per the requirements of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (hereinafter referred to as the “SEBI Guidelines”) (including any statutory modification(s) or re-enactment of the Act or the SEBI Guidelines, for the time being in force), which plans were previously approved by the shareholders.

Salient Features of the aforesaid ESOP plans as implemented by the Compensation Committee:

S No. Particulars ESOP Plan II 2008 ESOP Plan IV 20081. Total number of options granted (as approved

by the shareholders earlier)

100,000 173,953

2. Classes of employees entitled to participate Employees of the Company’s Subsidiary – Telisma SA. Employees of the Company’s Subsidiary – Voxmobili SA.3. Vesting Period and requirements of vesting 100% of the options shall vest at the end of two (2) years

from the date of the Grant as applicable under this Stock

Option Plan.

100% of the options shall vest at the end of one (1) year

from the date of the Grant as applicable under this Stock

Option Plan. 4. Maximum Vesting Period The options granted shall vest so long as the employee

continues to be in the employment of the company.

The options granted shall vest so long as the employee

continues to be in the employment of the company.5. Exercise Price The exercise price of the Options shall be determined by the

Compensation committee of the Board in accordance with

the applicable guidelines from time to time by considering

the fair market value and the trading price of the Company’s

equity shares on the stock exchange(s). The exercise price

shall not be less than the par value.

The exercise price of the Options shall be determined by

the Compensation committee of the Board in accordance

with the applicable guidelines from time to time by

considering the fair market value and the trading price of

the Company’s equity shares on the stock exchange(s). The

exercise price shall not be less than the par value.

116 117116 117

S No. Particulars ESOP Plan II 2008 ESOP Plan IV 20086. Exercise Period and process of exercise The period commencing 24 months after the date on which

the Options are granted in accordance with the relevant

stock option agreement and terminating on such date as

may be specified under the said agreement, within which

period the Optionee shall have the right to Exercise his

Vested Options.

Shall mean the period commencing 12 months after the

date on which the Options are granted in accordance with

the relevant stock option agreement and terminating on

such date as may be specified under the said agreement,

within which period the Optionee shall have the right to

Exercise his Vested Options. 7. Maximum exercise period Provided that in no event shall the Exercise Period exceed

five (5) years from the date the Options become Vested

Options. The Options will be exercisable by the Employees

by a written application to the Compensation Committee

under the Plan.

Provided that in no event shall the Exercise Period exceed

five (5) years from the date the Options become Vested

Options. The Options will be exercisable by the Employees

by a written application to the Compensation Committee

under the Plan.8. Appraisal process for determining the eligibility

of employees

As may be determined by the Compensation committee

based on the appraisal system and functional and managerial

and other performance parameters.

As may be determined by the Compensation committee

based on the appraisal system and functional and

managerial and other performance parameters.9. Method which the Company shall use to value

its options whether fair value or intrinsic value

Intrinsic Value Intrinsic Value

10. Maximum Number of Options to be issued per

employee

As may be determined by the Compensation committee. As may be determined by the Compensation committee.11. Whether grants can be made to Company’s

Subsidiary(ies)

Yes To employees of Voxmobili SA or employees of any

Company with which it is merged.12. Whether the vesting period would continue in

case of transfer of employee from one subsidiary

to another

Yes Yes

In case the Company calculates the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed in the Directors’ Report and also the impact of this difference on profits and on EPS of the Company shall also be disclosed in the Directors’ Report for all the stock options issued by the Company under the ESOP Plan II 2008 and ESOP Plan IV 2008.

The Company shall conform to all the accounting policies specified and applicable as per the SEBI Guidelines for the issue of stock options under the ESOP Plan II 2008 and ESOP Plan IV 2008.

The Directors of the Company or its subsidiary are deemed to be concerned or interested in the resolution only to the extent of their eligibility, if any, in the ESOP Plans.

The Board of Directors of your Company recommends this resolution to be passed as a Special Resolution, for your approval.

Item 11

Subsequent to the public issue of the Company, the statutory registers of the Company are being maintained electronically at both places i.e. at the office of the Companies share transfer and registrar agent (M/s Karvy Computer Share Private Limited) and an electronic back up of the same at the Company’s registered office. However, considering the fact that the Companies Act, 1956 read with the securities contract regulations allows the Company to maintain the statutory registers in the electronic format at a place other than the registered office of the Company, it is hereby proposed to seek the approval of the members for keeping the register of members at a place of the registrar and share transfer agent of the Company (M/s Karvy Computer Share Private Limited).

None of the directors are interested in the said resolution

The Board of Directors of your Company recommends this resolution to be passed as a Special Resolution, for your approval.

Item 12

The Company as a part of its global business expansion programme is intended to set up business unit / branch in Srilanka and has applied for opening of a branch office in Srilanka. The Srilankan government (Registrar of Companies of Srilanka) has required the Company to produce a resolution of the shareholders of the Company for undertaking business in that country and the resolution is required to state specifically the business to be undertaken by the Company and also that the company shall not engage in any retail trade or export or import or investment in Srilanka.

Accordingly, the resolution seeks such approval of the shareholders for the purpose of setting up business/branch office in Srilanka

The Board recommends this resolution for your approval.

None of the directors are interested or concerned in the resolution.

Item 13

The Company had, during the first quarter of financial year 2008-2009 i.e. on May 13, 2008, signed a Share Purchase Agreement(s) (“SPA”) with Telisma S A and its shareholders to acquire 100% of Telisma S A, France, a leading provider of speech recognition software for Service Providers and Enterprises in the telecom sector. Telisma S A (Telisma) is a Company that is based out of France. Telisma S.A. is specialized in the supply of advice and services in the communication, telematic, and interactive services fields and provides a wide range of software services, in particular voice

116 117116 117

recognition software services, for telecom companies. Further, Telisma has its software solutions focused for major mobile and landline operators. Telisma has its commercial activities in France.

Further, the Board of Directors had approved the acquisition of Telisma for a maximum consideration of € 12,664,270.89 (Euros Twelve Millions Six Hundred Sixty Four Thousand Two Hundred and Seventy Point Eighty Nine), equivalent to INR 843,721,841.37 (rupees eighty four crores thirty seven lakhs twenty one thousand eight hundred and forty one and thirty seven paise only) consisting of € 11,664,270.89 (Euros Eleven Millions Six Hundred Sixty Four Thousand Two Hundred and Seventy Point Eighty Nine) equivalent to INR 777,099,621.37 (seventy seven crore seventy lakhs ninety nine thousand six hundred and twenty one and thirty seven paise only) to be paid in cash and € 1,000,000 (Euros One Million) equivalent to INR 66,622,220 (Rupees six crores sixty six lakhs and twenty two thousand two hundred and twenty only) to be paid as an earn out adjustment of Equity shares of OnMobile Global Limited based on the financial performance of Telisma for the financial year ended December 31, 2008 as per the terms of the SPA and all other such related agreements placed before the Board.

Accordingly, as per the terms of the SPA and based on the performance of Telisma the Board on June 19, 2009 approved the issue of 76,506 Equity Shares of OnMobile Global Limited of face value Rs. 10 each representing € 500,000 (Euros five hundred thousand) equivalent to INR 3,33,10,000 (three crores thirty three lakhs ten thousand only) to Laurent Balaine, Eric Le Flour, Frédéric Soufflet, founders of Telisma and some of its employees, from the unissued share capital of the Company at a price to be determined in accordance with the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, Chapter XIII (hereinafter “SEBI (DIP) Guidelines”) which is Rs. 435.39/- per share at a premium of Rs. 425.39/- per share in satisfaction of the part consideration payable to them under the SPA and related agreements.

The Price is arrived at after considering the two below:

Higher of the below two is considered:Aggregate of average of weekly high and low of the closing prices of the shares quoted on the stock exchange having the highest trading volume during the six months preceding the ‘relevant date’, July 2, 2009 (From January 1, 2009 to July 1, 2009)

(a) 7,996.40

No. of trading weeks from January 1, 2009 to July 1, 2009

(b) 26

Average of average of weekly high and low (a)/(b) 307.55

Aggregate of the weekly high and low of the closing prices of the shares of the company during the two weeks preceding the ‘relevant date’, July 2, 2009 (From June 18, 2009 to July 1, 2009)

(a) 870.78

No. of trading weeks from June 18, 2009 to July 1, 2009

(b) 2

Average of average of weekly high and low (a)/(b) 435.39

The Company has obtained necessary approval of the Foreign Investment and Promotion Board (FIPB) Govt. of India for investment in Telisma S A.

In terms of provisions of Section 81(1A) of Companies Act, 1956 and SEBI (DIP) Guidelines the resolution seeks the consent of the shareholders in general meeting for issue and allotment of shares.

The disclosures pursuant to the SEBI (DIP) Guidelines relating to preferential issue are furnished below-

A) Objects of the Preferential Issue:

To satisfy the part consideration payable, in terms of Share Purchase Agreement(s) (“SPA”) with Telisma S A and its shareholders to acquire 100% of Telisma S A, France

B) Intention of the promoters/directors/key management persons to subscribe the offer.

No promoter/director/key management person shall subscribe to the offer except for the founders of Telisma and certain employees of Telisma.

C) The Shareholding pattern of the Company before and after the aforesaid preferential allotment stands is given below:

Category Pre Issue Post Issue

No. Of Equity shares

% of Pre Issue Capital

No. Of Equity shares

% of Post Issue Capital

a) Promotersi. Foreign 25,403,867 43.86 25,403,867 43.81ii. Indian 7,519,950 12.98 7,519,950 12.97Total (a) 32,923,817 56.85 32,923,817 56.77

b) Non promotersi. MFs/FIIs/

FIs12,097,518 20.89 12,097,518 20.86

ii. Bodies Corporate

3,096,461 5.35 3,096,461 5.34

iii. NRI/OCBs 2,978,136 5.14 2,978,136 5.14iv. Indian

Public6,818,715 11.77 6,818,715 11.76

Total (b) 24,990,830 43.15 24,990,830 43.09c) Proposed

InvestorsNil Nil 76,506 0.13

Grand Total (a+b+c)

57,914,647 100 57,991,153 100

D) Proposed time within which the allotment will be complete and the identity of the proposed allottees

Allotment pursuant to the resolution passed at this meeting of the shareholders of the Company shall be completed within 15 days from the date of this resolution. If the allotment is not completed within 15 days from the date of this resolution a fresh consent of the shareholder shall be obtained with the revised relevant date applicable.

E) The identity of the proposed allottee(s) and % of post preferential issue capital that may be held by them:

Name of the proposed allottee(s) Pre-Issue Post IssueNo. of Equity Shares

% of Pre-Issue Capital

No. of Equity Shares

% of Post-Issue

Capital1. Founders of Telisma S A NIL NIL 48,964 0.082. Employees of Telisma S A NIL NIL 27,542 0.05TOTAL NIL NIL 76,506 0.13

(details of all employees shall be available at the registered office and at the

venue of the AGM)

118 119118 119

Issue Price:

The issue price of share has been determined in accordance with the provisions of Chapter XIII of SEBI (Disclosure and Investor Protection) Guidelines, 2000 based on the relevant date – July 02, 2009

Lock In:

The shares issued under this preferential issue shall be locked in for a period of 1 year from the date of their allotment.

Consequential changes, if any, in the Board of Directors / control of the Company/voting rights:

There will not be any change in the control of the Company as the existing promoters will continue to hold majority voting rights and on the Board. There will not be any change on the Board. The change in the voting right of the existing promoters will also not be significant.

Auditors Certificate:

The Company has secured the certificate of compliance as required under the SEBI (DIP) Guidelines from the Statutory Auditors and will be placed before the shareholders at the meeting. A copy of the same is also available at the Company’s website www.onmobile.com.

The resolution seeks the approval of the members pursuant to Sec 81(1A)

of the Act to the proposed preferential issue.

The Directors recommend the resolution for approval of the members.

A copy of the Share Purchase Agreement dated May 13, 2009 entered into

with Telisma S A is available for inspection at the registered office of the

company during the working hours until the date of the meeting.

None of the directors is concerned or interested in the resolution.

Registered office: By Order of the Board of Directors

No. 26, Bannerghatta Road, For OnMobile Global Limited

JP Nagar, 3rd Phase, Sd/-

Bangalore – 560 076, Srikiran D

India. Company Secretary

Date: July 2, 2009

Place: Bangalore

118 119118 119


Registered Office: No. 26, Bannerghatta Road, JP Nagar Phase III, Bangalore – 560076, India

Proxy Form

Ninth Annual General Meeting – August 01, 2009

Regd. Folio No./DP Client ID

I/We………………………………. of ……………… being a member of OnMobile Global Limited hereby appoint ………………………… of ……………….. or failing him/her……………………… of ……………………………. as my/our proxy to vote for me/us on my/our behalf at the Ninth ANNUAL GENERAL MEETING of the Company to be held at Hotel Royal Orchid, Adjoining KGA Golf course, Airport Road, Bangalore – 560 008, India, at 10.30 AM IST on Saturday the August 01, 2009 and at any adjournment(s) thereof.

Signed this............... day of .................... 2009

...........................................

Signature of the member

Note: This form, in order to be effective, should be stamped, signed and deposited at the Registered office of the company, not less than 48 hours before the meeting.

……………………………………........………………please tear here………………………………………………………………………


Registered Office: No. 26, Bannerghatta Road, JP Nagar Phase III, Bangalore – 560076, India

Attendance Slip

Ninth Annual General Meeting – August 01, 2009

Regd. Folio No./DP Client ID

No. of shares held

I/we hereby record my/our presence at the Ninth Annual General Meeting held at Hotel Royal Orchid, Golf Avenue, Adjoining KGA Golf course, Airport Road, Bangalore – 560 008, India at 10.30 AM on Saturday the August 01, 2009.

……………………………… ….…………………………..

Name of the member/proxy Signature of the member/proxy

(in BLOCK letters)

Affix 0.15 Paise

revenue stamp

Copy of on Mobile Annual Report 2009

Documents

Transcript of Copy of on Mobile Annual Report 2009