onmobile global limited

OnMobile Global Limited# 26, Bannerghatta Road,

J. P. Nagar 3 Phase,Bangalore - 560 076, India.Phone : +91 80 41802500

Fax : +91 80 41802810Email : [email protected]: www.onmobile.com

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OnMobile Global Limited • Annual Report 2007 - 08

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44 Management Discussion &Analysis

49 Report of the Auditors

52 Financial Statements

74 Balance Sheet Abstract

75 Report of the Auditors on Consolidated Financial Statements

76 Consolidated Financial Statements

95 Statement Regarding Subsidiary Companies

96 Notice

01 Not Just Hello...

08 Message from the Chairman

10 Company Snapshot

12 Financial Snapshot

14The MVAS Ecosystem

15 Board of Directors

16 Corporate Information

17 Our LeadershipTeam

19 CEO and CFO Certificate

20 Report on Corporate Governance and Shareholder Information

33 Directors’ Report

Contents

The mobile is an integral part of our lives today. The

mobile is the only computer most people will ever have,

which allows you to talk, interact, engage in commerce

and do much more. At OnMobile, we enrich, empower

and enhance your life through this mobile interactivity, by

enabling you to use the mobile beyond just talk - Not just

hello...

Enriching lives by making technology really simple to use -

choose the ringtone that identifies you, from over millions

of songs or get ball-by-ball multi-media updates of your

favourite cricket matches.

Empowering lives by ensuring that you are in control -

buy movie tickets, vote for your favourite contestant on a

TV program, get the best shopping deals or get the best

prices for your commodity.

Enhancing lives through innovations, be it caller ringback

tones, searching for and listening to your favourite songs

on demand or safely backing up your precious pictures on

the network.

Such has been the power of this idea that the business

size has become over $ 2 billion dollars, in India, in less

than 8 years.

And this is just the beginning. We are just beginning to

know you. As billions of people are starting to use the

mobile, the opportunities to empower, enrich and

enhance are limitless. As we begin to offer our services in

more and more countries across the world, more lives

will be touched in more ways than one.

Welcome to the business of touching lives, touchingyou.

Last ball, Rajasthan Royals need one run to win.

Will Balaji get him? Dhoni has everyone

up! Oh this is so exciting…Balaji comes,

Sohail swings, and hard and….Rajasthan

Royals are the IPL 20-20 champions! This

is sensational stuff! This is awesome!

2

3

Now consider this update on your phone.'Rajasthan Royals won the IPL 20-20 on the last ball. ' How boring!

Ask any cricket enthusiast about the delight of listening to cricket commentary when on the move. You cannot replace

it. And now you can hear this on your mobile. Because your mobile is not just to make calls. The youth today are using

it to date and to chat. Others turn to the mobile for songs, news alerts, cricket updates and more.

And leading this revolution of bringing life to your lives is OnMobile. Ring tone and caller ringback tones are a way of life

now. But that's not all. By combining SMS, IVR with speech recognition andWAP technologies, ensuring multilingual

support and offering services over GSM as well as CDMA, OnMobile ensures a rich and delightful user experience,

making services more relevant and easy to use.

Over a million songs are searched and accessed every day, across the globe. In Trichy, call and you will be greeted in

Tamil. You can also download songs, hear horoscopes, get updates on matches, weather and news in Tamil. Local

language. Local flavour. On your mobile. In Malay in Malaysia, in Mandarin in Singapore.

What began as a fun activity has now become a habit.

OnMobile is enriching millions of lives each moment, every moment.

awesomewin

LastRoyals

ball

tohmujhejitanekeliye,SMS…

aurbhejiye505262601par

Agaraapkomeraganapasandaaya

yaphirphone kijiye 505464601.

4

5

And the winner is ..!You picked your choice. You decided the winner. It's the power of you. This is true

empowerment.

Reality shows rule the roost today in the entertainment world. And mobile phones have become

tools of empowerment. Some of the biggest shows on Indian television - KBC, Indian Idol, Fame

Gurukul, Kya Aap Panchvi Paas Se Tez Hain, Dus Ka Dum and many, many more - are successful

because of you, and because of the mobile. Imagine any of these without the power to vote or

participate!

And this empowerment is not restricted to reality shows. By leveraging Voice, DTMF, WAP and

SMS interaction modes, OnMobile has reinvented the way M-Commerce transactions are done.

A farmer gets prices from the mandi directly on his mobile. A moviegoer finds the availability of

tickets and books them from his phone. Paying utility bills. Booking airline and railway tickets.The

mobile revolution is on. Shopping, commerce, matrimonial services.

On mobile, thanks to OnMobile.

Empowering you.

votekijiye dial

karen

sms

You're beautiful. You're beautiful.

You're beautiful. It's true.

('You're beautiful' by James Blunt)

6

7

TringTring is passé.These days, people call and hope that the other person does not answer. That's because when you call

now, there is lovely music playing or a score update informing you about the latest India-Australia

ODI, instead of the classic tring, tring.

OnMobile's innovations have taken the mobile to another league all together. M-Search is one such

innovation. Search for Jodhaa Akbar. Search for Madonna's Hard Candy. And it's intelligent searching.

You don't need to enter Mission Impossible (MI). MI will get you the result equally efficiently. You

make a spelling mistake and we will ignore it. To facilitate a voice search, we have in-built voice

modulation and filters to recognize different accents and tones and by-pass pronunciation errors. And

you can search across platforms, SMS, Voice orWAP. Across 10 languages. And more.

Our Phone Backup facility allows you to safely copy and store in the network all your personal data

including pictures, contacts, messages and applications stored in the phone.

Apart from having a portal and customer care interface, Phone Backup allows for automatic backup

and can be upgraded with new formats.

OnMobile is enhancing your lives in many such ways.

Expect more from us.

You'rebeautiful

byBlunt

James

This is our first annual report as a listed company,

and we welcome our entire base of shareholders,

new investors and stakeholders to the exciting

world of Mobile Value Added Services (MVAS).This

sunrise industry has emerged from a small fledgling

sector back in 2001 when OnMobile started

operations in India, to an industry which is estimated

to exceed Rs. 8,000 crores in 08-09! This is as

exciting as the start of the internet saga in the late

90s, when global companies such as Yahoo, Amazon,

eBay emerged and changed the way in which

consumers worldwide interacted with, and

leveraged the capabilities of the internet.

8

To all OnMobile stakeholders and loyal investors,

M e s s a g e f r o m t h e C h a i r m a n

9

We fully intend to play a similar role

in shaping and leading the MVAS

industry as it gains momentum with

customers in India, and in new

consumer markets around the

globe. The mobile phone is fast

becoming the interactive channel of

choice for billions of consumers

worldwide. Our mission is to

innovate and launch new services

which allow consumers to change

the way they live and interact, via

mobile phones.

Our recent IPO in February 2008

sailed through despite most

challenging market conditions, and

has provided us a strong platform

with which we will expand in and

outside India, organically and

inorganically. We are actively

pursuing both these growth

avenues. The entrepreneurial

OnMobile team which has taken us

from startup to its current position

is largely intact after all these years,

and has been expanded and

strengthened to capitalize on our

industry leadership position. Our

product and engineering teams are

hard at work developing new

products and services which will be

launched this year, and we intend to

maintain our past innovation track

record and customer satisfaction

experiences. Our customer account

teams are scaled up and in place,

working closely with customers

daily on high scale operations and

planning the future to maintain the

growth potential of this industry.

In the past 12 months, we have

acquired two French companies,

which give us access to cutting edge

MVAS products and new data

services platform technology. We

are excited about leveraging our

Indian cost structure and software

skills to build out the full global

potential of these acquisitions.

Our zeal to excel in product

innovation, customer thought

leadership, intelligent M&A and

financial performance remains intact

after all these years.OurVision 2010

program, to become one of the

leaders in the global MVAS industry

is under implementation.

On behalf of all the shareholders, I

would like to thank the entire

OnMobile team and customers,

partners, suppliers for their

unflinching support over these

years.

The future trajectory we are

planning is challenging and exciting,

and I wish every one of you joins us

in this journey together!

Arvind Rao

Chairman, CEO & co-founder

10

C o m p a n y S n a p s h o t

The CompanyIncorporated in the year 2000, OnMobile Global

Limited (Company) is a leading provider of Mobile

Value Added Services and products (MVAS) in India

with an expanding international presence. The

Company's products are targeted at mobile

subscribers with an increasing focus on capitalising

on the convergence between wireless and wireline

telecommunications services, media, internet, mobile

marketing and mobile commerce.

Product PortfolioThe Company has a broad range of applications that

are delivered by its customers, who are telecom

operators and media companies, to their end-user

subscribers, which enable them to personalise their

mobile phones and thereby enhance user experience.

Key ProductsThe key products can be broadly categorised as

follows:

• Network based in-call solutions like CallerRingback Tones, Dynamic Voicemail and Missed Call

Alert Service, etc.

• Voice-based multi-modal portal which allowssubscribers to access informational and

entertainment content such as music, sports updates,

news, stock and commodity price updates, in multiple

languages using speech-based navigation.

• On-device client software applications.

• Interactive media solutions such as tele-voting,interactive programming, mobile auditioning and

auctions.

• Mobile commerce solutions like ticketing (movieand railway ticketing), utility payments and mobile

marketing services.

• Core business support solutions such as PhoneBackup and Pre-paid and Post-paid bill payments.

The Company deploys these applications on its multi-

modal platform, MMP 2500. This platform is a

carrier-grade system that effectively integrates

multiple delivery modes and payments and

subscription options for 2, 2.5 and 3G networks and

handsets.

PresenceThe Company is headquartered in Bangalore and has

offices in Mumbai and Delhi in India. It also maintains

offices in Dhaka, Jakarta, Kuala Lumpur, London, Paris,

Singapore and Sydney.

The Company's customers include major

telecommunications operators in India and in several

overseas countries. In addition to

telecommunications operators, the Company also

markets its products and services to media

companies, corporates, mobile handset

manufacturers, content owners and advertisers.

Some of the key performance indicators of the

Company are as follows:

11

Milestones in InnovationThe Company has a track record of

creating, developing and successfully

launching a large number of innovative

software products.

2000-2003: Platform -Voice Portal 1.0(English), Ring Tones, Infotainment

2004: Indian Languages Model(3 languages), Ringback Tones ('RBT')

2005: Support for more languages, LiveAudio Streaming,Ticketing

(Railways, Movies)

2006: Pricing innovations: Subscription,Not Enough Funds; Multimodal Support

including SMS,WAP, Multi-languageWAP

2007-2008: M-Search (Voice & SMS),M-Radio, RBT: Press * to copy, Mobile

Investor

Awards and Achievements• Best VAS Partner Award 2007 byAirtel, India

• "V&D 100, Best MVAS Company2007, India" byVoice & Data

• Amongst Deloitte Technology Fast 50India, 2007

• Amongst Deloitte Technology Fast500 Asia Pacific, 2007

• Amongst 100 IT Innovators 2007 byNASSCOM, India

Financial Performance(consolidated)During 2007-08, the Company recorded

a net revenue of Rs. 2,618.16 million, an

increase of 97% over the previous year.

The earnings after tax of the Company

increased from Rs. 337.20 million in

2006-07 to Rs. 603.10 million in 2007-

08, an increase of 79%.The diluted

Earnings Per Share (EPS) increased from

Rs. 7 per share to Rs. 12, an increase of

71%.

Operator ARPU Uplift 8-12 %

Market Reach 390 million, including more than 100 million

in international markets

Total unique users 206 million

Unique users / month 36 million

Calls handled / month 5 billion

RBT users / month 27 million

Phone Backup downloads 22 million

On-Device Portal downloads 4 million

Content usageVia M-Search 200% increase

F i n a n c i a l S n a p s h o t

2003-04* 2004-05 2005-06 2006-07 2007-08

Financial Performance

Net Revenue 172.64 409.46 826.17 1,329.72 2,618.16

Earnings before other income,

depreciation, finance charges and tax 69.63 264.37 471.31 609.90 1,048.36

Earnings after Tax 43.08 140.06 247.79 337.20 603.10

Earnings per share (Diluted) (In Rs.)** 1 5 7 7 12

Financial Position

Equity Share Capital 22.87 22.90 22.92 36.54 574.06

Reserves and Surplus 34.97 175.20 422.98 1,990.24 5,535.48

Networth 57.84 198.09 445.91 2,026.78 6,110.96

Gross Block 115.44 181.34 356.01 580.65 1,335.21

Net Block 102.33 123.45 213.01 292.20 795.34

Capital Expenditure 104.68 70.95 169.62 263.61 836.11

Investments 5.08 10.14 26.07 1,018.15 3,193.70

Net Current Assets (41.51) 70.76 230.20 512.47 958.49

Cash and Cash Equivalents 29.25 41.68 41.68 211.61 1,458.84

Total Assets 57.84 198.09 445.91 2,026.78 6,110.96

* 15 months ending March 2004

* * Adjusted for bonus issues in previous years

12

Particulars (Rs. in million)

06-07 07-08

06-07 07-08

337.20

06-07 07-08

1,329.72

603.10

650

600

550

500

450

400

OnMobile (lhs) BSE Sensex (rhs)

19-02-08

07-03-08

31-03-08

16000

18000

20000

Earnings After Tax (Rs. in million)

Stock Prices

Earnings Per Share (Diluted) (In Rs.)Net Revenue (Rs. in million)

14000

79%

97%

71%

13

7

12

2,618.16

14

T h e M VA S E c o s y s t e m

OnMobile'sFocusSpace

Mobile Value Added Services (MVAS) consists of all services beyond basic phone calls. Some common examples of MVAS include ring tones,

ringback tones, news alerts, stock updates, contests, phone backup, televoting, mobile social networking, mobile advertising,

M-Commerce movie ticketing, bill payment and pre-paid recharge. Typical ecosystem includes:

Develop and own

content e.g. music,

games, wallpapers etc.

Collect and package different

kinds of content suitable for

mobile platforms like caller

ringback tones, wallpapers,

ring tones, news, etc.

Develop and install

applications that allow easy

access to the content and

content - free applications,

for the end users.

Own the delivery

platform and applications.

Provide last mile access -

allowing the end user to

download, listen or view

the content on his phone.

Bill the customer and pay the

Content Owner,Aggregator,

Application Service Provider

and Platform Provider.

ContentOwners

ContentAggregators

ApplicationServiceProviders

PlatformProviders

MobileOperators

15

B o a r d o f D i r e c t o r s

Sridar A Iyengar

Independent Director2Chandramouli Janakiraman

Executive Director1

Prof. Jayanth RamaVarma

Independent Director5 Vikram Kirloskar

Independent Director6

H H Haight

Non-Executive Director3 Arvind Rao

Chairman & Managing Director4

Naresh Malhotra

Independent Director7

76

54

3

2

1

16

Board of Directors

Chairman & Managing Director

Arvind Rao

Executive Director

Chandramouli Janakiraman

Non-Executive Director

Henry Huntly Haight

Independent Directors

Jayanth RamaVarma

Sridar A Iyengar

Vikram Kirloskar

Naresh Malhotra

Board Committees

Audit Committee

Jayanth RamaVarma Chairman

Naresh Malhotra Member

Henry Huntly Haight Member

Investor Grievances Committee

Vikram Kirloskar Chairman

Naresh Malhotra Member

Chandramouli Janakiraman Member

Compensation Committee

Sridar A Iyengar Chairman

Vikram Kirloskar Member

Henry Huntly Haight Member

Company Secretary

D Srikiran

Auditors

Deloitte Haskins and Sells

Chartered Accountants,

Deloitte Centre, Anchorage II,

100/2 Richmond Road,

Bangalore - 560025

Registered Office

No. 26, Bannerghatta Road,

J. P. Nagar 3 Phase,

Bangalore - 560076

www.onmobile.com

Bankers

The ICICI Bank Limited

ICICI Towers, 1 Floor,WestWing

#1, Commissariat Road,

Bangalore - 560025

Kotak Mahindra Bank Limited

2 Floor,WestWing,

26 - 27 Raheja Towers,

M. G. Road,

Bangalore - 560001

Citibank N.A.

M. G. Road,

Bangalore - 560001

C o r p o r a t e I n f o r m a t i o n

rd

st

nd

17

OnMobile Leadership Team

In addition to the Company’s whole-time directors, Arvind Rao and Chandramouli Janakiraman, following are also part of the leadership team:

Kiran AnandampillaiHead-Consumer Products. He carries overall responsibility of defi ning and delivering products such as music, infotainment, sports and contests. He has over 14 years of experience in software and telecommunication industries. He received Bachelor of Engineering degree from BMSCE, Bangalore in Telecommunications.

Pratapa BernardHead-Marketing. He carries the overall responsibility for defi ning and executing Corporate and Product Marketing functions. He has over 17 years of experience in the IT and Telecommunications industry. He received a Bachelor of Engineering degree from Bangalore University and also holds a Post Graduate Diploma in Marketing Management.

Sanjay BhambriCo-Head, International Business Development. He is currently in charge of customers in Asia Pacifi c, Far East, Middle East and Africa. He has over 13 years of experience in Sales and Marketing. He received his Bachelor of Science degree in Computer Science from Kurukshetra University, Kurukshetra and Masters of Business Management, MS University of Baroda, Vadodara.

Amit Kumar DeyCo-Head of International Business Development & Alliances. Amit played a key role in establishing our business in India, and is currently in charge of Sales and Business Development in markets west of India including the Americas and Europe. He is also handling strategic alliances with large global distributors and resellers for our products and services. He has over 17 years of experience in the manufacturing and telecommunications industry. He holds a Bachelor of Engineering degree from Jadavpur University, Calcutta, and a Post Graduate Diploma in Business Administration from the Indian Institute of Management, Calcutta.

Nicolas FrattaroliExecutive director of the Company’s Subsidiary, Vox mobili S.A. He carries the overall responsibility for the portfolio of products mainly in Europe, the Middle East, Africa and the Americas. He has over 15 years of experience in the telecommunications industry. He received a Masters of Science degree from the National Institute of Telecommunications.

Sandeep GangulyHead-Private Operators (India). He carries the overall responsibility for handling the private telecom operator market in India. He has over 12 years of experience in telecommunications industry. He received a Bachelor of Engineering degree in Electronics and Communication from Pune University and a Post Graduate Diploma in Business Administration in Marketing from the Indian Institute of Management, Calcutta.

Christy GeorgeHead-Network/In-Call Products. He carries overall responsibility of defi ning and delivering Network/In-call products such as ringback tones, missed call alerts, dynamic voice mail system etc. He has over 15 years of experience in software and telecommunication industries. He received Bachelor of Technology degree from IIT, Mumbai.

Sandhya GuptaHead-Mergers and Acquisitions, Investments and Strategy. She carries the overall responsibility for mergers and acquisitions and strategic investments for the Company including international acquisitions, minority investments and equity related partnerships and joint ventures. She has over 10 years of experience in fi nancial services and capital markets industry. She received a Bachelors of Arts degree from the University of Rajasthan and a Master of Business Administration degree from the University of Mumbai.

Krishna JhaHead-Mobile Data Products and services. He carries the overall responsibility of managing the Mobile Data Products and services unit of the Company. He has over 10 years of experience in software and telecommunication industries. He received a Bachelor of Commerce degree from St. Xavier’s Calcutta and he also holds a Post Graduate Diploma in Business Administration from IBS, Hyderabad.

Rajesh MoortiChief Financial Offi cer. He carries the overall responsibility for the fi nance, legal, secretarial and administration functions of the Company. He has over 17 years of experience in consumer durables and non-durables industry. He received a Bachelor of Commerce degree from Bangalore University and qualifi ed as a Chartered Accountant from The Institute of Chartered Accountants of India and qualifi ed as a Cost Accountant from The Institute of Cost and Works Accountants of India.

18

Rajesh M.VHead-Media Business. He carries the overall responsibility for working with media houses in India and driving media-based, telecom value-added services which generate new revenue streams for media clients from the mobile sector. He has over 13 years of experience in the media and advertising industry. He received a Bachelor of Science degree and a Master of Science degree in Mathematics from Sathya Sai Institute of Higher Learning, Andhra Pradesh.

Sidharth SharmaHead-Public Sector Operators (India). He carries the overall responsibility for serving the mobile value added services needs of telecom operators in the public sector. He has over 8 years of experience in IT and telecommunications industry. He received a Bachelor of Engineering degree from Maharishi Dayanand University, Rohtak.

Debraj TripathyHead-Mobile Marketing. He carries the overall responsibility for Mobile Marketing including m-advertising. He has over 13 years of experience in the media and advertising industry. He received his Bachelor of Engineering degree in Electronics and Telecommunications from Sambalpur University, Orissa and Post Graduate Diploma in Business Administration from Indian Institute of Management, Calcutta.

Raghavendra VarmaHead-Technology Platform. He carries overall responsibility of defi ning and delivering the MMP2500 platform, on which the Company’s products are built. He has over 15 years of experience in software and telecommunication industries. He received Bachelor of Technology degree in Information Technology from Banaras Hindu University, Varanasi.

19

CEO and CFO Certifi cation

We, Arvind Rao, Chief Executive Offi cer and Managing Director, and Rajesh Moorti, Chief Financial Offi cer of OnMobile Global Limited, to the best of our knowledge and belief, certify that:

1. We have reviewed the balance sheet and profi t and loss account (consolidated and unconsolidated), and all its schedules and notes on accounts, as well as the cash fl ow 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 fi nancial statements, and other fi nancial information included in this report, present in all material respects, a true and fair view of the Company’s affairs, the fi nancial condition, results of operations and cash fl ows 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 fi nancial reporting. Defi ciencies 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 defi ciencies.

6. We have indicated to the auditors and the Audit Committee:

i. Signifi cant changes in the internal control over fi nancial reporting during the year;

ii. Signifi cant changes in the accounting policies during the year and that the same has been disclosed in the notes to the fi nancial statements; and

iii. Instances of signifi cant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a signifi cant role in the Company’s internal control system over fi nancial reporting.

7. In the event of any materially signifi cant misstatements or omissions, we will return to the Company that part of any bonus or incentive or equity based compensation, which was infl ated on account of such errors, as decided by the audit committee;

8. We affi rm 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 affi rmed compliance with the code of conduct for the current year.

Arvind Rao Rajesh MoortiCEO CFO

Date: April 30, 2008Place: Bangalore

20

PHILOSOPHYIt is the intention of the Company to be an acclaimed leader in the practice of Corporate Governance. The Company strives to ensure that the best practices of Corporate Governance and disclosure requirements are complied with, while ensuring that creation of wealth for shareholders and protection of interests of stakeholders, clients, suppliers and employees are adhered to with the highest level of integrity, fairness, accountability and transparency.

BOARD OF DIRECTORSThe OnMobile Board consists of executive and non-executive directors. The non-executive directors consist of eminent professionals from business, fi nance and reputed institutions. The Company does not have any nominee director. As per the articles of association of the Company, the Board can have a maximum of 12 members. Currently the Board has 7 directors, of which the Chairman of the Board is an executive director.

Name of the director Positions Category India ListedCompanies*

All Companies around the world##

CommitteeMemberships###

Chairpersonsof Committees###

Arvind Rao Chairman and Managing Director Executive – Promoter NIL 9 NIL NIL

Chandramouli Janakiraman Director Executive – Promoter NIL 6 1 NIL

H H Haight IV Director Non-Executive NIL 13 1 NIL

Sridar A Iyengar Director Independent 2 9 5 3

Naresh K Malhotra Director Independent 2 11 6 2

Jayanth R Varma Director Independent 1 3 2 2

Vikram S Kirloskar Director Independent 3 12 7 3

* Excluding directorships in OnMobile Global Limited and its subsidiaries## Directorships in all companies around the world (listed & unlisted) including OnMobile Global Limited and its subsidiaries### Includes memberships/chairmanships of audit committees and investor grievance committees in public companies (Listed and Unlisted)

Corporate Governance

MEETINGS AND ATTENDANCEStrategic 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 operation related issues, profi tability, and productivity issues for 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, 2008, the Board met fi ve times on April 20, 2007, July 12, 2007, October 12, 2007, February 9, 2008 and February 28, 2008. 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.

The details of the Board of Directors are as below:

Mr. Arvind RaoGraduated 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 the Company, he was with Schlumberger Wireline Services in Thailand, China and Malaysia, McKinsey & Company in New York and India, the Chatterjee Group in New York and India and Gilbert Global Equity Partners in New York. He has over two decades of experience in fi nancial services, IT and the telecom industry. He was appointed as Managing Director by the Board at their meeting held on July 24, 2006 for a period of fi ve years. Mr. Rao is on the Board of the following other Companies:

1. RiffMobile Private Limited2. Mobile Traffi k Private Limited

21

3. Cellphone Entertainment (Mumbai) Private Limited4. OnMobile Systems, Inc.5. OnMobile Singapore Pte Limited6. Vox mobili SA7. Vox mobili Inc8. Phonetize Solutions Private Limited

Mr. Chandramouli JanakiramanGraduated with a Bachelor of Technology degree from the National Institute of Technology, Allahabad. He has over 19 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. 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 Limited2. OnMobile Singapore Pte Limited3. OnMobile Australia Pty. Ltd.4. PT OnMobile Indonesia

5. Phonetize Solutions Private Limited

Mr. H.H. Haight IVGraduated 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 Offi cer in Argo Global Capital, LLC. He has been appointed as a non-executive Director by the shareholders of the Company at the AGM held on August 17, 2007. Mr. Haight is on the Board of the following other Companies:

1. OnMobile Systems, Inc.2. Genelabs Technology Inc.3. Maxager Technology Inc.4. Argo Global Capital, Inc.5. Argo Holding, LP.6. Argo Global Capital Corp.7. Telecom Investment Inc.8. Neural Technologies, Inc9. NT310. Chinatron Group Holdings Limited

11. Argnor Wireless Ventures B.V.12. SP Industries Inc.

Prof. Jayanth R VarmaGraduated with a Bachelor of Commerce degree from Bangalore University. He did his post-graduation in management from the Indian Institute of Management, Ahmedabad. He also obtained the Fellow of the Institute of Management, Ahmedabad and is also a qualifi ed cost accountant from Institute of Cost and Works Accountants of India. He has over 20 years of teaching, research and consulting experience in the fi eld of fi nance. 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 the Company at the AGM held on August 17, 2007. Prof. Varma is on the Board of the following other Companies:

1. Infosys BPO Limited (formerly Progeon Limited)

2. Axis Bank Limited (formerly UTI Bank Limited)

Mr. Naresh K. MalhotraGraduated with a Bachelor of Commerce degree from St. Xavier’s College, Calcutta University. He qualifi ed as a Chartered Accountant in 1970. He has over 35 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 fi nance in KPMG in India. He is also an advisor to GIV Management Inc., a Washington based Venture Capital Company. He has been appointed as an independent director by the shareholders of the Company at the AGM held on August 17, 2007. Mr. Malhotra is on the Board of the following other Companies:

1. N.M Properties & Consulting Private Limited2. Bluestar Infotech Limited3. Amalgamated Bean Coffee Trading Co. Private Limited4. Venture Infotek Global Private Limited5. Tarang Software Technologies Private Limited6. Balan Natural Foods Private Limited7. Royal Orchid Hotels Limited8. Printo Documents Services Private Limited9. A B Holdings Private Limited

22

10. Venture Infotek Inc.

Mr. Vikram S. KirloskarGraduated with a Bachelor of Engineering (Mechanical) from the Massachusetts Institute of Technology, Cambridge, USA. He has over 24 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 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 has been appointed as an independent director by the shareholders of the Company at the AGM held on August 17, 2007. Mr. Kirloskar is on the Board of the following other Companies:

1. Kirloskar Systems Limited2. Kirloskar Brothers Limited3. Kirloskar Oil Engines Limited4. Kirloskar Pneumatic Company Limited5. Kirloskar Theratronics Private Limited6. Kirloskar Toyoda Textile Machinery Private Limited7. Toyota Kirloskar Auto Parts Private Limited8. Toyota Kirloskar Motor Private Limited9. Vikram Geet Investments and Holdings Private Limited10. Toyota Tsucho Insurance Broker India Private Limited

Mr. Sridar A. IyengarIs a fellow of the Institute of Chartered Accountants, England and Wales. He has over 38 years of experience in corporate fi nance and accounting. He has previously served as chairman and chief executive offi cer at KPMG, India operations. He is associated with Bessemer Venture Partners and is an independent director of various companies. He has been appointed as an independent director by the shareholders of the Company at the AGM held on August 17, 2007. 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. Rediff Holding Inc.7. Career Launcher Limited

Director No. of Board Meetings held

No. of Board Meetings attended

Attendance at the Last AGM.

Arvind Rao 5 5 No

Chandramouli Janakiraman 5 5 Yes

H H Haight IV 5 4 No

Sridar A Iyengar 5 4 No

Naresh K Malhotra 5 5 No

Jayanth R Varma 5 4 No

Vikram S Kirloskar 5 3 No

Anthony Correa* 5 2 No

*Anthony Correa resigned effective from August 17, 2007

Information Placed before the BoardApart 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 fi nancial update.

• Minutes of the audit and compensation committees• Information on recruitment and remuneration of senior

offi cers 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/offi cers• 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;

23

Remuneration/Compensation to DirectorsThe table below shows the amount paid or payable to the Directors of the Company for the fi nancial year March 31, 2008:

Name

Fixed salary (includes

perquisites and

contribution to PF)

Variable pay

Sitting fees

Commiss-ion

Total compensation

EXECUTIVE DIRECTORS#

Arvind Rao 5,922,725 2,666,324 - - 8,589,049


3,547,254 1,014,362 - - 4,561,616

NON-EXECUTIVE DIRECTORS##

H H Haight IV - - 280,000 1,000,000 1,280,000

Naresh K Malhotra - - 240,000 1,000,000 1,240,000

Sridar A Iyengar - - 160,000 1,000,000 1,160,000

Jayanth R Varma - - 160,000 1,000,000 1,160,000

Vikram S Kirloskar - - 120,000 1,000,000 1,120,000

Anthony Correa* - - 40,000 - 40,000

*Anthony Correa resigned effective from August 17, 2007Note: #1) The above amounts exclude benefi ts accrued by the Company in respect of leave encashment and gratuity, as they are provided by the Company as a whole based on actuarial valuation.##2) The above amounts also exclude the stock compensation cost of Rs. 229,167/- arising out of grant of stock options to the independent directors.

REMUNERATION POLICYThe 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 fi xed pay, benefi ts 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, benefi ts, perquisites and allowances (fi xed component) and performance incentives (variable component) to its executive directors. 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, if the Company by special resolution authorizes such payment. The Board Members of the Company had vide their resolution

dated April 20, 2007, approved a sum of (1/6) % of the net profi ts of the Company to each of the non-executive directors (including independent directors) or a sum of Rs. 10,00,000/- per non-executive director which ever is lower. Members of the Company propose to, at the forth coming Annual General Meeting of the Company, approve the payment of remuneration by way of commission to independent directors for the fi nancial year 2007-08. The Company has paid Rs. 1,228,237/- as post tax sitting fees (includes Rs. 228,237/- pertaining to the fi nancial year ended March 31, 2007 paid during the year ended March 31, 2008) 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 fi ve of the non-executive directors - Rs. 5,000,000/-

2. 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 DirectorThe specifi c period of contract of service for the Chairman & Managing Director is fi ve years effective from July 24, 2006. The notice period is 6 months. The Company is liable to pay a terminal compensation or redundancy payment equivalent to 18 (eighteen) months paid in cash based on the previous fi nancial 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 directors shall not be considered for retirement by rotation as per the Articles of Association of the Company.

Independent and Non-executive directorsPeriod 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 DIRECTORSThe following table shows the details of stock options to independent and non-executive directors during the year.

24

NameNo. of stock options (after adjusting for bonus issues)

Grant price (after adjusting for bonus issues)

Sridar A Iyengar 26,000 228/-

Jayanth R Varma 26,000 228/

Naresh K Malhotra 26,000 228/

Vikram S Kirloskar 26,000 228/

H H Haight IV 26,000 228/

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.

MATERIALLY SIGNIFICANT RELATED PARTY TRANSACTIONSThere have been no materially signifi cant related party transactions, monetary transactions or relationships between the Company and directors, management, subsidiary or relatives, except for those disclosed in the fi nancial statements for the year ended March 31, 2008.

COMMITTEES OF THE BOARDFor the year ended March 31, 2008 the Board had four committees – the Audit Committee, the Compensation Committee, the IPO 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 fi nancial year and the related attendance are given below.

1. Audit CommitteeThis 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 Jayanth R 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 fi eld of fi nance. 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 the

Company at the AGM held on August 17, 2007. The Company Secretary acts as secretary to the committee.

The terms of reference of the audit committee include the following:

• Overseeing the Company’s fi nancial reporting process and disclosure of its fi nancial information to ensure that the fi nancial statements are true and fair and provide suffi cient information;

• Recommending to the Board the appointment, re-appointment, and replacement of the statutory auditor and the fi xation of audit fee.

• Approval of payments to the statutory auditors for any other services rendered by them and assess the independence and objectivity of the auditors and to ensure that the nature and amount of non-audit work does not impair the auditor’s independence and objectivity

• Establishing and reviewing the scope of the statutory audit including the observations of the auditors and review of the quarterly, half-yearly and annual fi nancial statements before submission to the Board, with particular reference to matters required to be included in the Directors Responsibility Statement to be included in the Board’s report in terms of clause 2(AA) of S.217 of the Companies Act, 1956, changes in the accounting policies and practices and reasons for the same, signifi cant adjustments made in the fi nancial statements arising out of audit fi ndings.

• The appointment, removal and terms of remuneration of the internal auditors, discussion and follow up on any important fi ndings with the internal auditors. In case there is a suspected case of fraud or irregularity, review of the fi ndings of the internal auditors and reporting the matter to the Board.

• Have post audit discussions with the statutory auditors to ascertain any area of concern.

• Regular review of the performance of statutory and internal auditors together with the management.

• Establishing the scope and frequency of internal audit, reviewing the fi ndings of the internal auditors and ensuring the adequacy of internal control systems including structure

25

of the internal audit department, frequency of internal audit, staffi ng and seniority of the offi cial heading the department. Review the functioning of the whistle blower mechanism.

• To look into reasons for substantial defaults in the payment to depositors, debenture holders, shareholders and creditors.

• To look into the matters pertaining to the Director’s Responsibility Statement with respect to compliance with applicable accounting standards and accounting policies.

• Compliance with Stock Exchange listing requirements concerning fi nancial statements.

• The Committee shall look into any related party transactions i.e., transactions of the Company of material nature and disclose such transactions, with promoters or management, their subsidiaries or relatives etc., that may have potential confl ict with the interests of Company at large.

• Review of management discussion and analysis of fi nancial condition and results of operations, statements of related party transactions submitted by management, management letters/letters of internal control weaknesses issued by the statutory auditors.

• To meet periodically as it may deem fi t to meet its objectives and to have at least four such meetings in a fi nancial year on a quarterly basis

• Obtaining an update on the risk management framework and the manner in which risks are being addressed;

• Such other matters as may from time to time are required by any statutory, contractual or other regulatory requirements to be attended to by the audit committee.

The audit committee also specifi cally reviews the un-audited/audited quarterly fi nancial results of the Company before these are submitted to the Board for approval. Minutes of each audit committee meeting are placed before the Board for noting

The powers of the audit committee shall include the power;1. To investigate activity within its terms of reference.2. To seek information from any employees.3. To obtain outside legal or other professional advice.4. To secure attendance of outsiders with relevant expertise, if

it considers necessary.

The Company has instituted internal process and systems to ensure that the audit committee has access to all the material information, and reviews on a regular basis the following:

• Management Discussion and Analysis of fi nancial condition and results of operations;

• Statement of signifi cant related party transactions (as defi ned by the audit committee), submitted by management;

• Management certifi cates on internal controls and compliance with laws and regulations, including any exceptions to these;

• Management letters / letters of internal control weaknesses issued by the statutory auditors;

• Internal audit reports relating to internal control weaknesses;

• The fi nancial statements, in particular the investments, if any made by the unlisted subsidiary companies.

Details of Audit Committee Meetings during the fi nancial yearDuring the fi nancial year ended March 31, 2008, four meetings of the audit committee were held as follows:

Sl no. Date Committee Strength

No. of Members Present.

1 April 19, 2007 03 03

2 July 11, 2007 03 03

3 October 11, 2007 03 03

4 February 28, 2008 03 03

Attendance at the Audit Committee Meetings during the fi nancial year

Director No. of Meetings attendedJayanth R Varma 04Naresh K Malhotra 04H H Haight IV 04

2. Compensation CommitteeThis 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 Sridar A Iyengar. He is a fellow of the Institute of Chartered Accountants, England and Wales. He has over 38 years of experience in corporate fi nance and accounting. He has previously served as chairman and chief executive offi cer at KPMG, India operations. He is associated

26

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 the Company at the AGM held on August 17, 2007. 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:

• The Securities and Exchange Board of India (Insider Trading) 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 fi nancial yearDuring the fi nancial year ended March 31, 2008, four meetings of the

compensation committee were held as follows:

Sl no. Date Committee StrengthNo. of Members

Present.

1 April 20, 2007 03 03

2 July 12, 2007 03 03

3 October 12, 2007 03 03

4 February 27, 2008 03 02

Attendance at the Compensation CommitteeMeetings during the fi nancial year

Director No. of Meetings attended

Sridar A Iyengar 04

H H Haight IV 04

Vikram S Kirloskar 03

3. Share Transfer and Investor Grievance CommitteeThe Share Transfer and Investor Grievance Committee consists of a minimum of three (3) 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 specifi cally look into the redressal of shareholder and investor complaints 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 Vikram S Kirloskar (Chairman), Naresh K Malhotra and Chandramouli Janakiraman. The Chairman of the committee is Mr. Vikram S Kirloskar an independent director. He has over 24 years of experience in the business of manufacturing automobiles and auto parts. 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. 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;

• To look into the redressal of shareholder and investor complaints 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.

27

Details of Shareholder and Investor Grievance Committee Meetings held during the fi nancial year

During the fi nancial year ended March 31, 2008, one meeting of the Shareholder and Investor Grievance Committee was held as follows:

Sl no. Date Committee StrengthNo. of Members

Present.1 February 27, 2008 03 02

Attendance at the Shareholder and Investor Grievance

Committee Meetings during the fi nancial year


Vikram S Kirloskar NIL

Naresh K Malhotra 01

Chandramouli Janakiraman 01

4. IPO CommitteeThe IPO Committee was constituted by our Board at their meeting held on April 20, 2007. The committee consists of Arvind Rao (Chairman), Naresh K Malhotra and H.H. Haight IV. The committee was constituted to decide all matters relating to the Issue and allotment of shares of the Company in accordance with the applicable rules and regulations. The powers of the committee include, deciding on the timing, pricing and other terms of the issue of shares for the Issue, appointment of book running lead managers, underwriters, syndicate members, registrars, legal advisors and other agencies for the Issue, to settle and execute the Draft Red Herring Prospectus, Red Herring Prospectus, Prospectus, syndicate agreement, underwriting agreement, escrow agreement and all other documents and agreements required for the Issue. The IPO Committee was dissolved on February 28, 2008.

Details of IPO Committee Meetings held during the fi nancial yearDuring the fi nancial year ended March 31, 2008, two meetings of the IPO Committee were held as follows:

Sl no. Date Committee Strength No. of Members Present.

1 July 11, 2007 03 03

2 October 11, 2007 03 03

Attendance at the IPO Committee Meetings during the fi nancial year


Arvind Rao 02

Naresh K Malhotra 02

H H Haight IV 02

DisclosuresThere are no materially signifi cant related party transactions of the Company which have potential confl ict with the interests of the Company at large. Details of non-compliance by the Company, penalties, strictures imposed on the Company by Stock Exchanges, SEBI or any statutory authority, on any matter related to capital markets, during the period from February 19, 2008 to March 31, 2008.

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 thereofDuring the year, the Company raised funds through an Initial Public Offering (IPO) of 10,900,545 Equity Shares consisting of fresh issue of 8,613,356 Equity Shares and an “Offer for sale” of 2,287,189 Equity shares of OnMobile Systems Inc. through a Book Building process for cash at a price band of Rs. 425/- to Rs. 450/-Per Equity Share, as per the Disclosure and Investor Protection Guidelines issued by the Securities and Exchange Board of India (SEBI). Despite the tough and challenging global equity market conditions, the Company’s IPO was oversubscribed by 10.85 times (17.16 times from the Qualifi ed Institutional Buyers).

Further, the Company received 99.94% applications in the IPO at the higher end of the price band (Rs. 450 and Cut-off) and only 0.06% of the applications were received at different prices below Rs. 450. However, considering the turbulent capital market conditions the Company fi xed the issue price as Rs. 440/- per Equity Share resulting in total issue proceeds of Rs. 4,796,239,800 /- out of which Rs.

28

3,789,876,640/- was on account of the fresh issue of Equity Shares and Rs. 1,006,363,160/- was on account of the “Offer for sale”.

The details pertaining to the utilization of IPO proceeds are specifi ed herein below. Post the Public issue the paid up Equity share capital of the Company stands at Rs. 574,061,390/- consisting of 57,406,139 Equity shares of face value Rs. 10/- each.

The Company had subsequently listed its Equity Shares on the Bombay Stock Exchange and National Stock Exchange on February 19, 2008. The details of the movement in share price are specifi ed else where in this report.

The utilization of IPO proceeds is as below:

Amount in Rs. Million

PARTICULARS PROJECTION IN PROSPECTUS

ACTUAL FUNDS UTILISED TILL MARCH

31, 2008

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

1,805 155

Working capital requirements 50 -

Repayment of Loan 350 350

General Corporate purposes 1,339 14

The total share issue expenses of Rs. 246 million (net of OnMobile Systems Inc.’s share) has been offset against balance available in securities premium account in the balance sheet.

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 Certifi cationAs required by Clause 49 of the listing agreement, the CEO / CFO certifi cation is provided in the Annual Report.

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

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

FINANCIAL YEAR

DATE TIME VENUE

2006-07 August 17, 2007 10.00 AMNo. 26, Bannerghatta Road, JP Nagar, 3rd Phase, Bangalore – 560 076

2005-06 July 24, 2006 11.30 AMNo. 26, Bannerghatta Road, JP Nagar, 3rd Phase, Bangalore – 560 076

2004-05 May 26, 2005 11.00 AMPavithra Complex, Site No. 1, First Floor, 2nd Cross, 27th Main, BTM 1st Stage, Bangalore – 560 068

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 17.00 HrsNo. 26, Bannerghatta Road, JP Nagar, 3rd Phase, Bangalore – 560 076

* Results were declared at this time and place.

Results of the Special Resolution passed through Postal Ballot are:

Particulars No. 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. S N Mishra”, Company Secretary

29

General Information for ShareholdersListing Details The Shares of the Company are Listed on:

National Stock Exchange of India Limited • (NSE) Exchange Plaza, 5th Floor, Plot No. C/1, G Block, Bandra Kurla Complex, Bandra (E), Mumbai - 400 001.

Bombay Stock Exchange Limited (BSE)• Phiroze Jeejeebhoy Towers, Dalal Street, Fort Mumbai – 400 001The listing fees for both the exchanges have been paid a nd compliance of listing requirements has been done.

Stock Code National Stock Exchange of India Limited (NSE) – ONMOBILEBombay Stock Exchange Limited (BSE) – 532944

Registered Offi ce

OnMobile Global LimitedNo. 26, Bannerghatta Road, JP Nagar Phase III,Bangalore – 560076Phone: 080 – 41802500;Fax: 080 – 41802810;

Other Locations(In India)

RPS Green Space, No: 165/5, 1st Main, • Krishna Raju Layout, J.P Nagar 7th Phase, Bangalore- 560 076.

#1004, Floor 10, Dalamal House, Nariman • Point, Mumbai - 400 021.Sumer plaza, 5th fl oor, marol maroshi road, • Marol, Andheri (E), Mumbai - 400 059.

704, Floor 7, Bhikaji Cama Bhawan, Bhikaji • Cama Place,New Delhi - 110 066.

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

Forth coming Annual General Meeting (AGM)

The Eighth Annual General Meeting (AGM) of the Members of OnMobile Global Limited will be held on Friday, August 01, 2008, at 10.00 A.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, 2008

July 31, 2008

Financial reporting for the quarter ended September 30, 2008

October 31, 2008

Financial reporting for the quarter ended December 31, 2008

January 31, 2009

Financial reporting for the quarter ended March 31, 2009

April 30, 2009

Registrars and Share Transfer Agents

Karvy Computershare Private LimitedKarvy House, 21, Avenue – 4Plot No. 17 to 24, Vittalrao Nagar, Madhapur,Hyderabad – 500 081Phone No. 040 -23420818-828Fax No. 040 – 23420814

Compliance Offi cer

Mr. Srikiran DCompany SecretaryNo. 26, Bannerghatta Road, JP Nagar Phase III,Bangalore – 560076Phone: 080 – 41802500; 080 -40096000Fax: 080 – 41802810; 080 -40096009

Depository System

Currently 86% 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 Offi cer, at the addresses mentioned above.

Investor Complaints to be addressed to

Registrars and Share Transfer Agents or to Mr. Srikiran D, Compliance Offi cer, at the above mentioned addresses.

Email ID of Grievance Redressal Division

[email protected] or [email protected]

Distribution of Shareholding

DISTRIBUTION SCHEDULE AS ON MARCH 31, 2008

Rs. No. of Shareholders % Total No. of Shares %

1-500 19211 97.32 1286142 2.24

501 - 1000 154 0.78 109385 0.19

1001 - 2000 105 0.53 156660 0.27

2001 - 3000 49 0.25 123429 0.22

3001 - 4000 23 0.12 80807 0.14

4001 - 5000 14 0.07 65709 0.11

5001 - 10000 45 0.23 345370 0.60

10001 & Above 140 0.71 55238637 96.22

TOTAL 19741 100.00 57406139 100.00

30

Shareholding pattern as on March 31, 2008

Category of shareholderNo. of

shareholdersTotal no. of shares

No. of shares held in dematerialized

form

Total shareholding as a percentage of total number of

shares

SHAREHOLDING OF PROMOTER AND PROMOTER GROUPIndian 5 7,619,950 5,369,767 13.27

Foreign 1 25,403,867 25,403,867 44.25

Total Shareholding of Promoter and Promoter Group

6 33,023,817 30,773,634 57.53

PUBLIC SHAREHOLDINGInstitutions -

Mutual Funds / UTI 13 1,672,649 1,672,649 2.91

Financial Institutions / Banks 2 5,000 5,000 0.01

Foreign Institutional Investors 31 4,921,979 4,921,979 8.57

Non-Institutions -

Bodies Corporate 516 2,214,457 2,214,457 3.86

Individuals - (i) Individual shareholders holding nominal share capital up to Rs.1 lakh.

18605 1,768,763 1,388,850 3.08

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

80 6,219,465 2,062,232 10.83

non Resident Indians 307 72,771 72,771 0.13

Clearing Members 172 54,198 54,198 0.09

Foreign Nationals 2 423,722 - 0.74

Foreign Companies 7 7,029,318 6,210,324 12.24

Total Public Shareholding 19735 24,382,322 18,602,460 42.47

Shares held by Custodians and against which Depository Receipts have been issued

- - - -

GRAND TOTAL 19741 57,406,139 49,376,094 100.00

31

Price movements of the Company’s Shares on the National Stock Exchange and Bombay Stock Exchange for the period from February to

March 2008. The Company was listed on the Stock exchanges on February 19, 2008.

BSE NSE

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

February 650.00 421.00 652.00 411.00 March 624.00 455.00 622.70 455.00

14,000

16,000

18,000

20,000

400

450

500

550

600

650

2/19

/200

8

3/10

/200

8

3/30

/200

8

On Mobile (lhs) BSE Sensex (rhs)

OnMobile Vs SENSEX

32

Details of complaints received and resolved during the period since the listing date till March 31, 2008 are as below:

NATURE OF COMPLAINTS RECEIVED RESOLVED

OUTSTANDING

AS ON

MARCH 31, 2008

Status of Applications lodged for

Public issue(s)126 126 -

Withdrawal of application (s) 72 72 -

Reason for rejection (non-

Allotment)9 9 -

non Receipt of Refund Order 374 374 -

non Receipt of Electronic Credits 202 202 -

*Post March 31, 2008, 16 complaints (received through SEBI) are unresolved and were being attended to as on April 24, 2008

Dematerialization of SharesThe Company’s shares are admitted into both the depositories viz., National Securities Depository Ltd (NSDL) and Central Depository Services (India) Limited (CDSL). As of March 31, 2008, 86.01% of the Company’s shares are held in electronic form.

Investor Grievances and Share TransferThe 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 certifi cates, 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 confi rmation 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.

CERTIFICATE OF COMPLIANCE FROM AUDITORS AS STIPULATEDUNDER CLAUSE 49 OF THE LISTING AGREEMENT OF THE STOCK EXCHANGES IN INDIA

CERTIFICATE

To the members of OnMobile Global Limited (formerly OnMobile Asia Pacifi c Private Limited)

We have examined the compliance of conditions of corporate governance by OnMobile Global Limited (formerly OnMobile Asia Pacifi c Private Limited) ( the “Company”) for the period from February 19, 2008 (the date of initial listing) to March 31, 2008 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 fi nancial 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 effi ciency or effectiveness with which the management has conducted the affairs of the company.

for Deloitte Haskins & Sells Chartered Accountants

V. SrikumarPlace: Bangalore PartnerDate: May 2, 2008 M. No.: 84494

33

Dear Members,

The Directors take pleasure in presenting the 8th Annual Report on the business and operations of the Company together with the Audited Financial Statements and Accounts for the year ended March 31, 2008.

Results of OperationsFINANCIAL HIGHLIGHTS of OnMobile Global Limited (unconsolidated)For the year 2007-08 (Rs. Millions) (Rs. Millions)PARTICULARS 2007-08 2006-07Net Revenue 2,307.64 1,303.15Earning before other income, depreciation,fi nance charges and tax 917.12 592.81Other Income 68.85 42.77Depreciation 249.18 142.25Finance Charges 17.09 0.16Earnings before tax 719.70 493.17Earnings after tax 475.68 330.37Equity Share Capital 574.06 36.54Reserves and Surplus 5,364.60 1,985.37Networth 5,940.07 2,021.91Investments 4,610.75 1,237.25Gross Block 1,301.56 567.03Net Block 776.07 281.98Net Current Assets 757.97 489.46Cash and Cash Equivalents 1,436.41 197.37No. of Equity shares 57,406,139 3,300,207Earnings per share (Diluted) (In Rs.) 9 7

During 2007-08, the Company recorded net revenue of Rs. 2308 million, an increase of 77% over the previous year of Rs 1,303million. The Earnings after tax of the Company increased from Rs. 330 million in 2006-07 to Rs. 476 million in 2007-08, an increase of 44%. The diluted earnings per share (EPS) increased from Rs. 7 per share to Rs. 9 per share.

LiquidityThe Company ensures that it has adequate cash to meet its strategic objectives. As on March 31, 2008 the Company had liquid assets including investments in, money market mutual funds of Rs 4,584 million as compared to Rs. 1,216 million for the previous year-ending March 31, 2007. The Company has invested these funds with banks, liquid mutual funds and fi xed maturity plans.

Changes to the Share CapitalA. Initial Public Offer (IPO)

During the year the Company was converted into a Public

Directors’ Report

Limited Company by a special resolution of the shareholders dated August 17, 2008 and subsequently the Company made an Initial Public Offer (IPO) of 10,900,545 Equity Shares consisting of fresh issue of 8,613,356 Equity Shares and an “Offer for sale” of 2,287,189 Equity shares by OnMobile Systems Inc. through a Book Building process for cash at a price band of Rs. 425/- to Rs. 450/-Per Equity Share, as per the Disclosure and Investor Protection Guidelines issued by the Securities and Exchange Board of India (SEBI). Despite the tough and challenging global equity market conditions, the Company’s IPO was oversubscribed by 10.85 times (17.16 times from the Qualifi ed Institutional Buyers).

The Company received 99.94% applications in the IPO at the higher end of the price band (Rs. 450 and Cut-off) and only 0.06% of the applications were received at different prices below Rs. 450. However, considering the turbulent capital market conditions the Company fi xed the issue price as Rs. 440/- per Equity Share resulting in total issue proceeds of Rs. 4,796,239,800/- out of which Rs. 3,789,876,640/- was on account of the fresh issue of Equity Shares and Rs. 1,006,363,160/- was on account of the “Offer for sale”.

The details pertaining to the utilization of IPO proceeds till March 31, 2008 is specifi ed in the notes to accounts section of the Annual Report. Post the Public issue the paid up Equity share capital of the Company stands at Rs. 574,061,390/- consisting of 57,406,139 Equity shares of face value Rs. 10/- each.

The Company had subsequently listed its Equity Shares on the Bombay Stock Exchange and National Stock Exchange on February 19, 2008. The details of the movement in share price are specifi ed in the Corporate Governance section of the Annual Report.

B. Conversion and Redemption of Preference SharesDuring the year the Company approved in the Annual General Meeting held on August 17, 2007 the conversion of 353,629 Preference Shares held by Deustche Bank AG, Kings Road Investments (Mauritius) Limited, Jade Dragon Investments (Mauritius) Ltd. (referred to as the (“Investors”)) into 353,629 Equity Shares of the Company in the ratio of one Equity Share for every Preference Share held by the Investors.

During the year under review, the Company successfully

34

completed the amalgamation with ITfi nity Solutions Private Limited, as per the scheme of amalgamation and arrangement approved by the High Courts of Karnataka by order dated March 27, 2007 and the High Court of Mumbai by order dated April 21, 2007. The scheme was effective from May 14, 2007 which was the last date when the copies of the orders of the High Courts of Mumbai and Karnataka sanctioning the scheme were fi led with the Registrar of Companies at Mumbai and Karnataka.

Accordingly as part of the amalgamation process, the Company had approved the conversion of 12,676 optionally convertible preference shares held by the promoters of ITfi nity Solutions Private Limited into 12,676 Equity Shares and further approved the redemption of 9,098 optionally convertible preference shares held by the Promoters of ITfi nity Solutions Private Limited at a price of Rs. 3632/- per Share.

C. Bonus IssueDuring the year under review the Company approved in the Annual General Meeting held on August 17, 2007 the issue of Bonus shares to its Equity Shareholders in the ratio of twelve (12) Equity Shares for every one (1) Equity Share held by capitalising the share premium account.

D. Acquisition of Vox mobili S AOn September 10, 2007, the Company completed the acquisition of the entire issued share capital of Vox mobili S.A. (“Vox mobili”), a provider of telecommunications related value added services focused on global management of personal and group data such as personal data management, wireless synchronization and embedded client solutions to telecommunications operators, Internet Service Providers (“ISPs”) and cable operators.

As a part of the purchase consideration payable to Vox mobili SA, the Company had issued 423,722 new equity shares (after adjusting for the bonus issue made by the Company) to the founding shareholders of Vox mobili (the “Founders”).

The paid up Equity Share Capital of the Company post the Bonus issue and the issue of shares to Vox mobili SA increased to Rs. 487,927,830/- consisting of 48,792,783 Equity Shares.

AppropriationsA. 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 signifi cant growth in the coming years. Accordingly, keeping in view the Company’s growth plans and the need to fi nance the growth plans through internal accruals, the directors do not recommend any dividend for the year ended March 31, 2008.

The register of members and the share transfer books will remain closed from July 29, 2008 to August 01, 2008, both days inclusive. The Annual General Meeting of the Company has been scheduled for August 01, 2008.

B. Transfer to ReservesWe propose to retain Rs. 1201.06 million in the Profi t and Loss Account.

SubsidiariesAs on March 31, 2008, the Company has the following Subsidiaries:

1. OnMobile Australia Pty. Ltd.2. OnMobile Singapore Pte. Ltd.3. PT. OnMobile Indonesia4. Vox mobili S.A.5. Vox mobili Inc.6. Ver se Innovation Private Limited7. Phonetize Solutions Private Limited

As per Section 212 of the Companies Act, 1956, the Company is required to attach the directors’ report, balance sheet, and profi t and loss account of its subsidiaries. The Company had applied to the Government of India seeking exemption from such an attachment as the Company presents the audited consolidated fi nancial statements in the Annual Report. The Government of India has granted exemption from complying with Section 212. Accordingly, the annual report does not contain the fi nancial 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 offi ce.

Considering the decision to optimize tax benefi ts, the Company’s Australian business is being changed from a subsidiary model to a branch model. Accordingly, the Australian subsidiary is in the process

35

of winding up. A Liquidator has been appointed by the subsidiary and the same would be wound up as per the regulations prescribed in Australia.

Statement regarding subsidiary companies under Section 212 of the Companies Act, 1956 is included in the Annual Report for this Financial Year 2007-2008.

New Products and ServicesThe dynamic nature of the market demands constant innovation. Successful mobile services demand innovative solutions coupled with superior user experience. The Company launched various new products and several enhancements to current products, some of which are outlined below.

One-Touch RBT:This pioneering innovation in Caller Ringback Tones was the fi rst of its kind in the world. It enabled consumers to select and change their song preferences with the click of a single key making the service viral. With this, the Ringback Tones penetration hit an all-time high of 30%, one of the highest in the industry.

Mobile Radio:M-Radio V3 provides radio on the go to a mobile customer, anywhere, anytime. The product is now powered by M-Search, repeat user intelligence, channel intelligence and Hermes music alerts. In the current deployments M-Radio has delivered impressive results with service usage four times higher.

M-SearchThe Company’s consumer research indicated that existing options for content discovery were cumbersome and complex for the users. Users typically knew the music that they wanted, but simply could not locate it within the Telecom Operator’s content catalogue. M-Search, a mobile search solution, enabled users to directly request the desired content, which was then instantly located and delivered to the user’s phone.

Subscription Services GatewayAs mobile services evolved, the pay-per-use model did not prove to be appropriate for all and Subscription based services were introduced. To suit the customer’s wallet, the Company’s Subscription Services Gateway supported monthly, daily and event based charging options. This is now offered as standard across all of the deployments.

Phone Backup:Mobile phones have evolved to become a multi-functional device and now hold lots of precious customer data. In the event of a loss of the phone, all important data including contacts, messages, pictures and other data would be lost. The Company’s Phone Backup solution, enabled users to save a backup of their precious data on the network, which could be quickly retrieved either in case of a loss of phone or if the user changed their handset.

On-device Portal:The Company’s signifi cantly improved its fl agship device product 2GO, an On-device Portal. The product now supports Windows Smart Phone 6.0 and Blackberry devices, including a large majority of Symbian and J2ME devices

Other Business Highlights of this year - Ringback tones(RBT) for Airtel:RBT contributes signifi cantly to Airtel’s MVAS turnover. The Company received an order from Airtel to replace their existing RBT systems in one of their regions. This will surely drive the revenues and visibility of the Company in the Indian MVAS market in FY 2008-09.

New customers:With the addition of the Aircel and Virgin accounts, the Company’s coverage of large Indian telecom operators (more than 5 million customers) is now complete as on date.

Continued growth in Media business:On the Media Services front, some of the new clients signed for the year were Dainik Bhaskar, UTV, Turner Networks, Jaya TV, Network18, NDTV Imagine and Radio One.

Televoting, Contests and Talent Hunt Applications powered popular TV programmes like Indian Idol, Voice of India, Chotte Ustaad, Nach Baliye and Mission Ustaad.

New LocationsLast year saw the Company expanding internationally more than ever before. The Company had signifi cant new deployments in Indonesia, Malaysia and Bangladesh. As part of the Company’s global expansion, the Company now also has branch offi ces in Malaysia, Bangladesh, UK and a subsidiary in Indonesia.

36

Material Changes for the period between End of the Financial Year and the Date of the ReportThe Company has signed a Share Purchase Agreement in May 2008 to acquire the entire issued share capital of Telisma S.A. (“Telisma”), a French Company set up in the year 2000 with headquarters in Lannion, France. Telisma S.A. is specialized in the supply of advice and services in the communication, telematic, and interactive services fi elds 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. Telisma has its commercial activities in France.

The Company’s Board has approved the acquisition of Telisma for a maximum consideration of € 12,664,271 (Euros Twelve Millions Six Hundred Sixty Four Thousand Two Hundred and Seventy Only), equivalent to INR 843,721,842 (Rupees eighty four crores thirty seven lakhs twenty one thousand eight hundred and forty two only) consisting of € 11,664,271 (Euros Eleven Millions Six Hundred Sixty Four Thousand Two Hundred and Seventy One) equivalent to INR 777,099,622 (Rupees seventy seven crore seventy lakhs ninety nine thousand six hundred and twenty two 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 the Company based on the fi nancial performance of Telisma as for the fi nancial year ended December 31, 2008 as per the terms of the draft share purchase agreement between OnMobile Global Limited (“OnMobile” or “the Company”) and the respective shareholders of Telisma SA (“Telisma”), the founders’ share purchase agreement and in the presence of Telisma, and all other such related agreements (hereinafter referred to as the “Agreement(s)”), as per terms and conditions mentioned in the said Agreement(s) placed before the Board.

Additionally, the Company’s Board has approved to pay € 700,000 (Euros Seven Hundred Thousand only) equivalent to INR 46,635,540 (Rupees four crores sixty six lakhs thirty fi ve thousand fi ve hundred and forty only) in the form of stock options of the Company payable to the founders and some employees of Telisma.

QUALITYThe 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 Benefi cial 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:• Information Security Governance• Risk Assessment• Asset Management• Business Continuity Management• Human Resource Security• Usage of ‘Scrum’, an Agile Software Development Methodology

for the Company’s software development lifecycle• A suite of workfl ow tools to ensure timely delivery of 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.

ISO/IEC 27001 provides an ISMS model for adequate and proportionate security controls to protect information assets and give confi dence to interested parties. This sets the standard for handling the Confi dentiality, 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/BRANDINGCustomer RecognitionBharti Airtel recognized the Company as the best MVAS partner for the year 2007. It is an apt recognition of the Company’s dedication and focus for delivering quality service to its customers. It also sets a high benchmark for the Company to continue its existing performance.

37

Industry RecognitionVoice & Data recognized the Company as India’s Best MVAS Company and accorded the V&D100 award for 2007. The V&D100 Awards is popularly recognized by the Indian communications industry as its most reliable chronicle.

The Company has also been recognized as one of the 50th fastest growing technology companies in India by Deloitte Touche Tohmatsu and received ‘Technology Fast 50 India 2007’ award. The awards recognize the most successful Indian technology companies, and it is a signifi cant achievement to be a part of this elite group. This nomination is one more indicator of the Company’s growth during the past year and the Company continues to grow strongly to become India’s largest Mobile Value Added Services (MVAS) Provider Company.

The Deloitte Technology Fast 50 India 2007 Program, conducted by Deloitte Touche Tohmatsu Asia Pacifi c, identifi es the top 50 fastest growing technology companies in India based on their percentage revenue growth over the last three fi nancial years. It is part of a global program run in parallel with the other regional programs in EMEA (Europe, the Middle East and Africa), North America and Asia Pacifi c. It includes all areas of technology from Internet to life sciences, from computers to semiconductors. It covers both public and private companies.

INFRASTRUCTUREAs of March 31, 2008, the Company has obtained on lease, offi ce spaces at Bangalore and Mumbai constituting an area of 138,245 square feet and 15,705 square feet respectively. Further, the Company has purchased an offi ce space in Mumbai constituting an area of 7,985 square feet. Apart from this the Company has various offi ces at Delhi, Australia, Malaysia, Bangladesh and UK and a few guest houses on lease for the employees of the Company at Mumbai and Bangalore.

HUMAN RESOURCE MANAGEMENTThe Human Resource Portrait of the Company is an interesting mix of knowledge, skills, competence and orientation. The key to the Company’s hiring and retention strategy is the appreciation of diverse mix of talent needed to execute the Company’s business.

For the year 2007-08 the Company has added 324 (Full Time Employee (FTE) + Contract) employees (as on March 31, 2007 the employee strength (FTE + Contract) was 519). The Company’s hiring

spans the whole spectrum of hiring from campuses to bringing on Board employees with proven capability and experience. This ensures that the Company has a judicious mix of experience in its employee base.

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

on enhancing the learning and development opportunities offered to

OnMobilians. In the year 2007-08 the Company has offered 1383

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

The retention metrics for the year 2007-08 have been extremely

encouraging and positive. The annualized attrition % for confi rmed

FTE for the year 2007-08 is 10.8%. The Company has seen a dip in

annualized attrition % age from 15.9% in 2006-07.

RESEARCH AND DEVELOPMENT/EDUCATION AND KNOW-HOW INITIATIVES

While India has been the main market, the Company is fast expanding in to many other developing and developed markets.

The Research and development (R&D) efforts are focused on• Reaching out to as many users as possible across multiple

channels, given the different capabilities of handsets and networks;

• Making the services affordable, particularly given the low-ARPU and challenging recharge patterns, in the developing markets;

38

• Serving a totally-new set of subscribers, who have joined the mobile network;

• Making the services easy to use, with Localization, Easier Content Discovery and Personalization.

Corporate GovernanceThe 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 has 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. A certifi cate from the auditors of the Company, Deloitte Haskins & Sells, Chartered Accountants, confi rming compliance of conditions of corporate governance as stipulated under the aforesaid Clause 49 is annexed to the Report on Corporate Governance section of the Annual Report.

Management Discussion and Analysis ReportIn accordance with the Listing Agreements, the Management Discussion and Analysis Report is presented in the separate section forming part of the Annual Report.

DirectorsMr. H H Haight IV, Director retires by rotation and being eligible offers himself for re-appointment at the forthcoming Annual General Meeting of the Company.

Since the last Directors’ Report, Mr. Anthony Correa has resigned from the Board on August 17, 2007.

Brief resume of the director offering for re-appointment is included in the notice for the Annual General Meeting.

AuditorsThe 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 confi rmed that their appointment, if made, will be within the limits under Section 224(1B) of the Companies Act, 1956.

RESPONSIBILITY STATEMENT OF THE BOARD OF DIRECTORSPursuant to Section 217(2AA) of the Companies Act, 1956, the directors to the best of their knowledge and belief confi rm that:

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 fi nancial year and of the profi t of the Company for that period;

iii. they have taken proper and suffi cient 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 EMPLOYEESThe 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 to this report.

CONSERVATION OF ENERGY AND TECHNOLGY ABSORPTIONThe 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.

FIXED DEPOSITSIn 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 fi xed deposits during the year under review.

EMPLOYEE STOCK OPTION PLAN (ESOP)The Company offers six 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 to its employees. All the schemes endeavor to provide incentives and retain employees who contribute to the growth of the

39

Company. 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 as below:

ESOP PLAN I - 2003Description Details

Total number of options under the plan (each option represents one share after adjusting for bonus issues of the Company on August 18, 2007)

13,338,000

The Pricing Formula Rs.10

Variation in terms There was a clarifi catory 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 fi rst 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 on August 18, 2007)

427,999

Weighted average price per option granted during the year Rs.10

Options vested (as of March 31, 2008) 12,131,873

Options exercised during the year 301,444

Money raised on exercise of options: 231,880

Options forfeited during the year 81,939

Options lapsed during the year Nil

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

1,736,085

Grant to senior management and independent directors during the year* 185,510

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

230,685

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

9

*Grant to senior management and independent directors during the yearRajesh MoortiRajesh MV

Sidharth SharmaSanjay BhambriSandeep Ganguly

** Employees receiving 5% or more of the total number of options granted during the yearRajesh MoortiRajesh MVSidharth SharmaSumit SardanaBiswajit NandiSandeep Ganguly

ESOP PLAN II - 2003Description Details


1,482,000

The Pricing Formula Rs.10

Variation in terms There was a clarifi catory 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 fi rst 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 Rs.10

Options vested (as of March 31, 2008) Nil

Options exercised during the year Nil

Money raised on exercise of options Nil

Options forfeited during the year Nil



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


9

40

ESOP PLAN III - 2006Description DetailsTotal number of options under the plan (each option represents one share after adjusting for bonus issues of the Company on August 18, 2007)

800,371

The Pricing Formula 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 NilOptions granted during the yearTotal number of options under the plan (each option represents one share after adjusting for bonus issues of the Company on August 18, 2007)

774,371

Weighted average price per option granted during the year Rs.252.95

Options vested (as of March 31, 2008) 4,385Options exercised during the year NilMoney raised on exercise of options NilOptions forfeited during the year 42,523Options lapsed during the year NilTotal number of options in force at the end of the year (including unvested Options)

731,848

Grant to senior management and independent directors during the year* 150,800


Nil


9

*Grant to senior management and independent directors during the yearSridar A IyengarProf Jayanth R VarmaNaresh MalhotraVikram KirloskarHH HaightSanjay Bhambri

ESOP PLAN I - 2007Description DetailsTotal number of options under the plan (each option represents one share of the Company)

975,000

The Pricing Formula 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 NilOptions granted during the year 404,370Weighted average price per option granted during the year Rs. 453.04

Options vested (as of March 31, 2008) NilOptions exercised during the year NilMoney raised on exercise of options NilOptions forfeited during the year 1040

Options lapsed during the year NilTotal number of options in force at the end of the year (including unvested Options)

403,330

Grant to senior management and independent directors during the year

Nil


Nil


9

ESOP Plan II - 2007Description Details


74,360

The Pricing Formula

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

Options granted during the year Total number of options under the plan (each option represents one share after adjusting for bonus issues of the Company on August 18, 2007)

74,360

Weighted average price per option granted during the year

Rs. 298.54

Options vested (as of March 31, 2008) Nil

Options exercised during the year Nil

Money raised on exercise of options Nil

Options forfeited during the year Nil



74,360

Grant to senior management and independent directors during the year

Nil


Nil


9

FOREIGN EXCHANGE EARNINGS AND OUTGORs. Million

Description Year ended

March 31, 2008 March 31,2007

Foreign exchange earnings 95.26 27.30

Foreign exchange outgo 400.05 51.00

41

ACKNOWLEDGMENTSThe 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 support extended 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 JanakiramanChairman and Managing Director Director

Place: BangaloreDate: June 23, 2008

42

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44

1. INDUSTRY OVERVIEWGlobal telecommunications (Telecom) industryThe prospects of the global mobile market look robust with a global subscription growth being over 20%. In comparison to developed countries, the telecom markets in emerging economies in South Asia such as India, Indonesia, Thailand, Pakistan, Bangladesh, Malaysia and Sri Lanka are growing rapidly and represent a huge opportunity.

Indian telecommunications industryThe Indian telecom industry has been growing at an exceptional rate over the last few years. As many as eight million telephone connections, both wired and wireless were added in April 2008, taking the total number of subscriptions to over 308 million.

Mobile subscribers in India (2003-08)

The total number of wireless subscribers in the country including GSM, CDMA and WLL stood at over 269 million at the end of April 2008 in comparison to 13 million in 2003. India surpassed the US wireless market to become the world’s second largest wireless network after China at the end of March 2008. Declining handset prices and subscription cost, rising affordability, rapidly increasing coverage and the growing concept of multiple ownership is expected to further boost the wireless subscriber base. This fi gure is expected to cross the 500 million mark in the next three to fi ve years. The overall teledensity was around 25% at the end of April 2008. This is expected to cross 40% by March 2012.

The growing subscriber base has positively impacted industry revenues which have risen consistently. Revenues from cellular services are expected to increase by approximately 23%.

However, the fl ipside of the growth in revenues has been the declining Average Revenue Per User (ARPU). The ARPU from GSM

Management Discussion and Analysis

subscribers has declined from Rs. 366 per subscriber per month in March 2006 to Rs. 297 per subscriber per month in June 2007 and, 275 per subscriber per month as on January 2008. The ARPU from CDMA subscribers has declined from Rs. 256 per subscriber per month in March 2006 to Rs. 206 per subscriber per month in June 2007 and is Rs. 173, per subscriber per month as on January 2008.

Mobile Value Added Services (MVAS) industryTelecom operators in India face severe competition and with the call rates being one of the cheapest in the world ARPU is declining and the margins are under pressure. To retain customers in a pre-dominantly pre-paid, high churn market, to develop alternative revenue streams and to differentiate themselves, mobile operators are focusing on MVAS for the next wave of growth. MVAS provides incremental revenue to the operators with comparatively smaller capital expenditure. India has thus, developed into one of the fastest emerging markets in the world for MVAS.

In India, MVAS revenues are currently around Rs. 50 billion. This is expected to grow rapidly and cross Rs. 80 billion by the end of this fi scal. According to industry estimates, MVAS accounts for around 8-10% of the operators’ revenue at present. This fi gure is expected to cross 20% in the next 5-7 years. The Indian mobile industry’s revenues from MVAS are expected to grow at a CAGR of over 45% to cross Rs. 225 billion in 2011.

In addition to supply side drivers (such as the declining ARPU, brand differentiation needs and the growing focus on entertainment related content), demand side drivers such as the booming Indian economy, increasing user comfort with basic mobility services, personalization of content and devices, increasing consumer demand for MVAS,

45

reduction in call rates and cheaper handsets are also driving the growth of the MVAS market.

Major MVAS categoriesAll services beyond basic voice calls, as listed below, come under the category of MVAS:

• Messaging - This category consists of Person-to-person messaging such as SMS, VoiceSMS, MMS etc,

• Entertainment - This category consists of songs, ring tones, caller ringback tones, voice portals, sports updates, wallpapers, games, video and audio downloads/streaming etc. These services are very popular and are currently driving the revenues in the Indian MVAS market.

• Information - This category consists of news alerts, stock prices, air/rail ticket status, bank account balance/transaction alerts etc.

• User Generated Content (UGC) - This category consists of services which allow subscribers to generate and share content such as Find-a-Friend, Classifi eds etc.

• Media solutions - This category consists of interactive services such as tele-voting, interactive programming and mobile auditioning.

• M-Commerce - This category consists of services allowing transactions on mobile phones e.g. purchase of tickets and other goods, person-to-person money transfer, utility payments etc.

2. OUTLOOK AND OPPORTUNITIESIn India, the Company has long-term relationships with blue-chip Indian operators and has a sizable market share in India’s fast growing MVAS market. Combining this with breadth and depth of product portfolio, proven ongoing product innovation and ability to scale, the Company plans to build on the market leadership in India.

The Company is fast expanding in to various International markets, and is already operational in 20 countries. The revenues from the Company’s international operations grew from 5% of total revenues last year to 15% of the total revenues, this year. As the international operations expand organically and inorganically, the Company expects the international revenues to grow

signifi cantly and contribute a higher share of the total revenues.

Thus the Company is uniquely positioned to grow into one of the leading global providers of MVAS.

3. RISKS AND CONCERNS• The markets in which the Company operate are highly

competitive.

• The markets in which the Company operates are highly competitive. The competition would intensify further, as new entrants emerge in the industry due to the opportunities available and as existing competitors seek to expand their services. Consolidation among competitors may also lead to a competitive disadvantage. Competitors in the future may include other content aggregators and wireless software companies from India and overseas.

• However, development of innovative revenue generating products joint revenue product planning and service deployments with its customers which involve complex hardware systems and software applications deeply embedded within the carrier’s network infrastructure create high technological and time-to-market barriers to entry for new entrants.

• The Company offers white label applications and services to its customers who then market or promote its applications and services to their end-user subscribers.

• Most of the Company’s customer contracts are on a revenue sharing basis which provide that it earns and receive revenue only if its customers’ end-user subscribers use or subscribe to the services offered by them. As a result, the Company’s revenue is subject to uncertainties that are beyond its control, such as market acceptance of its application services by its customers’ end-user subscribers and the subscriber churn rate and are dependent upon the pricing of the services, product placement and marketing and promotion activities conducted by the Company’s customers either jointly with the Company or solely.

• However, the Company’s continued focus on the development of innovative products, a creative user interface and a good understanding of consumer needs will ensure that it enjoys good positioning on its customers’ menus and websites.

46

• The Company earns a signifi cant portion of its revenue from music related services which is concentrated to a few major carrier customers.

• The Company earns a signifi cant portion of its revenue from ringback tones and music related services, which is expected to continue in the next few years. Also the revenue is concentrated to a few major carrier customers, as they dominate the market share of the Indian telecommunications industry. Although its dependence on the top fi ve customers has reduced in the last three years, the Company will continue to depend on them in the future.

• To dilute the revenue concentration, the Company intends to expand its geographic presence and market to new carrier and other target customers by leveraging its expertise and track record in offering products that address the needs of the customers. Also the Company has invested and will continue to invest resources in research and development in order to keep creating new applications and solutions and to upgrade or improve the existing ones thereby expanding the existing product portfolio.

• A substantial number of the new subscribers of carrier customers are from non-metro areas and they tend to have lower levels of average revenue per user.

• The average revenue per user of the Company’s carrier customers is infl uenced by the demographic make-up of their subscriber base. With the expanding penetration of wireless telecommunications in India, increasingly, based on internal estimates, a substantial number of the new subscribers of its carrier customers are from non-metro areas who generally spend less on telecommunications solutions and applications than subscribers from metro areas, which results in lower average revenues for its carrier customers.

• In order to increase the penetration of value-added services, the Company has invested resources in understanding consumer needs and their spending pattern. This has led to development of new pricing solutions thereby making products affordable to the existing as well as new subscribers.

• Retention of talent

• The Company’s future success and ability to maintain competitive position and implement its business strategy are dependent to a large degree on its ability to identify, attract, train and retain personnel with skills that enable it to keep pace with growing demands and evolving industry standards. However qualifi ed individuals are in high demand and competition for qualifi ed engineers and personnel in the industry is intense, and the Company may incur signifi cant costs to retain or attract them.

• The Company follows a role–based selection process and emphasizes on cultural fi t of the prospective employee with its organizational values. As a retention strategy, the Company has issued ESOPs. Further, in order to mitigate the risk, considerable emphasis is placed on development of leadership skills and on building employee motivation.

4. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACYThe Company’s well defi ned organizational structure, documented policy guidelines, defi ned authority matrix and internal controls ensure effi ciency 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 internal control system is supplemented by extensive internal audits, regular reviews by management and standard policies and guidelines to ensure reliability of fi nancial and all other records to prepare fi nancial statements and other data. 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.

4. DISCUSSION ON FINANCIAL PERFORMANCE (CONSOLIDATED)

Net RevenueDuring the year ended March 31, 2008, the consolidated net revenue grew by 97% to Rs. 2,618.16 million from Rs. 1,329.72 million for the year ended March 31, 2007.

Revenue from India operations grew from Rs. 1,301.34 million for the year ended March 31, 2007 to Rs 2,212.44 million for the year ended March 31, 2008 thus representing a 70% growth.

47

Revenue from international operations grew from Rs 28.38 million for the year ended March 31, 2007 to Rs 405.73 million in the current year ended March 31, 2008. During the current year, revenue from international operations accounted for about 15% of the total net revenue.

Operating ExpensesThe Company incurred total operating expenses of Rs. 1,569.81 million for the year ended March 31, 2008 as compared to Rs 719.82 million for the year ended March 31, 2007. The current year operating expenses represented 60% of the net revenue and comprised of:

• Cost of sales and services – Rs. 388.24 million (15% of the net revenue)

• Manpower cost- Rs. 641.99 million (24% of the net revenue)

• Administration and other expenses – Rs. 539.57 million (21% of the net revenue)

Earnings before other income, depreciation, fi nance charges and taxFor the year ended March 31, 2008, the Company had an earnings before other income, depreciation, fi nance charges and tax of Rs. 1,048.36 million, representing an increase of 72% as compared to Rs 609.90 million for the year ended March 31, 2007.

Other IncomeDuring the year ended March 31, 2008 the Company earned other income primarily through yield on investments and interest on bank deposits amounting to Rs. 74.68 million. In the previous fi nancial year ending March 31, 2007, the Company earned Rs 43.41 million as other income.

Depreciation and Finance charges Depreciation expense during the year ended March 31, 2008 was Rs 255.64 million as compared to Rs 142.93 million for the year ended March 31, 2007. The increase in depreciation is on account of increased investment in fi xed assets for the Company’s expanding operations.

Finance charges stood at Rs. 17.09 million for the year ended March 31, 2008 primarily on account of charges relating to working capital loans drawn from banks.

Earnings Before TaxThe earnings before tax increased by 67 % from Rs. 510.22 million in the year ended March 31, 2007 to Rs. 850.31 million in the year ended March 31, 2008. Earnings before tax as a percentage of net revenue was 32 % in the year ended March 31, 2008.

Provision for TaxationProvision for taxation increased by 48 % from Rs. 167.51 million for the year ended March 31, 2007 to Rs. 247.22 million for the year ended March 31, 2008 due to an increase in current taxes and fringe benefi t taxes.

Earnings after Tax after minority interestThe Company’s earnings after tax after minority interest increased by 79 % from Rs. 337.20 million in the year ended March 31, 2007 to Rs. 603.10 million in the year ended March 31, 2008. Earnings after tax as a percentage of net revenue was 23% for the year ended March 31, 2008.

Capital ExpenditureDuring the year ended March 31, 2008, the Company has incurred capital expenditure of Rs. 836.21 million.

Balance SheetThe Gross Tangible Block stood at Rs. 1,134.38 million and Net Tangible Block including Capital Work In Progress (CWIP) stood at Rs. 853.61 million as at March 31, 2008. Net Intangible block was at Rs. 55.12 million as at March 31, 2008.

Net current assets as at March 31, 2008 stood at Rs 958.49 million thus representing an increase of Rs 446.02 million as compared to previous year.

6. MATERIAL DEVELOPMENTS IN HUMAN RESOURCESHuman resources are an integral and important part of any organization. The Company has put in place sound policies for the growth and progress of its employees. The Company has in place individual performance management systems to encourage merit and enhance innovative thinking among its employees. Investing in people is one of the most important success factors for any organization today. As on March 31, 2008, the Company had 843 (FTE and contract) employees.

48

7. 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 infl uence 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.

49

Auditors’ Report

TO THE MEMBERS OF ONMOBILE GLOBAL LIMITED(formerly ONMOBILE ASIA PACIFIC PRIVATE LIMITED)

We have audited the attached Balance Sheet of ONMOBILE GLOBAL LIMITED (formerly ONMOBILE ASIA PACIFIC PRIVATE LIMITED) (the “Company”) as at March 31, 2008, the Profi t and Loss Account and the Cash Flow Statement of the Company for the year ended on that date, both annexed thereto. These fi nancial statements are the responsibility of the Management of the Company. Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free of material misstatement. An audit includes, examining on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by the Management as well as evaluating the overall fi nancial 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 specifi ed 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 Profi t and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of accounts and proper returns adequate for the purpose of our audit have been received from the branches not visited by us;

(d) in our opinion, the Balance Sheet, the Profi t 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 disqualifi ed as on March 31, 2008 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, 2008;

(ii) in the case of the Profi t and Loss Account, of the profi t for the year ended on that date; and

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

For Deloitte Haskins & Sells Chartered Accountants

V. SrikumarPlace: Bangalore PartnerDate: May 02,2008 Membership No. 84494

50

ANNEXURE TO THE AUDITORS’ REPORT(Referred to in our report of even date)

(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, 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 fi xed assets:

(a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fi xed assets.

(b) The fi xed assets were physically verifi ed during the year by the management in accordance with a programme of verifi cation, which in our opinion provides for physical verifi cation of all the fi xed assets at reasonable intervals. According to the information and explanations given to us no material discrepancies were noticed on such verifi cation.

(c) The fi xed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fi xed 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, fi rms 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 Inventory and fi xed assets and for the sale of services and we have not observed any continuing failure to correct major weaknesses in such internal controls.

(v) In respect of contracts or arrangement 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 fi rm 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, the Company has been regular in depositing undisputed statutory dues, including Investor Education and Protection Fund, Employees’ State Insurance, Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty, Cess and any other material statutory dues with the appropriate authorities during the year and 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.

(b) According to the information and explanations given to us, as at the year-end there are no dues of Income tax, Sales tax, Wealth tax, Service tax, Customs duty, Excise duty and Cess which have not been deposited on account of any dispute.

(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. There are no dues repayable to fi nancial institution and debenture holders.

(ix) 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.

51

(x) We have verifi ed the end use of money raised by public issue is as disclosed in the note B2 to the schedule 15 of the fi nancial statements.

(xi) 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


52

Balance Sheet as at March 31, 2008ONMOBILE GLOBAL LIMITED (formerly OnMobile Asia Pacifi c Private Limited)

Particulars Sch No.

As at March 31, 2008 As at March 31, 2007

Rs. Rs.

I SOURCES OF FUNDS

Shareholders’ Funds

Share capital 1 574,061,390 36,538,360

Stock Options Outstanding Account 1,411,984 -

Reserves & Surplus 2 5,364,598,155 1,985,365,246

Deferred Payment Liability 278,636,800 -

(Refer Note B (9) of Schedule 15)

Deferred Tax Liability (Net) 39,463,720 29,661,000

TOTAL 6,258,172,049 2,051,564,606

II APPLICATION OF FUNDS

Fixed Assets 3

Gross block 1,301,562,584 567,033,362

Less: Accumulated Depreciation 525,494,835 285,051,284

Net Block 776,067,749 281,982,078

Add: Capital Work In Progress 113,385,669 889,453,418 42,871,979 324,854,057

Investments 4 4,610,749,991 1,237,249,405

Current Assets, Loans and Advances

Sundry Debtors 5 782,758,976 514,066,940

Cash and Bank Balances 6 1,436,407,314 197,371,387

Other Current Assets 7 12,536,985 5,384,918

Loans and Advances 8 916,146,726 465,180,743

3,147,850,001 1,182,003,988

Less: Current Liabilities and Provisions 9

Current Liabilities 1,692,342,845 282,633,719

Provisions 697,538,516 409,909,125

2,389,881,361 692,542,844

Net Current Assets 757,968,640 489,461,144

TOTAL 6,258,172,049 2,051,564,606

Signifi cant Accounting Policies and Notes On Accounts 15

The Schedules referred to above and the notes thereon form an integral part of the Balance SheetAs per our report of even date attached

Deloitte Haskins & SellsChartered Accountants

Arvind RaoChief Executive Offi cer and Managing Director

Chandramouli JDirector

V. Srikumar Partner

D SrikiranCompany Secretary

Rajesh Moorti Chief Financial Offi cer

Place: BangaloreDate: May 02, 2008

Place: BangaloreDate: April 30, 2008

53

Profi t & Loss Account for the year ended March 31, 2008ONMOBILE GLOBAL LIMITED (formerly OnMobile Asia Pacifi c Private Limited)

Particulars SchNo.

For the year endedMarch 31, 2008

Rs.


Rs.INCOMETelecom Value Added Services 2,272,647,646 1,279,516,367 Software Development 24,038,824 - Software Licence Fee - 13,500,000 Other Services 10,950,963 10,133,334 Net Revenue 2,307,637,433 1,303,149,701

EXPENDITURECost of Sales and Services 10 354,813,627 235,546,698 Manpower Costs 11 513,233,291 247,138,692 Administration and Other Expenses 12 522,472,844 227,650,765 Total Operating Expenses 1,390,519,762 710,336,155

Earnings before other income, depreciation, fi nance charges and tax 917,117,671 592,813,546 Other Income 13 68,854,956 42,774,197 Depreciation 3 249,178,189 142,252,171

Earnings before fi nance charges and tax 736,794,438 493,335,572 Finance Charges 14 17,093,143 160,603

Earnings before tax 719,701,295 493,174,969

Provision for taxation - current year tax (Note B (23) of Schedule 15) 210,900,000 151,000,000 -earlier year provision 6,900,000 - - deferred tax (Note B (22) of Schedule 15) 15,040,620 6,285,000 - fringe benefi t tax 11,180,339 5,518,000

Earnings after tax 475,680,336 330,371,969

Balance brought forward from previous year 755,305,180 424,933,211

Loss transferred on Amalgamation ( Note B(8) of Schedule 15) (19,100,955) - Provision for leave encashment (net of deferred tax): (Note B (16) of Schedule 15 ) (10,729,297) -

Transfer to capital redemption reserve (90,980) -

Balance carried forward to Balance sheet 1,201,064,284 755,305,180

Basic & Diluted Earnings Per Share (Note B (21) of Schedule 15) - Earnings per share ( Basic)( Face value of equity share of Rs 10/- each) 10 12 - Earnings per share ( Diluted)( Face value of equity share of Rs 10/- each) 9 7


The Schedules referred to above and the notes thereon form an integral part of the Profi t and Loss Account.As per our report of even date attached




V. Srikumar Partner





54

Cash Flow Statement for the Year ended March 31, 2008ONMOBILE GLOBAL LIMITED(formerly OnMobile Asia Pacifi c Private Limited)

Particulars For the year ended

March 31, 2008 For the year ended

March 31, 2007 Rs. Rs.

CASH FLOW FROM OPERATING ACTIVITIESEarnings before taxation 719,701,295 493,174,969 Depreciation and amortisation 249,178,189 142,252,171 Interest income (9,647,198) (6,563,145) Accrued Yield on investments (56,236,676) (34,927,940) Excess Provision reversed (2,473,410) - (Profi t)/Loss on sale of assets 1,573,402 (10,101) Provision for Doubtful Debts 53,386,174 - Profi t on redemption of investments (144,282) (15,282) Unrealised foreign exchange (gain) / loss 22,161,309 (1,764,896) Finance charges 17,093,143 274,890,651 160,603 99,131,409 Changes in current assets and liabilities Sundry debtors (293,020,000) (173,077,132) Loans and advances (139,742,499) (19,378,454) Current liabilities and provisions 282,009,855 (150,752,644) 152,452,925 (40,002,661)Income taxes, TDS and FBT paid during the year (309,918,386) (210,602,826)Net cash generated from operating activities (A) 533,920,916 341,700,892

CASH FLOW FROM INVESTING ACTIVITIES Purchase of fi xed assets and change in Capital work-in-progress (822,937,310) (254,119,215) Proceeds from sale of fi xed assets 9,070,993 10,101 Investment in subsidiaries (1,079,636,078) (195,069,099) Payment towards Deferred Liability (2,504,361) - Sale/ (Purchase) of securities (net) (2,129,558,037) (997,470,610) Interest income 9,647,198 6,583,145 Yield on investments 49,084,609 (3,966,832,986) 34,927,940 (1,405,137,737)Net cash used in investing activities (B)

CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issuance of share capital 3,793,814,990 1,225,266,870 Offer for sale payable to OMSI (net of reimbursement of expenses) 992,710,227 - Share Issue Expense (72,450,288) - Redemption of preference shares (33,043,936) - Proceeds from short term borrowings 350,000,000 - Repayment of short term borrowings (350,000,000) - Finance charges (17,093,143) 4,663,937 ,850 (160,603) 1,225,106,267 Net cash used in fi nancing activities (C)

NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS(A + B + C) 1,231,025,780 161,669,422 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 197,371,387 35,701,965 Cash and Cash Equivalents of Itfi nity Solutions Pvt Ltd at the time ofamalgamation 8,010,147 - CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,436,407,314 197,371,387

Note:1. The above Cash fl ow statement has been prepared under the “indirect method” as set out in the Accounting Standard 3-“Cash Flow statements”. 2.Cash & Cash Equivalents include deposits of Rs. 264,486,557/- (March 31, 2007 : 97,780,169/-) the use of which was restricted. 3.Cash & Cash Equivalents include unrealised foreign exchange loss of Rs. 13,468 /- (March 31, 2007 - Rs. 322,458/-).

As per our report of even date attached




V. Srikumar Partner





55

Schedules forming part of the Balance SheetONMOBILE GLOBAL LIMITED(formerly OnMobile Asia Pacifi c Private Limited)

Particulars As at March 31, 2008Rs.

As at March 31, 2007Rs.

1. SHARE CAPITAL

Authorised

74,500,000 ( at March 31, 2007 – 4,500,000) Equity Shares of Rs. 10 each 745,000,000 45,000,000

500,000 ( at March 31, 2007 – 500,000) Preference Shares of Rs. 10 each 5,000,000 5,000,000

750,000,000 50,000,000

Issued, Subscribed and Paid Up

57,406,139 ( at March 31, 2007 – 3,300,207) Equity Shares of Rs. 10 each, fully paid up 574,061,390 33,002,070

Nil ( at March 31, 2007 – 353,629) Preference Shares of Rs. 10 each, fully paid up - 3,536,290

574,061,390 36,538,360

Notes:-

1) 27,446,008 ( at March 31, 2007 – 2,287,169) Equity Shares are held by the erstwhile Holding Company OnMobile Systems Inc., USA (formerly Onscan Inc.,USA).

2) 567,749 Equity Shares ( at March 31, 2007 – 5,068) were issued to erstwhile shareholders of ITfi nity Solutions Private Limited at the time of amalgamation (inclu-sive of 524,076 bonus shares).

3) During the year the Company has made a bonus issue in the ratio of 12 : 1 to the shareholders by capitalisation of Capital Redemption Reserve and Securities Premium account (Refer Note B (4) of the Schedule 15)

4) 423,722 Equity Shares have been issued to the promoters and employees of Vox Mobili ,SA France as a part of Purchase consideration for its acquisition [inclusive of 391,128 bonus shares].

5) Preference shares issued during 2006-07 with rights to dividend ranking pari passu with the equity shares being convertible at any time on or or before the occur-rence of the intial public offer or on liquidity event as defi ned 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.(Refer note B 8(c) in Schedule 15)

6) On February 19, 2008 the Company allotted 8,613,356 equity shares of Rs 10/- each under an Initial Public Offer (IPO).

2. RESERVES AND SURPLUS

Securities Premium Account

Opening Balance 1,230,060,066 -

Add: Received during the year 4,021,051,016 1,310,457,014

Less: Share issue expenses 245,804,675 80,396,948

Less: Goodwill on Amalgamation Adjusted (Refer Note B(8 (a)) of Schedule 15 ) 358,515,640 -

Less: Redemption of Preference Shares (Refer Note B (8 (c)) of Schedule 15 ) 32,952,956 -

Less: Utilised towards bonus issue 450,303,940 4,163,533,871 - 1,230,060,066

Capital Redemption Reserve

Opening Balance - -

Add: Additions during the year 90,980 -

Less: Utilised towards bonus issue 90,980 - - -

Profi t and Loss Account 1,201,064,284 755,305,180

5,364,598,155 1,985,365,246

56

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57

Schedules forming part of the Balance Sheet

ONMOBILE GLOBAL LIMITED(formerly OnMobile Asia Pacifi c Private Limited)



4. INVESTMENTSLong term investments - Non Trade (unquoted) at costWholly owned subsidiariesOnMobile Singapore Pte. Ltd., Singapore 85,000 equity shares of Singapore $ 1 each, fully paid 2,289,573 2,289,573

OnMobile Australia Pty. Ltd., Australia 100,000 equity shares of Australian $ 1 each, fully paid

Pt. Indonesia OnMobile ., Indonesia 1,000 equity shares of USD 100 each, fully paid 4,062,000 -

Vox mobili SA , France 6,501,705 equity shares of Euro 0.05 each, fully paid 1,431,111,797 -

Phonetize Solutions Private Ltd , India 9,999 equity shares of Rs 10/- each, fully paid 99,990 -

Other SubsidiariesVerse Innovation Private Ltd, India10,412 equity shares of Rs 10/- each, fully paid 22,000,556 -

ITfi nity Solutions Private Limited (Amalgmated into the company with effect from May 14, 2007) Nil (Previous Year: 559,781) equity shares of Rs 10/- each, fully paid. - 213,476,075 TOTAL LONG TERM-UNQUOTED-(A) 1,462,894,916 219,096,648

Short term investments - Non Trade (quoted) at lower of cost and market value ABN AMRO Fixed Term PlanNil ( at March 31, 2007 –25,641,719) units, Net Asset Value Rs Nil ( at March 31, 2007 – Rs 257,781,327) - 255,842,986

ABN AMRO Interval Fund Quartely Plan H Interval Dividend40,000,000 ( at March 31, 2007 –Nil) units, Net Asset Value Rs 403,932,000/- ( at March 31, 2007 – Rs Nil) 400,000,000 -

Kotak Fixed Maturity Plan 3 M Series 8Nil ( at March 31, 2007 – 25,732,171) units , Net Asset Value Rs Nil ( at March 31, 2007 – Rs 257,576,457) - 255,881,032

ING Fixed Maturity Fund - 42 Institutional Dividend30,010,048 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs.301,552,969/- ( at March 31, 2007 – Rs. Nil) 300,100,482 -

HDFC FMP 90D January 2008 (VI) - Wholesale Plan Dividend 500,000,000 - 50,000,000 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 505,150,000/- ( at March 31, 2007 – Rs. Nil) 300,100,482 -

Standard Chartered Fixed Maturity Plan - Quarterly Series 25 - Dividend100,86,574 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 100,896,000/- ( at March 31, 2007 – Rs. Nil) 100,866,000 -

Templeton Quarterly Interval Plan - Plan B - Institutional - Dividend Payout24,974,276 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 251,446,010/- ( at March 31, 2007 – Rs. Nil) 250,000,000 -

Birla Sunlife Qtrl Interval - Series 9 - Dividends Payout 250,000,000 - 25,000,000 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 250,727,500/- ( at March 31, 2007 – Rs. Nil)

Birla Sunlife Qtrl Interval - Series 1 - Dividends Payout10,023,681 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 100,520,629/- ( at March 31, 2007 – Rs. Nil) 100,304,973 - ICICI Prudential Interval Fund II Quarterly Interval Plan E29,186,524 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 293,283,707/- ( at March 31, 2007 – Rs. Nil) 291,865,242 -

58





TATA Dynamic Bond Fund Option B - Dividend17,002,038 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 173,245,662/- ( at March 31, 2007 – Rs. Nil) 172,868,217 -

TATA Fixed Income Portfolio Fund Scheme A3 Institutional24,988,505 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 250,512,264/- ( at March 31, 2007 – Rs. Nil) 250,000,000 -

DWS QUARTERLY INTERVAL FUND - SERIES 1 - Dividend Plan10,000,000 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 100,428,000/- ( at March 31, 2007 – Rs. Nil) 100,000,000 -

Reliance Interval FundNil ( at March 31, 2007 –2,000,000 ) units, Net Asset Value Rs Nil ( at March 31, 2007 – Rs. 200,806,879/-) - 200,000,000

Pru ICICI Fixed Maturity Plan Series 35Nil ( at March 31, 2007 – 25,748,988) units , Net Asset Value Rs Nil ( at March 31, 2007 – Rs 257,554,248/-) - 255,863,434

ICICI Prudential - Flexible Income Plan14,205,826 ( at March 31, 2007 – Nil) units , Net Asset Value Rs 150,205,317/- ( at March 31, 2007 – Rs Nil) 150,205,317 -

LIC Mutual FundNil ( at March 31, 2007 – 4,605,177) units, Net Asset Value Rs Nil ( at March 31, 2007 – Rs 50,565,305/-) - 50,565,305

Birla Sun Life Liquid Plus - Instl. - Daily Dividend -Reinvestment5,120,516 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 51,254,038/- ( at March 31, 2007 – Rs. Nil) 51,239,979 -

Birla Sun Life Liquid Plus - Instl. - Daily Dividend -Reinvestment3,002,311 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 30,033,022/- ( at March 31, 2007 – Rs. Nil) 30,033,022 -

Fidelity Liquid Plus Inst - Daily Dividend 5,011,320 ( at March 31, 2007 Nil ) units, Net Asset Value Rs 50,117,715/- ( at March 31, 2007 Rs. Nil) 50,118,716 -

JP Morgan India liquid fund -Dividend Plan-Reinvest5,000,813 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 50,052,641/- ( at March 31, 2007 – Rs. Nil) 50,052,641 -

Mirae Asset Liquid Fund-Institutional-Dividend Plan (Daily) 50,078 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 50,147,979/- ( at March 31, 2007 – Rs. Nil) 50,147,979 -

Principal Floating Rate Fund FMP Institutional Option - Dividend Reinvestment Daily4,999,102 ( at March 31, 2007 –Nil ) units, Net Asset Value Rs 50,052,507/- ( at March 31, 2007 – Rs. Nil) 50,052,507 - TOTAL SHORT TERM QUOTED- (B) 3,147,855,075 1,018,152,757 GRAND TOTAL -(A+B) 4,610,749,991 1,237,249,405

5. SUNDRY DEBTORS (Unsecured)Debts outstanding for a period exceeding six monthsConsidered good 78,995,927 32,157,089 Considered doubtful 34,751,313 2,662,125

Other debts Considered good 465,774,380 315,967,111 Considered doubtful 18,634,861 - Unbilled Revenue 237,988,669 165,942,740

836,145,150 516,729,065 Less: Provision for Doubtful Debts 53,386,174 2,662,125 Sundry debtors include due from subsidiaries Rs 30,590,454/- ( at March 31, 2007 – Rs 10,266,265/-) 782,758,976 514,066,940

59


6. CASH AND BANK BALANCES Cash on hand 175,458 151,315 Cheques on hand - 182,085 Balances with scheduled banks: - In current account 1,414,490,889 96,029,808 - In deposit account 13,990,544 101,008,179 Balances with other banks (non scheduled banks): - Citibank Malaysia 1,527,235 - - Citibank UK 4,840,190 - - Citibank Australia 576,968 - - Citibank Bangladesh 806,030 -

1,436,407,314 197,371,387 Balances with banks include: - Margin Money Deposit 9,580,087 4,480,169 - LC Deposit 1,200,000 - - Amounts in Escrow 253,706,470 - - Deposits maintained in terms of a Shareholder Agreement - 93,300,000 Maximum amount outstanding at any time during the year with the non scheduled banks are as follows:Citibank Malaysia 1,823,626 - Citibank UK 4,840,190 - Citibank Australia 2,611,724 - Citibank Bangladesh 881,980 -

7. OTHER CURRENT ASSETS Accrued Dividend 12,536,985 5,384,918

12,536,985 5,384,918

8. LOANS AND ADVANCES (Unsecured, considered good)Advances recoverable in cash or in kind or for value to be received. 59,169,044 20,554,442 Other Deposits 145,395,647 47,360,817 Dues from Subsidiaries : - Loan 7,735,376 1,443,895 - Other advances 2,404,671 - Advance income tax & tax deducted at source 701,441,988 395,821,589

916,146,726 465,180,743

9. CURRENT LIABILITIES AND PROVISIONSCurrent liabilities:Sundry creditors other than Micro and Small Enterpises (Refer Note B (26) of Schedule 15) - for capital items- due to erstwhile Holding company 66,821,049 73,285,441 - for capital items- due to others 37,463,911 36,047,364 - for expenses 499,111,914 117,672,009 - due to Subsidiaries 17,818,916 8,106,443 Due to erstwhile Holding company * 940,198,764 - Share Application money (Refer Note B (3) of Schedule 15) 3,706,470 - Deferred revenue 4,812,090 899,825 Other liabilities 122,409,731 46,622,637

1,692,342,845 282,633,719 Note:Sundry Creditors include due to a company in which a director is interested Rs 769,190/- ( at March 31, 2007 - Rs. 202,346/-). Maximum balance during the year Rs 769,190/- ( at March 31, 2007 – Rs. 202,346/-).*Amount due to the erstwhile Holding company is amount payable to OnMobile Systems Inc towards Offer for Sale of 2,287,189/- equity shares at the rate of Rs 440/- per share net of its share in the pre-issue expenses to the extent of Rs 66,164,396/-.Provisions: Income Tax 593,682,346 362,970,249 Fringe Benefi t Tax (Net)* 174,216 3,200,000 Employee Benefi ts 26,480,244 8,841,673 Other Provisions 77,201,710 34,897,203 * Net of advance FBT paid Rs 20,471,779/- ( at March 31, 2007 – Rs. 5,517,154/-) 697,538,516 409,909,125




60

Schedules forming part of the Profi t and Loss Account

10. COST OF SALES AND SERVICESContent fee and Royalty 230,694,581 187,529,211 Cost of hardware and software development charges 124,119,046 48,017,487

354,813,627 235,546,698

11. MANPOWER COSTSalaries, wages and bonus 433,596,729 220,087,672 Contribution to provident fund and other funds 56,239,740 16,941,199 Workmen and staff welfare expenses 19,226,466 6,538,166 Employee Insurance 4,170,356 3,571,655

513,233,291 247,138,692

12. ADMINISTRATION AND OTHER EXPENSES Power and Fuel 12,291,256 6,038,785 Rent 70,959,662 32,972,361 Repairs 14,757,769 3,221,186 Offi ce maintenance 25,373,602 18,083,381 Rates and taxes 3,752,739 851,731 Printing and stationery 3,193,088 1,586,161 Postage, courier and octroi 3,565,820 1,295,771 Communication charges 53,338,727 26,723,836 Training and Recruitment expenses 20,083,518 9,762,394 Travelling and conveyance 81,811,906 43,471,650 Legal, professional & consultancy charges 66,898,726 25,956,975 Commission to non whole time directors 5,000,000 - Remuneration to auditors 2,300,000 1,000,000 Marketing expenses 38,804,448 22,618,881 Business development expenses 32,227,664 23,746,098 Provision for Doubtful Debts 53,386,174 2,662,125 Brokerage and Commission 1,730,244 4,823,406 Bank charges 4,910,086 652,555 Miscellaneous expenses 1,298,761 2,183,469 Loss on Sale of Assets 1,573,402 - Exchange loss 25,215,252 -

522,472,844 227,650,765

13. OTHER INCOMEInterest :- from deposits with banks 9,647,198 6,563,145 (Tax deducted at source Rs 1,623,246/- ,at March 31, 2007 Rs 253,485/-)- from subsidiaries 230,678 55,480 Accrued Dividend on investment 56,236,676 34,927,940 Profi t on Sale of Assets - 10,101 Profi t on redemption of investments 144,282 15,282 Excess Provision reversed 2,473,410 - Exchange Gain - 1,202,249 Other Income 122,712 -

68,854,956 42,774,197

14. FINANCE CHARGESInterest on Short term loan 17,093,143 160,603

17,093,143 160,603


ParticularsFor the year ended

March 31, 2008Rs.

For the year ended March 31, 2007

Rs.

61

Schedules to the Financial Statements for the year ended March 31, 2008ONMOBILE GLOBAL LIMITED(formerly OnMobile Asia Pacifi c Private Limited)

15. SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of fi nancial statements

The fi nancial 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 fi nancial 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 fi nancial 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 benefi t plans, income taxes and the useful lives of fi xed 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 investment is recognized on an accrual basis. Profi t on sale of investments is recorded on transfer of title from the Company and is determined as the difference between the sales price and the then carrying value of the investment.

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 fi xed assets and the cost of fi xed 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

Building 61 years

Offi ce 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 specifi ed 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 Benefi ts

a. Short term employee benefi ts including salaries, social security contributions, short term compensated absences

62

(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, profi t sharing and bonuses payable within twelve months after the end of the period in which the employees render the related services and non monetary benefi ts (such as medical care) for current employees are estimated and measured on an undiscounted basis.

b. Defi ned Contribution Plan

Company’s contributions paid / payable during the year to Provident Fund are recognised in the Profi t and Loss Account.

c. Defi ned Benefi t 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 fi nancial year. Provision for liabilities pending remittance to the fund is carried in the Balance Sheet.

Actuarial gain and losses are recognized immediately in the statement of Profi t and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash fl ows 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 defi ned benefi t obligation.

d. Liability for Leave Encashment is provided based on accumulated leave credit outstanding to the employees as on the date of Balance Sheet.

9. Employee Stock Option Plan

The Company has formulated 6 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 and OnMobile Employees Stock Option Plan – I 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

and OnMobile Employees Stock Option Plan – I 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 profi t and loss account over the period of vesting.

10. Leases

Leases arrangements, where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are classifi ed as operating leases and the lease rentals thereon are charged to the Profi t and Loss account on accrual basis. Assets acquired under fi nance lease arrangements are recognised as an asset and a liability is set up at the inception of the lease, at an amount equal to lower of the fair value of the leased assets or the present value of the future minimum lease payments.

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 benefi ts 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 benefi t 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 fi scal 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 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 benefi t tax is provided as per provisions of the Income Tax Act 1961.

Fringe Benefi t tax on stock options exercised during the year is being recovered from the benefi ciaries and not charged to the Profi t and Loss Account.

63

13. Cash fl ow Statement

Cash Flow Statement has been prepared in accordance with the indirect method prescribed in Accounting Standard 3-“Cash fl ow statements”. The cash fl ows from operating, investing and fi nancing 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 Profi t and Loss Account in the year in which an asset is identifi ed 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 fl ows 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 profi t 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 outfl ow 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 refl ect current best estimates.

B. NOTES ON ACCOUNTS

1. The name of the Company has been changed to “OnMobile Global Limited” (the “Company”) from “OnMobile Asia Pacifi c Private Limited” with effect from August 21, 2007.

2. Initial Public Offer (IPO)

During the year, 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. 4,796,239,800/-. The public issue of 10,900,545 equity shares consisted of a fresh issue of 8,613,356 equity shares aggregating to Rs 3,789,876,640/- and an offer for sale of 2,287,189 equity shares by the erstwhile Holding company, OnMobile Systems Inc aggregating to Rs 1,006,363,160/-. The premium of Rs. 430/- per share amounting to Rs. 3,703,743,080/- from the allotment of 8,613,356 shares has been credited to Securities Premium Account. The Securities Premium Account stands net of share issue expenses of Rs 245,804,675/-.

Pursuant to the Public Issue, shares of the Company have been listed on Bombay Stock Exchange and National Stock Exchange effective February 19, 2008.

The actual utilization of the proceeds of the issue of Rs 3,544,540,000/- (net of share issue expenses) as disclosed in the Prospectus is as under:

Amount in Rs

Sl. No. Expenditure Items

Total cost to be fi nanced from the

Net Proceeds

Actual utilization upto March 31, 2008

1 Purchase of equipment for of-fi ces at Bangalore, Mumbai and Delhi and various customer sites

1,805,210,000 154,842,594

2 Working capital requirements 50,000,000 -

3 Repayment of loan 350,000,000 350,000,000

4 General corporate purposes 1,339,330,000 13,713,385

Total 3,544,540,000 518,555,979

The unutilised funds as at March 31, 2008 have been temporarily invested in short term investments.

3. 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.

4. In the general meeting held on August 17, 2007 the shareholders approved the issue of 12 equity shares of face value of Rs 10/- each as bonus shares for every one share held by the equity shareholders of the Company whose name appear in the register of members as on the record date, by capitalization of capital redemption reserve and Securities premium account. The Board of Directors by a circular resolution on August 18, 2007 has allotted 45,039,492 bonus shares (out of which 391,128 shares

64

were allotted on September 10, 2007 after receipt of Foreign Investment and Promotion Board approval).

5. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for – Rs 82,641,685/- (Previous year: Rs. 90,152,292/-).

6. 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.

7. Export obligation to be met:

The Company has imported certain plant & machinery including on loan basis, at concessional/nil rate of duty under Software Technology Park of India Scheme with an obligation to export software of a specifi ed value by March 31, 2008. As at the year end there was a shortfall in meeting the export obligation amounting to Rs. 45,621,138/-. The Company has fi led an application to Software Technology Park of India for extending the Export Obligation period to 2008-2009 which is pending. Pending receipt of the extension, the Company is contingently liable for customs duty amounting to Rs. 11,843,082/- (Previous Year: Rs. 11,843,082/-), interest thereon and penalty of the equivalent amount against export obligations to be met. The Company has provided bank guarantee of Rs. 475,000/- (net of margin money deposit) in respect of the same.

8. Amalgamation with ITfi nity Solutions Private Ltd.

a. The Company acquired 51% of share capital of ITfi nity Solutions Private Limited (“ITfi nity”) which is in the same line of business, as the Company, on December 22, 2006 for a total consideration of Rs. 213,476,075/- based on an independent valuation, of which Rs. 195,069,099/- was payable in cash and the balance consideration of Rs. 18,406,976/- payable by allotment of equity shares of Rs. 10/- each based on an exchange ratio recommended by the independent valuer. Accordingly, the value of investment in ITfi nity was recorded at Rs. 213,476,075/- and the aggregated premium of Rs.18,356,296/- on allotment of shares was credited to the Securities Premium Account.

Subsequently ITfi nity was amalgamated with the Company with effect from April 1, 2006, in terms of the Scheme of Amalgamation (“the Scheme”) sanctioned by the Honorable High Court of Karnataka, Bangalore and the High Court of Judicature at Bombay vide their orders dated March 27, 2007 and April 21, 2007 respectively. The Scheme came into effect on May 14, 2007 and pursuant thereto all assets and debts,

outstanding, credits, liabilities, benefi ts under income tax, excise, sales tax (including deferment of sales tax) benefi ts for and under STPI registrations, duties and obligations were transferred to and vested in the Company retrospectively with effect from April 1, 2006.

Pursuant to the Scheme, the investment held by the Company in the said subsidiary was cancelled and the balance consideration to the minority shareholders aggregating to Rs. 191,664,272/- was paid by allotment of 30,997 equity shares of Rs. 10/- each fully paid up and 21,774 preference shares of Rs. 10/- each fully paid up in the Company. The amalgamation was accounted under the “ Purchase Method” as per the Accounting Standard 14 - “Accounting for Amalgamations” and in accordance with the Scheme, the assets and liabilities were taken over at their book values. In terms of the scheme, the excess of consideration over the value of the net assets taken over being Goodwill arising on amalgamation as calculated below was appropriated against the Securities Premium account. If accounted based on Accounting Standard 14 - “Accounting for Amalgamations”, goodwill would have been amortised over its useful life not exceeding 5 years from the effective date resulting in the profi ts for the year ended March 31, 2008 being lower by Rs. 71,703,128/-.

Goodwill arising on amalgamation:

Particulars Amount (Rs.)

Fixed Assets 1,197,153

Investment 1,110,000

Current Asset 58,907,732

Current Liabilities (14,578,794)

Miscellaneous Expenditure 71,600

Deferred Tax liabilities (82,984)

Total Net Assets as on April 1, 2006 46,624,707 A

Value of Consideration to Minority Shareholders 191,664,272 B

Cancellation of Investments 213,476,075 C

Goodwill on Amalgamation (Adjusted against Securities Premium Account)

358,515,640 (B+C-A)

b. Adjustments arising out of amalgamation:

As per the amalgamation order received by the Company, the appointed date is April 1, 2006. Accordingly net loss from ITfi nity during the fi nancial year 2006-07 as below is transferred to the Profi t and Loss account in the books of the Company upon amalgamation.

65

Amount (Rs.)

Net Profi t for the year from April 1, 2006 to March 31, 2007 ( After alignment to Company’s accounting policies ) 18,610,336

Less: Dividend paid during April 1, 2006 to December 22, 2006 before ITfi nity became a subsidiary of the Company 37,711,291

Net loss transferred on amalgamation (19,100,955)

c. Of the shares issued and allotted to the minority shareholders of erstwhile ITfi nity, as discussed in Para 8(a) above, 9,098 Preference shares were redeemed on June 01, 2007 at a premium of Rs. 3,622/- each and 12,676 Preference Shares of Rs. 10/- each were converted into equity shares of Rs. 10/- each at par. Capital Redemption Reserve was credited to the extent of the face value of the Preference Shares redeemed during the year.

d. 24,430 Equity Shares issued to the founders of ITfi nity on its amalgamation, have been retained in an escrow up to the committed period of their employment being up to December 20, 2008 (“Employment Period”). On expiration of the Employment Period, the shares shall be released to the Founders. According to the Employment Agreement read along with the Merger Agreement and the Escrow Agreement, if in case the employment gets terminated within the Employment Period due to reasons stated therein, the shares shall be transferred back to the Company.

e. In view of the aforesaid amalgamation with effect from April 1, 2006, the fi gures for the current year are not comparable to those of the previous year.

9. Acquisition of Voxmobili S.A.

a. During the year the Company has vide resolution of the Board of Directors dated July 12, 2007 and the share purchase agreement signed by and between the Company and the shareholders of Voxmobili S.A (“ Vox”) on July 18 , 2007 (“Shares purchase agreement”) has acquired 6,501,708 shares consisting of 2,500,000 Class A shares and 4,001,708 class B shares of Vox on September 10, 2007 for a maximum total consideration of Euros 25,434,423 (aggregating to Rs 1,431,111,797/- including Rs 2,504,361/- of taxes payable towards transfer of shares) payable under the share purchase agreement as below:

1. Euros 18,735,192 in Cash

2. 423,722 equity shares (including bonus shares) of the Company payable to Founders of Vox valued at Euros 2,279,231 based on independent valuation and approved by the Foreign Investment and Promotion Board vide their letter dated September 5, 2007.

3. Euros 3,520,000 in cash subsequent to an earn out valuation adjustment as mentioned in the share purchase agreement, payable to the founders of Vox and

4. Euros 900,000 payable in Cash to the eligible key employees of Vox

Accordingly, the Company has issued 423,722 equity shares of Rs 10/- each and paid Euros 18,735,192 of which Euros 2,543,192 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 Euros 4,420,000 (Rs 278,636,800/-) is shown as deferred payment liability in the Balance Sheet.

b. In terms of the share purchase agreement, the Company vide resolution of Compensation committee of the Board dated February 27, 2008 has granted 74,360 options exercisable at Rs 299/- per option, for a total value aggregating to Euros 400,000 to the key employees other than the founders of Vox.

10. Investment in Ver se Innovation Private Limited

During the year the Company has vide resolution of the Board of directors dated July 12, 2007 and the subscription cum shareholders agreement signed by and between the Company and the promoters of Ver se Innovation Private Limited (“ Ver se ”) on October 26, 2007 has acquired 51% equity share capital of Ver se consisting of 10,412 equity shares for a total consideration of Rs 22,000,556/-.

The Company has further agreed to a capital commitment in Ver se up to Rs. 66,000,000/- 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 shareholders agreement.

11. 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 realizable in full.

66

Particulars As atMarch 31, 2008

As atMarch 31, 2007

Maximum amount due at any time during the year

2007-08

Maximum amount due at any time during the year

2006-07Subsidiaries- OnMobile Singapore Pte. Ltd- PT OnMobile Indonesia

1,591,2906,144,086

1,443,895-

1,591,2906,144,086

1,443,895-

Employees loan given in the ordinary course of the busi-ness 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 speci-fi ed in section 372A of the Companies Act, 1956. 11,511,838 3,930,808

Details of purchase and sale of investments during the year:

Name of the fundPurchased Sold(at cost)

No. of Shares / Units Amount No. of Shares /

Units Amount

Long term Investments Pt OnMobile Indonesia 1,000 40,62,000 - -Vox Mobili SA,France 6,501,705 1,431,111,797 - -Phonetize Solutions Private Ltd (included on Amalgamation) 9,999 99,990 - -Verse Innovation Private Ltd 10,412 22,000,556 - -

Short Term InvestmentsING Liquid Fund - Super IP - Daily Dividend 43,229,991 432,548,252 40,227,679 402,515,230ICICI Prudential Flexible Income Plan - Daily Dividiend 66,445,714 702,563,756 52,239,886 552,358,438DBS Chola Liquid Fund 30,065,043 300,730,628 30,065,043 300,730,628DWS Credit Opportunities Cash Fund 6,013,681 60,462,750 6,013,681 60,462,750Principal Floating Rate MF 10,058,006 100,703,773 10,058,006 100,703,773 Templeton Long Term Plan Institutional Option - Dividend Reinvestment 20,045,226 201,043,590 20,045,226 201,043,590 Tata Mutual Fund 77,618,570 778,949,820 77,618,570 778,948,922Kotak Fixed Maturity Plan 3 M Series 8 639,274 6,270,143 26,371,445 263,714,451.51 Kotak Fixed Maturity Plan 3 M Series 16 26,425,851 264,258,513 26,425,851 264,258,513.00 ABN AMRO Fixed Term Plan 752,782 7,617,526 26,394,501 264,995,321.Reliance Interval Fund 367,304 3,626,166 2,367,304 204,433,045Pru ICICI Fixed Maturity Plan Series 35 134,925 1,494,836 25,883,912 258,839,123LIC MF Liquid Plus Fund - Daily Dividend 25,185,625 251,858,082 29,990,802 302,423,387HSBC Liquid Plus Fund 5,205,084 52,116,425 5,205,084 52,116,425Lotus India Liquid Plus Fund - IP - Daily Dividend 30,073,763 301,209,786 30,073,763 301,209,786Birla Sun life Liquid Plus 15,144,197 151,544,952 10,023,681 100,304,973ING Fixed Maturity Fund - 42 Institutional Dividend 30,010,048 300,100,482 - -HDFC FMP 90D January 2008 (VI) - Wholesale Plan Dividend 50,000,000 500,000,000 - -Standard Chartered Fixed Maturity Plan - Quarterly Series 25 - Dividend 10,086,574 100,866,000 - -ABN AMRO Interval Fund Quartely Plan H Interval Div-Redemption 40,000,000 400,000,000 - -Templeton Quarterly Interval Plan - Plan B - Institutional - Dividends Payout 24,974,276 250,000,000 - -Birla Sunlife Qtrl Interval - Series 9 - Dividends Payout 10,023,681 100,304,973 - -BSL Quarterly Interval Fund Series 9 25,000,000 250,000,000 - -ICICI Prudential Interval Fund II Quarterly Interval Plan E 29,186,524 291,865,242 - -Tata Fixed Income Portfolio A3 24,988,505 250,000,000 - -Tata Dynamic Bond Fund Option B – Dividend 17,002,038 172,868,217 - -DWS Quarterly Interval Fund-Series 1-Dividend Plan 10,000,000 100,000,000 - -Fidelity Liquid Plus Inst - Daily Dividend 5,011,320 50,118,716 - -Mirae Asset Liquid Fund-Institutional-Dividend Plan (Daily) 50,078 50,147,979 - -Principal Floating Rate Fund FMP Insti. Option - Dividend Reinvestment Daily 4,999,102 50,052,507 - -JP Morgan India liquid fund -Dividen Plan-Reinvest 5,000,813 50,052,641 - -Total 650,261,111 7,990,650,098 419,004,434 4,409,058,356

67

13. Loans and advances include:


As atMarch 31, 2007

Due from a company in which director is interested Maximum balance outstanding during the year Rs 96,605/-(Previous year Rs 96,605/-)

96,605 96,605

Due from a director of the Company (Maximum balance outstanding during the year Rs 3,151,231/-(Previous year Rs 3,918,380/-)

852,173 2,109,767

14. Remuneration to Directors

a. Managerial Remuneration to Whole time directors

ParticularsFor the year

endedMarch 31, 2008

For the year ended

March 31, 2007Salary and Allowances 13,294,533 16,315,328Perquisites 510,500 -Contribution to Provident Fund 430,009 24 4,800 14,235,042 16,560,128

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 directors


endedMarch 31,2008

For the year ended

March 31, 2007Sitting fees * 1,228,237 -Commission 5,000,000 -Stock Options 229,167 -

6,457,404 -

* The above sitting fees include Rs 228,237 pertaining to the fi nancial year ended March 31, 2007 paid during the current year ended March 31, 2008.

c. Computation of net profi t in accordance with Section 349 of the Companies Act,1956 and commission payable to directors:

Particulars For the year endedMarch 31, 2008

Profi t before taxation 719,701,295 Add: Managerial remuneration 20,692,446 Loss on Sale of assets 1,573,402 Provision for Doubtful Debts 53,386,174 74,456,803Less: Profi t on Sale of investments 144,282 Excess Provision reversed back 2,473,410 2,617,692 Net Profi t 792,735,625Remuneration to whole time Directors:Eligible under Section 309 79,273,562Restricted to remuneration paid 14,235,042 Commission to Non-whole-time directors Eligible under Section 309 7,927,356Restricted to Commission Payable 5,000,000

15. Auditors Remuneration


ended March 31, 2008

For the year ended March

31, 2007

Audit Fees 2,000,000 800,000

Tax Audit Fees 300,000 200,000

Total 2,300,000 1,000,000

The above fees does not include Rs 4,494,400 (including service tax) towards services rendered for the initial public offer which has been 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.

16. Employee Benefi ts:

The Company has adopted the Accounting Standard 15 (Revised 2005)- “Employee Benefi ts” with effect from

April 1, 2007 the details of which are given below:

I. Defi ned Contribution Plans

During the year, the Company has recognized the following amount in the Profi t and Loss Account-


endedMarch 31, 2008

Employers’ Contribution to Provident Fund 22,990,552 *

* Included in Contribution to provident and other funds (Refer Schedule11)

II. Defi ned Benefi t Plan

a. Defi ned Benefi t Plan (Leave Encashment):

In accordance with Accounting Standard 15 (Revised 2005) - “Employee Benefi ts”, the transitional liability of Rs 16,167,298/- in respect of unutilised leave salary existing as on April 01, 2007 has been adjusted against opening balance of surplus in Profi t & Loss account, net of deferred tax adjustment of Rs 5,438,000/-.

Leave encashment benefi t expensed in the Profi t & Loss Account for the year was Rs.21,419,856/-. Such liability was hitherto calculated on estimated payout basis . However in the current year the liability was estimated on cost of compensated absences and the impact being profi ts for the current year lower by Rs.9,201,813/-.

b) Contribution to Gratuity Fund:

In accordance with Accounting Standard 15 (Revised 2005) - “Employee Benefi ts”, actuarial valuation as on March 31, 2008

68

was done in respect of the aforesaid defi ned benefi t plan of Gratuity based on the following assumptions.

Particulars For the year ended March 31, 008

Discount Rate 8.25% p.a.Expected Rate of Return on Plan Assets 7.50% p.a.

Salary Escalation Rate 10.0% p.a. for fi rst 4 years& 7.0% p.a. thereafter

The estimates of rate of escalation in salary considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors including supply and demand in the employment market.

Change in Present Value of Obligation:


Present Value of Obligation as at 1st Apr, 2007 4,924,492Current Service Cost 2,299,991Interest on Defi ned Benefi t Obligation 382,536Benefi ts Paid -Net Actuarial Losses / (Gains) Recognized in Year 3,246,806Past Service Cost -Losses / (Gains) on “Curtailments & Settlements” -Closing Present Value of Obligations 10,853,825

Change in the Fair Value of Assets:


Opening Fair Value of Plan Assets 1,820,521Expected Return on Plan Assets 166,067Actuarial Gains / (Losses) 157,932Assets Distributed on Settlements -Contributions by Employer 5,090,974Assets Acquired due to Acquisition -Exchange Difference on Foreign Plans -Benefi ts Paid -Closing Fair Value of Plan Assets 7,235,494

Reconciliation of Present Value of Defi ned Benefi t Obligation and the Fair Value of plan assets:


Closing Present Value of Funded Obligations 10,853,825Closing Fair Value of Plan Assets (7,235,494)Closing Funded Status 3,618,331Unrecognized Actuarial (gains) / losses -Unfunded Net Asset / (Liability) recognised in Balance Sheet -

Amount recognized in the Balance Sheet:


Closing Present value of obligations 10,853,825Closing Fair Value of plan assets (7,234,494)Liability Recognised in the Balance Sheet 3,618,331

Expenses recognized in the Profi t & Loss Account:


endedMarch 31, 2008

Current Service Cost 2,299,991

Past Service Cost -

Interest Cost 382,536

Expected Return on Plan Assets (166,067)

Actuarial (Losses) / Gain 3,088,874

Losses / (Gains) on “Curtailments & Settlements” -

Total Expenses to be recognized in theProfi t & Loss Account 5,605,334

This being the fi rst year of adoption of Accounting Standard 15 (Revised 2005) - “Employee Benefi ts”, no comparative information and other disclosures relating to previous year have been provided in this account.

17. Operating leases

The Company is obligated under non-cancelable operating lease for offi ce space.

Total rental expense and future lease payments under non-cancelable operating lease for offi ce space are as follows:


endedMarch 31, 2008

For the yearended

March 31, 2007Rental expense charged toProfi t and Loss account 64,459,945 28,645,676Future lease paymentsNot later than 1 year 74,012,348 39,474,773Later than 1 year and not later than5 years 200,990,737 172,933,887

18. Employee Stock Option Plans

a. During the year 2003-2004, the Company introduced ‘OnMobile Employees Stock Option Plan – I 2003’ and ‘OnMobile Employees Stock Option Plan – II 2003’ for the benefi t of the employees, as approved by the board of directors in the meeting held on October 31, 2003 and December 4, 2003 respectively and Extra Ordinary General Meeting held on March 5, 2001 ,November 29, 2003 and December 30,2003 and the Company had appropriated 1,026,000 and 114,000 equity shares of Rs.10/- each respectively to be granted to the eligible employees. The options were granted at the discretion of the compensation committee at the exercise price determined by them. In accordance with the terms of the stock option plans, 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

69

of 1/36th per month for the next thirty six (36) months from the fi rst Vesting.

Numbers of options granted, exercised and forfeited during the year under the said scheme are given below:


endedMarch 31,2008

For the year ended

March 31,2007

Options granted outstanding at the beginning of the year 130,113 1,060,376

Granted during the year 32,923 71,899

Exercised during the year 23,188 972,681

Forfeited during the year 6,303 29,471

Increase in the options consequent to issu-ance of bonus shares as discussed in Note 4 above

1,602,540 -

Options granted outstanding at the end of the year 1,736,085 130,113

Grants outstanding which are vested as at Balance Sheet date including increase due to issuance of bonus shares

599,079 937,774

b. During the year 2006-2007 the Company introduced ‘OnMobile Employees Stock Option Plan – III 2006’ vide Board Resolution dated July 24, 2006 and Shareholders Resolution dated July 24, 2006. A total of 61,567 options had been appropriated to be granted to the eligible directors and employees. The options to the directors were granted at the discretion of the Board of Directors and the options to the employees were granted by compensation committee at the exercise price determined by them respectively. In accordance with the terms of the stock option plans, 25% of such Options granted would vest at the end of twelve (12) months from the date the Optionee becomes an employee/director 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 fi rst Vesting.

c. During the year 2007-2008, the Company introduced ‘OnMobile Employees Stock Option Plan – I and Plan-II 2007’ vide Board Resolution dated July 12, 2007 and Shareholders Resolution dated August 17, 2007. A total of 975,000 and 74,360 options respectively have been appropriated to be granted to the eligible employees.

In accordance with the terms of ‘OnMobile Employees Stock Option Plan – I 2007’, 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 fi rst Vesting.

In accordance with ‘OnMobile Employees Stock Option Plan – II 2007’, approved by the compensation committee of the Board on February 27, 2008, 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.

Details of options granted under the schemes discussed in Point b) and c) above are given below:

ParticularsFor the

year endedMarch 31,2008

For the year ended

March 31,2007Options granted outstanding at the beginning of the year - -

Granted during the year 1,253,101 - Exercised during the year - - Forfeited during the year 43,563 - Options granted outstanding at the end of the year 1,209,538 -

Weighted average remaining contractual life (years)at the year end 4.25 -

Weighted average exercise price per option (after adjusting for Bonus issue) Rs 322.34 -

Range of exercise price (after adjusting for bonus issue) 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 profi t and loss account. Accordingly, the compensation charge thereon in the current year is Rs.1,411,984/-.

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 profi t for the year ended March 31, 2008 would have been lower by Rs. 26,998,954/- and Basic and diluted EPS would have been revised to Rs. 9.4 and Rs 8.7 respectively as compared to Rs 9.9 and 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 4.8 years, an expected dividend rate of 1% on the underlying equity shares, volatility in the share price ranges from 21% to 59% and a risk free rate of 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 fl uctuations.

70

19. 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 identifi ed to geographical locations and the company’s signifi cant operations constituting more than 90% of the total operations are carried out of India. Details of secondary segment by geographical locations are given below:-



I Revenue (by location of customer) In India 2,212,380,050 1,275,848,381 Outside India 95,257,383 27,301,320

II Total carrying amount of Segmental Assets, by geographical location In India 3,229,345,282 1091,714,973 Outside India 86,243,788 12,492,670

III Cost incurred for purchase of tangible & intangible assets, by geographical location In India 810,935,007 254,119,215 Outside India 12,002,303 -

20. Transactions with related parties

I. List of Related parties and relationship:

Sl No Relationship Related parties

(i) Controlling EnterprisesHolding Company OnMobile Systems Inc., USA (upto February 18, 2008)Associate Company OnMobile Systems Inc., USA (w.e.f from February 19, 2008)Subsidiaries OnMobile Singapore Pte. Ltd.

OnMobile Australia Pty. Ltd.PT OnMobile Indonesia (w.e.f. August 23, 2007)Vox Mobili S.A (w.e.f. September 10, 2007)Phonetize Solutions Private Limited (w.e.f. May 14, 2007)Ver se Innovation India Private Limited (w.e.f. October 26, 2007)

(ii) Other related parties with whom the Company had transactionsKey Management Personnel Arvind Rao


Amount in Rs

Sl No Nature of transactions

Holding Company Subsidiary Companies Associate Company Key Management Personnel Total

March 31,2008

March 31,2007

March 31,2008

March 31,2007

March 31,2008

March 31,2007

March 31,2008

March 31,2007

March 31,2008

March 31,2007

1 Income from services

OnMobile Singapore Pte. Ltd. - - 33,362,408 2,568,621 - - - - 33,362,408 2,568,621

OnMobile Australia Pty. Ltd. - - 5,647,620

13,863,098 - - - - 5,647,620 13,863,098

Total - - 39,010,028 16,431,719 - - - - 39,010,028 16,431,719

2Business Development expenses

OnMobile Singapore Pte. Ltd. - - 14,249,383 7,383,345 - - - - 4,249,383 7,383,345

OnMobile Australia Pty.Ltd. - - 6,728,281

16,362,753 - - - - 6,728,281 16,362,753

PT OnMobile Indonesia - -

11,250,000 - - - - - 11,250,000 - Total - - 32,227,664 23,746,098 - - - - 32,227,664 23,746,098 3 Remuneration Arvind Rao - - - - - - 8,845,672 13,849,126 8,845,672 13,849,126

Chandramouli Janakiraman - - - - - - 5,389,370 2,711,002 5,389,370 2,711,002

Total - - - - - - 14,235,042 16,560,128 14,235,042 16,560,128

71

Sl No Nature of transactions

Holding Company Subsidiary Companies Associate Company Key Management Personnel Total

March 31,2008

March 31,2007

March 31,2008

March 31,2007

March 31,2008

March 31,2007

March 31,2008

March 31,2007

March 31,2008

March 31,2007

4 Interest Income

OnMobile Singapore Pte. Ltd - - 54,792 55,480 - - - - 54,792 55,480

PT OnMobile Indonesia - - 175,886 - - - - - 175,886 - Total - - 230,678 55,480 - - - - 230,678 55,480

OnMobile Singapore Pte. Ltd. - - - 1,433,094 - - - - - 1,433,094

OnMobile Australia Pty. Ltd. - - 7,035,516 6,673,349 - - - - 7,035,516 6,673,349

PT OnMobile Indonesia - -

10,783,400 - - - - - 10,783,400 -

OnMobile Systems Inc. -

73,285,441 - - 1,007,019,813 - - -

1,007,019,813 73,285,441 Total - 73,285,441 17,818,916 8,106,443 1,007,019,813 - - - 1,024,838,729 81,391,884 5 Amount Receivable A Loan

OnMobile Singapore Pte. Ltd - - 1,428,150 1,388,415 - - - - 1,428,150 1,388,415

PT OnMobile Indonesia - - 6,003,696 - - - - - 6,003,696 - B Accrued interest

OnMobile Singapore Pte. Ltd - - 163,140 55,480 - - - - 163,140 55,480

PT OnMobile Indonesia - - 140,390 - - - - - 140,390 - C Other Advances Arvind Rao - - - - - - 852,173 2,096,736 852,173 2,096,736

Chandramouli Janakiraman - - - - - - - 13,031 - 13,031

OnMobile Singapore Pte. Ltd - - 1,642,280 - - - - - 1,642,280 -

PT OnMobile Indonesia - - 762,391 - - - - - 762,391 - D Sundry Debtors

OnMobile Singapore Pte. Ltd. - -

24,793,508 2,435,017 - - - - 24,793,508 2,435,017

OnMobile Australia Pty. Ltd. - - 5,796,946 7,831,248 - - - - 5,796,946 7,831,248

Total - - 40,730,501 11,710,160 - - 852,173 2,109,767 41,582,674 13,819,927

Notes:1. Related party relationships are as identifi ed by the Company on the basis of information available and accepted 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.


The earnings per share, computed as per the requirements of Accounting Standard 20 –“Earnings per Share” is as under:

Particulars

For the year ended

March 31, 2008

For the year ended

March 31, 2007

Profi t after tax as per the Profi t & Loss Account 475,680,336 330,371,970Weighted Average number of Shares for Basic EPS 47,916,994 26,634,907

Add: Effect of Convertible Preference Shares and Stock Options outstanding 3,942,651 22,338,870

Weighted Average Number of equity shares for diluted EPS 51,859,645 48,973,777

For the year ended

March 31, 2008 Rs.

For the year ended

March 31, 2007 Rs.

Nominal value of equity shares 10.00 10.00Earnings Per ShareBasic 10 12Diluted 9 7

Note: Consequent to issuance of bonus shares as discussed in Note 4 above, the calculation of basic and diluted earnings per share has been adjusted for the increase in the number of equity shares outstanding as a result of the issuance of bonus equity shares, for all the years presented.

72

22. Accounting For Taxes On Income

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. 15,040,620/- for the current year, which has been debited to the Profi t & Loss account. Details of Deferred Tax Asset and Liabilities are:

Particulars Deferred Tax (Assets)/ Li-abilities as on April 1, 2007 Adjustment Current year

(credit)/charge

Deferred Tax (Assets)/ Liabilities as on March

31, 2008Difference between book & tax depreciation 33,533,000 Nil 32,126,000 65,659,000Others (Provision for gratuity, leave encashment etc.,) (3,872,000) (5,438,000) (17,085,380) (26,395,380) Deferred Tax (ITfi nity) at the time of Amalgamation Nil 200,100 Nil 200,100Total 29,661,000 (5,237,900) 15,040,620 39,463,720

Out of the above credit Rs 5,438,000/- has been credited to the General reserve on account of transitional provisions as per revised Accounting Standard 15-“ Employee Benefi ts” (Revised 2005).

23. 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.

24. The details of Provisions under Accounting Standard 29 - “Provisions, Contingent liabilities and Contingent assets” is as under:-

Sl. No. Nature of Expense

Probable outfl ow

estimated within

Provision outstanding as at

April 1, 2007

Provision made during

the year

Provision utilized during the year

Provision reversed during

the year

Provision outstanding as at

March 31, 2008

1 Other provisions- warranties & customer credits 3 years 34,897,203 188,963,416 144,185,499 2,473,410 77,201,710

25. Disclosure on Derivative Instruments

There are no outstanding forward exchange contracts entered into by the company as at March 31, 2008. Foreign currency exposure as at March 31, 2008 that have not been hedged by derivative instrument or otherwise is as follows:

ParticularsAs at

March 31, 2008 Amount (Rs.)

As atMarch 31, 2007Amount (Rs.)

As atMarch 31, 2008

Amount (Foreign Currency)

As atMarch 31, 2007

Amount (Foreign Currency)Due from: Debtors against export of services/goods 21,193,429 1,132,474 USD 532,296 USD 28,495 24,880,226 2,435,017 SGD 860,700 SGD 89,474 11,768,419 7,831,248 AUD 320,554 AUD 225,210 6,003,397 - BDT 10,215,950 -

630,420 - EUR 10,000 -Against loan 1,591,290 1,443,895 SGD 55,072 SGD 53,963 6,144,086 - USD 153,994 -Against advances 1,642,280 - SGD 56,813 -

2,630,696 - USD 65,932 - 762,391 - IDR 177,574,876 -

Due to: Creditors against import of goods and services 7,035,516 6,673,349 AUD 192,129 AUD 178,229 10,783,400 - IDR 2,452,549,669 - - 1,433,094 - SGD 56,241

74,697,145 73,285,441 USD 1,872,109 USD 1,674,713Voxmobili Payable 278,636,800 - EUR 4,420,000 -

26. During the year ,the Company has circulated request to all suppliers to confi rm their status under the Micro, Small and Medium Enterprises Development Act, 2006 and despite regular follow up the Company has not received confi rmations 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.

73

27. 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.

28. Value of imports calculated on CIF basis



Capital goods (including software downloads) 283,490,219 22,424,135

29. Expenditure in Foreign Currency



Business Development Expenses 32,227,664 23,746,098Travel 13,022,658 3,162,176Content Cost 6,185,172 -Software and Software development charges 4,562,699 -Annual maintenance charges 11,705,855 -Legal and Professional 24,599,563 1,666,453Pre-issue expenses (charged to Securities Premium account) 21,424,936 -Others 2,835,540 -Total 1,16,564,087 28,574,727

30. Earnings in Foreign Currency



Master Services/Professional Services 95,257,383 27,301,320

31. Previous year’s fi gures have been regrouped/reclassifi ed wherever necessary.

Signatures to Schedule 1 to 15

Arvind Rao Chandramouli JChief Executive Offi cer Directorand Managing Director

D Srikiran Rajesh MoortiCompany Secretary Chief Financial Offi cer


74

Balance Sheet abstractONMOBILE GLOBAL LIMITED (formerly OnMobile Asia Pacifi c Private Limited)

I REGISTRATION DETAILSRegistration Number 27860

State Code 08

Balance Sheet Date 31-03-08

II CAPITAL RAISED DURING THE YEAR (RUPEES IN THOUSANDS)Public Issue 3,789,876,640

Rights Issue N.A

Bonus Issue 450,303,940

Private Placement -

Preferential offer of shares under Employee Stock Option Plan Scheme(s)* 301,444

III POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (RUPEES IN THOUSANDS)Total Liabilites 6,258,172,049

Total Assets 6,258,172,049

Source of Funds

Paid up Capital 574,061,390

Reserves & Surplus 5,364,598,155

Secured Loans -

Unsecured Loans -

Application of Funds

Net Fixed Assets 889,453,418

Capital Work-in-Progress (including Capital Advances)

Investments 4,610,749,991

Deferred Tax Assessment

Net Current Assets 757,968,640

Miscellaneous Expenditure -

Accumulated Losses -

IV PERFORMANCE OF COMPANY (RUPEES IN THOUSANDS)Turnover 2,307,637,433

Total Expenditure 1,656,791,094

Profi t/(Loss) Before Tax 719,701,295

Profi t/(Loss) After Tax 475,680,336

Earnings per share (Rupees) 9

Dividend Rate % N.A

V GENERIC NAMES OF THREE PRINCIPAL PRODUCTS/SERVICES OF COMPANY(AS PER MONETARY TERMS)Production Description Item Code No.

Software Development. 85243111

* Issue of shares arising on the exercise of option granted to employees under Company’s ESOP Plan - I, 2003 and adjustment of bonus issue of 12 equity shares for every 1 equity share held.

75

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 Pacifi c Private limited) (“the Company”) and it’s subsidiaries (“the group”) as at March 31, 2008; the Consolidated Profi t and Loss Account and the Consolidated Cash Flow Statement for the year then ended, both annexed thereto. These fi nancial statements are the responsibility of the Management of the Company and have been prepared by the management on the basis of separate fi nancial statements and other fi nancial information regarding components. Our responsibility is to express an opinion on these fi nancial 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 fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the fi nancial statements of subsidiaries as at March 31, 2008, whose fi nancial statements refl ect total assets of Rs. 436,038,257 and total revenues of Rs.383,383,825 and net cash outfl ows of Rs. 17,349,648 for year ended on that date. These fi nancial statements and other fi nancial 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 fi nancial statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, notifi ed by the Companies (Accounting Standard) Rules, 2006 and on the basis of the separate audited fi nancial statements of the Company and its subsidiaries included in the consolidated fi nancial statements.

5. On the basis of the information and explanation given to us and on the consideration of the separate audit reports on individual fi nancial statements and on the other fi nancial information of the components of the Company and its subsidiaries, we are of the opinion that the attached consolidated fi nancial 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, 2008; and

b. in the case of the consolidated profi t 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 fl ow statement, of the consolidated cash fl ows of the group for the year then ended.

For Deloitte Haskins & SellsChartered Accountants


Auditors’ Report

76


Particulars Sch No.

As at March 31, 2008 Rs.

As at March 31, 2007 Rs.

I SOURCES OF FUNDS

Shareholders’ Funds

Share Capital 1 574,061,390 36,538,360

Stock Options Outstanding Account 1,411,983 -

Reserves & Surplus 2 5,535,483,327 1,990,239,662

Minority Interest - 13,864,047

Deferred Payment Liability 278,636,800 -

(Refer Note B (9) Of Schedule 15)

Deferred Tax Liability (Net) 39,252,511 29,861,100

TOTAL 6,428,846,011 2,070,503,169

II APPLICATION OF FUNDS

Goodwill On Consolidation 1,367,929,687 204,810,086

Fixed Assets 3

Gross Block 1,335,210,118 580,648,387

Less : Accumulated Depreciation 539,867,583 288,446,602

Net Block 795,342,535 292,201,785

Add: Capital Work In Progress 113,385,669 908,728,204 42,871,981 335,073,766

Investments 4 3,193,700,565 1,018,152,757

Current Assets, Loans and Advances

Project Work In Progress 10,605,803 -

Sundry Debtors 5 989,726,289 539,276,664

Cash and Bank Balances 6 1,458,839,603 211,605,239

Other Current Assets 7 12,536,985 5,384,917

Loans and Advances 8 947,356,669 479,052,490

3,419,065,349 1,235,319,310

Less: Current Liabilities and Provisions 9

Current Liabilities 1,739,129,303 297,951,607

Provisions 721,448,491 424,901,143

2,460,577,794 722,852,750

Net Current Assets 958,487,555 512,466,560

TOTAL 6,428,846,011 2,070,503,169


Consolidated Balance Sheet as at March 31, 2008

The Schedules referred to above and the notes thereon form an integral part of the Balance SheetAs per our report of even date attached




V. Srikumar Partner





77

Consolidated Profi t & Loss Account for the year ended March 31, 2008ONMOBILE GLOBAL LIMITED(formerly OnMobile Asia Pacifi c Private Limited)

Particulars Sch No.


Rs.


Rs. INCOME Telecom Value Added Services 2,459,475,367 1,280,591,255 Software Development 146,048,882 11,745,784 Software Licence Fee - 13,500,000 Other Services 12,640,564 23,879,822 Net Revenue 2,618,164,813 1,329,716,861

EXPENDITURE Cost of Sales and Services 10 388,243,105 237,221,204 Manpower Costs 11 641,992,764 270,461,340 Administration and Other Expenses 12 539,573,046 212,137,988 Total Operating Expenses 1,569,808,915 719,820,531

Earnings before other income, depreciation, fi nance charges and tax 1,048,355,898 609,896,329

Other Income 13 74,684,946 43,408,159 Depreciation 3 255,635,746 142,926,327

Earnings before fi nance charges and tax 867,405,098 510,378,162 Finance Charges 14 17,093,143 160,603

Earnings before tax 850,311,955 510,217,559 Provision for taxation - current tax (Note B (20) of Schedule 15) 214,463,640 154,990,203 - relating to earlier year 6,900,000 - - deferred tax (Note B (19) of Schedule 15) 14,829,411 6,379,575 - fringe benefi t tax 11,023,482 6,139,899

Earnings after tax 603,095,422 342,707,882

Share of Profi t of Minority Interest - 5,511,930 Earnings after Tax after Minority Interest 603,095,422 337,195,952 Balance brought forward from previous year 756,179,596 422,983,644

1,359,275,018 760,179,596 Transfer to General Reserve - 4,000,000 Loss transferred on Amalgamation (Note B(8) of Schedule 15) (21,626,130) - Provision for leave encashment (net of deferred tax) Note B (13) of Schedule 15) (10,729,298) - Transfer to capital redemption reserve (90,980) - Balance carried forward to Balance sheet 1,326,828,610 756,179,596

Basic & Diluted Earnings Per Share (Note B (18) of Schedule 15) - Earnings per share (Basic) (Face value of equity share of Rs. 10/- each) 13 13 - Earnings per share (Diluted) (Face value of equity share of Rs. 10/- each) 12 7


The Schedules referred to above and the notes thereon form an integral part of the Profi t and Loss Account.As per our report of even date attached




V. Srikumar Partner





78

Consolidated Cash Flow Statement for the year ended March 31, 2008ONMOBILE GLOBAL LIMITED(formerly OnMobile Asia Pacifi c Private Limited)


March 31, 2008Rs.


Rs.CASH FLOW FROM OPERATING ACTIVITIESEarnings before taxation 850,311,955 510,217,559 Depreciation and amortisation 255,635,745 142,926,327 Interest income (9,748,107) (6,609,688) Accrued Yield on investments (56,717,646) (34,943,953) Excess Provision reversed (2,473,410) - (Profi t)/ Loss on sale of assets 1,573,402 (10,101) Provision for Doubtful Debts 53,386,174 - Profi t on redemption of investments (144,282) (15,282) Unrealised foreign exchange gain / loss 50,894,375 - Preliminary expenses written off 42,878 (23,396) Finance charges 17,093,143 309,542,272 160,603 101,484,511

Changes in current assets and liabilities Sundry debtors (418,370,697) (184,240,126) Loans and advances (141,000,806) (16,493,367) Current liabilities and provisions 254,194,500 (305,177,003) 148,393,207 (52,340,286)

Income taxes,TDS and FBT paid during the year (305,015,128) (211,400,503)Net cash generated from operating activities (A) 549,662,096 347,961,281

CASH FLOW FROM INVESTING ACTIVITIES Purchase of fi xed assets and change in Capital work-in-progress (836,211,262) (263,608,924) Proceeds from sale of fi xed assets 9,070,993 10,101 Investment in subsidiaries (1,064,473,522) - Payment towards Deferred Liability (2,504,361) - Sale/ (Purchase) of securities (net) (2,158,602,928) (1,192,519,709) Interest income 9,748,107 6,609,688 Yield on investments 44,180,661 (3,998,792,312) 34,943,953 (1,414,564,891)Net cash used in investing activities (B)

CASH FLOW FROM FINANCING ACTIVITIES Proceeds from issuance of share capital 3,793,814,990 1,225,266,870 Offer for sale payable to OMSI (net of reimbursement of expenses) 992,710,227 - Share Issue Expense (72,450,288) - Redemption of preference shares (33,043,936) - Proceeds from short term borrowings 350,000,000 - Repayment of short term borrowings (350,000,000) - Finance charges (17,093,143) 4,663,937,850 (160,603) 1,225,106,267Net cash used in fi nancing activities (C)

NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS(A + B + C) 1,214,807,634 158,502,656

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 211,605,239 53,102,583 Cash acquired on acquisition of Ver se Innovation Private Limited 4,623,413 - Cash acquired on acquisition of Voxmobili S A 27,803,317 - CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 1,458,839,603 211,605,239

Notes:1. The above Cash Flow Statement has been prepared under the “indirect method” as set out in the Accounting Standard 3 - “Cash fl ow statements”. 2. Cash & Cash Equivalents include deposits of Rs. 264,486,557/- (March 31, 2007 : 97,780,169/-) the use of which was restricted. 3. Cash & Cash Equivalents include unrealised foreign exchange loss of Rs. 13,468 /- (March 31, 2007 - Rs. 322,458/- ).

As per our report of even date attached




V. Srikumar Partner





79

Schedules forming part of the Consolidated Balance Sheet


Particulars As at March 31, 2008 Rs.


1. SHARE CAPITALAuthorised74,500,000 ( at March 31, 2007 - 4,500,000) Equity Shares of Rs. 10 each 745,000,000 45,000,000 500,000 ( at March 31, 2007 – 500,000) Preference Shares of Rs. 10 each 5,000,000 5,000,000

750,000,000 50,000,000

Issued, Subscribed and Paid Up57,406,139 ( at March 31, 2007 – 3,300,207) Equity Shares of Rs. 10 each, fully paid up 574,061,390 33,002,070 Nil ( at March 31, 2007 – 353,629) Preference Shares of Rs. 10 each, fully paid up - 3,536,290

574,061,390 36,538,360 Notes:-

1) 27,446,008 ( at March 31, 2007 – 2,287,169) Equity Shares are held by the erstwhile Holding Company OnMobile Systems Inc., USA (formerly Onscan Inc.,USA).

2) 567,749 Equity Shares ( at March 31, 2007 – 5,068) were issued to erstwhile shareholders of ITfi nity Solutions Private Limited at the time of amalgamation (inclu-sive of 524,076 bonus shares).

3) During the year the Company has made a bonus issue in the ratio of 12 : 1 to the shareholders by capitalisation of Capital Redemption Reserve and Securities Premium Account (Refer Note B (4) of the Schedule 15)

4) 423,722 Equity Shares have been issued to the promoters and employee of Vox Mobili ,SA France as a part of Purchase consideration for its acquisition [inclusive of 391,128 bonus shares].

5) Preference shares issued during 2006-07 with rights to dividend ranking pari passu with the equity shares being convertible at any time on or or before the occur-rence of the intial public offer or on liquidity event as defi ned 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. (Refer note B 8(c) in Schedule 15)

6) On February 19, 2008 the Company allotted 8,613,356 equity shares of Rs 10 each under an Initial Public Offer (IPO).

2. RESERVES AND SURPLUSSecurities Premium accountOpening Balance 1,230,060,066 - Add: Received during the year 4,042,947,452 1,310,457,014 Less: Share issue expenses 245,804,675 80,396,948 Less: Goodwill on Amalgamation Adjusted (Refer Note B(8 (a)) of Schedule 15) 358,515,640 - Less: Redemption of Preference Shares (Refer Note B (8 (c)) of Schedule 15) 32,952,956 - Less: Utilised towards bonus issue 450,303,940 4,185,430,307 - 1,230,060,066

General reserveOpening Balance 4,000,000 - Add: Received during the year - 4,000,000 Less: Adjusted on Amalgamation ((Note B(8) of Schedule 15) 4,000,000 - - 4,000,000

Capital Redemption ReserveOpening Balance - - Add: Additions during the year 90,980 - Less: Utilised towards bonus issue 90,980 - - -

Foreign Currency Translation Reserve 23,224,411 -

Profi t and Loss Account 1,326,828,610 756,179,596 5,535,483,327 1,990,239,662

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81

Schedules forming part of the Consolidated Balance Sheet


Particulars As at March 31, 2008 Rs.


4. INVESTMENTSCurrent InvestmentsMutual Funds 3,156,952,699 1,018,152,756 Others 36,747,865 - Refer to Note B(12) of Schedule 15 for details of purchase and sale of investments during the year

3,193,700,565 1,018,152,757

5. SUNDRY DEBTORS (Unsecured)Debts outstanding for a period exceeding six monthsConsidered good 196,217,114 33,929,550 Considered doubtful 34,751,313 2,662,125

Other debtsConsidered good 474,848,880 337,552,415 Considered doubtful 18,634,861 - Unbilled Revenue 318,660,294 167,794,699 1,043,112,462 541,938,789 Less: Provision for Doubtful Debts 53,386,174 2,662,125

989,726,289 539,276,664

6. CASH AND BANK BALANCESCash on hand 229,746 195,028 Cheques on hand 89,000 182,085 Balances with scheduled banks: - In current account 1,436,779,891 107,768,204 - In deposit account 13,990,544 103,459,922 With other banks (non scheduled banks) 7,750,423 -

1,458,839,603 211,605,239

7. OTHER CURRENT ASSETSAccrued Dividend 12,536,985 5,384,918

12,536,985 5,384,918

8. LOANS AND ADVANCES (Unsecured, considered good)Advances recoverable in cash or in kind or for value to be received 90,884,099 20,608,762 Other Deposits 154,979,422 51,954,622 Advance income tax & tax deducted at source 701,493,148 406,489,106

947,356,669 479,052,490

9. CURRENT LIABILITIES & PROVISIONSCurrent liabilities:Sundry creditors - for capital items-due to erstwhile Holding Company 66,821,049 73,285,442 - for capital items- due to others 37,463,911 41,975,313 - for expenses 543,228,468 129,185,892 Due to erstwhile Holding Company * 940,198,764 - Share Application money (Refer Note B (3) of Schedule 15) 3,796,470 - Deferred revenue 11,657,212 1,079,825 Other liabilities 135,963,430 52,425,135

1,739,129,303 297,951,607 Note:*Amount due to the erstwhile Holding Company is amount payable to OnMobile Systems Inc towards Offer for Sale of 2,287,189 equity shares at the rate of Rs 440/- per share net of its share in the preissue expenses to the extent of Rs 66,164,396.Provisions: Income Tax 594,137,973 376,691,692 Fringe Benefi t Tax (Net)* 174,949 3,247,626 Employee Benefi ts 49,933,859 10,064,622 Other Provisions 77,201,710 34,897,203 * Net of advance FBT paid Rs 20,494,789/- ( at March 31, 2007 – Rs. 5,517,154/-) 721,448,491 424,901,143

82

Schedules forming part of the Consolidated Profi t & Loss Account


Particulars For the year endedMarch 31, 2008 Rs.

For the year endedMarch 31, 2007 Rs.

10. COST OF SALES AND SERVICESContent fee and Royalty 231,780,996 187,718,339 Cost of hardware and software development charges 156,462,109 49,502,865

388,243,105 237,221,204

11. MANPOWER COSTSalaries, wages and bonus 529,340,085 241,555,567 Contribution to provident fund and other funds 87,878,488 17,451,781 Workmen and staff welfare expenses 19,011,056 7,804,394 Employee Insurance 5,763,135 3,649,598

641,992,764 270,461,340

12. ADMINISTRATION AND OTHER EXPENSES Power and Fuel 12,291,256 6,038,785 Rent 79,278,879 35,142,908 Repairs 14,757,769 3,223,818 Offi ce maintenance 27,394,132 18,185,384 Rates and taxes 7,386,431 835,481 Printing and stationery 3,255,690 1,599,350 Postage, courier and octroi 3,575,497 1,302,829 Communication charges 56,671,011 27,490,449 Training and Recruitment expenses 19,776,556 9,824,250 Travelling and conveyance 90,189,238 45,679,753 Legal, professional & consultancy charges 75,462,575 28,185,406 Commission to non whole time directors 5,000,000 - Remuneration to auditors 2,300,000 1,000,000 Marketing expenses 41,825,520 22,960,213 Provision for Doubtful Debts 53,386,174 2,662,125 Brokerage and Commission 5,922,858 5,039,720 Bank charges 5,577,904 675,735 Miscellaneous expenses 2,180,223 2,291,781 Loss on Sale of Assets 1,573,402 - Exchange loss 31,767,931 -

539,573,046 212,137,988

13. OTHER INCOMEInterest :- from deposits with banks 9,748,107 6,609,688 (Tax deducted at source Rs 1,623,246/-, at March 31, 2007 – Rs 253,485/-)Accrued dividend on investment 56,717,646 34,943,953 Profi t on sale of Assets - 10,101 Profi t on redemption of investments 144,282 15,282 Excess Provision reversed 2,473,410 - Exchange Gain 1,472,219 1,822,085 Other Income 4,129,283 7,051

74,684,946 43,408,159

14. FINANCE CHARGESInterest on Short term loan 17,093,143 160,603

17,093,143 160,603

83


15. SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of fi nancial statements

The Consolidated Financial statements relate to OnMobile Global Limited (formerly OnMobile Asia Pacifi c Private Limited) (the Company) and its subsidiaries.

The Consolidated fi nancial 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. Principle of consolidation

The fi nancial 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 fi nancial statements.

The following entities are considered in the consolidated fi nancial statements.

Sl No

Name of entity Country of Incorpora-

tion

% of Owner-ship held as

on March 31, 2008

% of Owner-ship held as

on March 31, 2007

1 OnMobile Australia Pty Ltd Australia 100 1002 OnMobile Singapore Pte

Ltd Singapore 100 1003 Phonetize Solutions

Private Limited (w. e. f. May 14, 2007) India 99.99 -

4 PT OnMobile Indonesia(w. e. f. June 11, 2007) Indonesia 100 -

5 Voxmobili SA(w. e. f. September 10, 2007) France 100 -

6 Voxmobili Inc(w. e. f. September 10, 2007) USA 100 -

7 Ver se Innovation Private Ltd(w. e. f. October 26, 2007) India 51 -

The consolidation for the year includes fi gures of PT OnMobile Indonesia formed during the year and of Voxmobili SA, Voxmobili Inc. and Ver se Innovation Private Limited, which were acquired during the year. Erstwhile subsidiary, ITfi nity Solutions Private Limited has been amalgamated into the Company w. e. f May 14, 2007 with the appointment date April 1, 2006 (refer note B(8) in this schedule). Loses incurred by Ver se Innovation Private Ltd over the minority shareholders paid up capital has been absorbed by the Company. Hence previous year fi gures are not comparable.

3. Use of Estimates

The preparation of the fi nancial 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 fi nancial 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 benefi t plans, income taxes and the useful lives of fi xed 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 investment is recognized on an accrual basis. Profi t on sale of investments is recorded on transfer of title from the Company and is determined as the difference between the sales price and the then carrying value of the investment.

5. Fixed assets

Fixed assets are stated at cost of acquisition including taxes, duties, freight and other incidental expenses relating to acquisition and installation.

Schedules to the Consolidated Financial Statements for the year ended March 31, 2008

8484

Capital work in progress is stated at cost and includes advances paid to acquire fi xed assets and the cost of fi xed assets that are not ready for their intended use at the Balance Sheet date.

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 yearsLeasehold Improvements primary lease periodBuilding 61 yearsOffi ce equipment 3 to 10 yearsFurniture & Fixtures 3 to 10 yearsComputers & Electronic equipment 3 to 5 yearsComputer Software 1 to 3 yearsMotor 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 specifi ed in Schedule XIV of the Companies Act, 1956.

7. Investments

Short term investments are stated at lower of cost or 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 fi rst day of the fi scal 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 Profi t 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.

9. Employee Benefi ts

a. Short term employee benefi ts 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, profi t sharing and bonuses payable within twelve months after the end of the period in which the employees render the related services and non monetary benefi ts (such as medical care) for current employees are estimated and measured on an undiscounted basis.

b. Defi ned Contribution Plan: Company’s contributions paid / payable during the year to Provident Fund are recognized in the Profi t and Loss Account.

c. Defi ned Benefi t 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 fi nancial year. Provision for liabilities pending remittance to the fund is carried in the Balance Sheet.

Actuarial gain and losses are recognized immediately in the statement of Profi t and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash fl ows 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 defi ned benefi t obligation.

d. Liability for Leave Encashment is provided based on accumulated leave credit outstanding to the employees as on the date of Balance Sheet.

10. Employee Stock Option Plan

The Company has formulated 6 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 and OnMobile Employees Stock Option Plan – I 2008.

8585

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 and OnMobile Employees Stock Option Plan – I 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 profi t and loss account over the period of vesting.

11. Leases

Leases arrangements, where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are classifi ed as operating leases and the lease rentals thereon are charged to the Profi t and Loss account on accrual basis. Assets acquired under fi nance lease arrangements are recognised as an asset and a liability is set up at the inception of the lease, at an amount equal to lower of the fair value of the leased assets or the present value of the future minimum lease payments.

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 benefi ts to the Company while other borrowing costs are expensed.

13. Income Tax

Income tax expense includes Indian and International income taxes. Income tax comprises the current tax provision, net change in deferred tax asset or liability in the year and fringe benefi t 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 fi scal 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 virtually certain. Voxmobili S.A. has a special tax credit on Research and Development costs in accordance with the French fi scal 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 benefi t tax is provided as per provisions of the Income Tax Act 1961.

Fringe Benefi t tax on stock options exercised during the year is being recovered from the benefi ciaries and not charged to the Profi t and Loss Account.

Research tax rebate:-

In accordance with French fi scal rules, the subsidiary Voxmobili SA, 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 fl ow Statement

Cash Flow Statement has been prepared in accordance with the indirect method prescribed in Accounting Standard 3 – “Cash Flow Statements”. The cash fl ows from operating, investing and fi nancing 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 Profi t and Loss Account in the year in which an asset is identifi ed 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 fl ows are discounted to the present value. A previously recognized impairment loss is further provided or reversed depending on changes in circumstances.

16. Earning per Share

In determining the earning per share, the Company considers the net profi t 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 earning per share comprises the weighted average number of equity shares considered for deriving basic earning 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.

86

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 outfl ow 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 refl ect current best estimates.

B. NOTES ON ACCOUNTS

1. The name of the Company has been changed to “OnMobile Global Limited” (the “Company”) from “OnMobile Asia Pacifi c Private Limited” with effect from August 21, 2007.

2. Initial Public Offer (IPO)

During the year, 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. 4,796,239,800/- The public issue of 10,900,545 equity shares consisted of a fresh issue of 8,613,356 equity shares aggregating to Rs 3,789,876,640/- and an offer for sale of 2,287,189 equity shares by the erstwhile Holding Company, OnMobile Systems Inc aggregating to Rs 1,006,363,160/-. The premium of Rs. 430/- per share amounting to Rs. 3,703,743,080/- from the allotment of 8,613,356 shares has been credited to Securities Premium Account. The Securities Premium Account stands net of share issue expenses of Rs 245,804,675/-.

Pursuant to the Public Issue, shares of the Company have been listed on Bombay Stock Exchange and National Stock Exchange effective February 19, 2008.

The actual utilization of the proceeds of the issue of Rs 3,544,540,000/- (net of share issue expenses), as disclosed in the prospectus, is as under:

Amount in Rs

S/. No. Expenditure Items

Total cost to be fi nanced

from the Net Proceeds

Actual utilization upto March 31,

2008

1Purchase of equipments for offi ces at Bangalore, Mumbai and Delhi and various customer sites

1,805,210,000 154,842,594

2 Working capital requirements 50,000,000 -3 Repayment of loan 350,000,000 350,000,0004 General corporate purposes 1,339,330,000 13,713,385 Total 3,544,540,000 518,555,979

The unutilized funds as at March 31, 2008 have been temporarily invested in short term investments.

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.

In the general meeting held on August 17, 2007 the shareholders approved the issue of 12 equity shares of face value of Rs 10/- each as bonus shares for every one share held by the equity shareholders of the Company whose name appear in the register of members as on the record date, by capitalization of capital redemption reserve and Securities premium account. The Board of Directors by a circular resolution on August 18, 2007 has allotted 45,039,492 bonus shares (out of which 391,128 shares were allotted on September 10, 2007 after receipt of Foreign Investment and Promotion Board approval).

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for – Rs 82,641,685/- (Previous year: Rs. 90,152,292/-)

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.

7. Export obligation to be met:

The Company has imported certain plant & machinery including on loan basis, at concessional/nil rate of duty under Software Technology Park of India Scheme with an obligation to export software of a specifi ed value by March 31, 2008. As at the year end there was a shortfall in meeting the export obligation amounting to Rs. 45,621,138/-. The Company has fi led an application to Software Technology Park of India for extending the Export Obligation period to 2008-2009 which is pending. Pending receipt of the extension, the Company is contingently liable for customs duty amounting to Rs. 11,843,082/- (Previous Year: Rs. 11,843,082/-), interest thereon and penalty of the equivalent amount against export obligations to be met. The Company has provided bank guarantee of Rs. 475,000/- (net of margin money deposit) in respect of the same.

8. Amalgamation with ITfi nity Solutions Private Ltd.

a. The Company acquired 51% of share capital of ITfi nity Solutions Private Limited (“ITfi nity”) which is in the same line of business, as the Company, on December 22, 2006, for a total consideration of Rs. 213,476,075/- based on an independent valuation, of which Rs. 195,069,099/- was payable in cash and the balance consideration of Rs. 18,406,976/- payable by allotment of equity shares of Rs. 10/- each based

87

on an exchange ratio recommended by the independent valuer. Accordingly, the value of investment in ITfi nity was recorded at Rs. 213,476,075/- and the aggregated premium of Rs.18,356,296/- on allotment of shares was credited to the Securities Premium Account.

Subsequently ITfi nity was amalgamated with the Company with effect from April 1, 2006 in terms of the Scheme of Amalgamation (“the Scheme”) sanctioned by the Honorable High Court of Karnataka, Bangalore and the High Court of Judicature at Bombay vide their orders dated March 27, 2007 and April 21, 2007 respectively. The Scheme came into effect on May 14, 2007 and pursuant thereto all assets and debts, outstanding, credits, liabilities, benefi ts under income tax, excise, sales tax (including deferment of sales tax) benefi ts for and under STPI registrations, duties and obligations were transferred to and vested in the Company retrospectively with effect from April 1, 2006.

Pursuant to the Scheme, the investment held by the Company in the said subsidiary was cancelled and the balance consideration to the minority shareholders aggregating to Rs. 191,664,272/- was paid by allotment of 30,997 equity shares of Rs. 10/- each fully paid up and 21,774 preference shares of Rs. 10/- each fully paid up in the Company. The amalgamation was accounted under the “Purchase Method” as per the Accounting Standard 14 - “Accounting for Amalgamations” and in accordance with the Scheme, the assets and liabilities were taken over at their book values. In terms of the scheme, the excess of consideration over the value of the net assets taken over being Goodwill arising on amalgamation as calculated below was appropriated against the Securities Premium account. If accounted based on Accounting Standard 14 - “Accounting for Amalgamations”, goodwill would have been amortised over its useful life not exceeding 5 years from the effective date resulting in the profi ts for the year ended March 31, 2008 being lower by Rs. 71,703,128/-.

Goodwill arising on amalgamation:

Particulars Amount (Rs.)Fixed Assets 1,197,153 Investment 1,110,000 Current Asset 58,907,732 Current Liabilities (14,578,794)Miscellaneous Expenditure 71,600 Deferred Tax liabilities (82,984)Total Net Assets as on April 1, 2006 46,624,707 AValue of Consideration to Minority Shareholders 91,664,272 BCancellation of Investments 213,476,075 CGoodwill on Amalgamation (Adjusted against Securities Premium Account) 358,515,640 (B+C-A)

b. Adjustments arising out of amalgamation:

As per the amalgamation order received by the Company, the appointed date is April 1, 2006. Accordingly net loss from ITfi nity during the fi nancial year 2006-07 as below is transferred to the Profi t and Loss account in the books of the Company upon amalgamation

Amount (Rs.)

Net Profi t for the year from April 1, 2006 to March 31,

2007 (After alignment to Company’s accounting policies )12,085,161

Add: General Reserve transferred 4,000,000

Less: Dividend paid during April 1, 2006 to December 22,

2006 before ITfi nity became a subsidiary of the Company 37,711,291

Net loss transferred on amalgamation (21,626,130)

c. Of the shares issued and allotted to the minority shareholders of erstwhile ITfi nity, as discussed in Para 8(a) above, 9,098 Preference shares were redeemed on June 01, 2007 at a premium of Rs. 3,622/- each and 12,676 Preference Shares of Rs. 10/- each were converted into equity shares of Rs. 10/- each at par. Capital Redemption Reserve was credited to the extent of the face value of the Preference Shares redeemed during the year.

d. 24,430 Equity Shares issued to the founders of ITfi nity on its amalgamation, have been retained in an escrow up to the committed period of their employment being up to December 20, 2008 (“Employment Period”). On expiration of the Employment Period, the shares shall be released to the Founders. According to the Employment Agreement read along with the Merger Agreement and the Escrow Agreement, if in case the employment gets terminated within the Employment Period due to reasons stated therein, the shares shall be transferred back to the Company.

e. In view of the aforesaid amalgamation with effect from April 1, 2006, the fi gures for the current year are not comparable to those of the previous year.

9. Acquisition of Voxmobili S.A.

a. During the year the Company has vide resolution of the Board of Directors dated July 12, 2007 and the share purchase agreement signed by and between the Company and the shareholders of Voxmobili SA (“Vox”) on July 18, 2007 (“Shares purchase agreement”) has acquired 6,501,708 shares consisting of 2,500,000 Class A shares and 4,001,708 class B shares of Vox on September 10, 2007 for a maximum total consideration of Euros 25,434,423 ( aggregating to Rs 1,431,111,797/- including Rs 2,504,361/- of taxes payable

88

towards transfer of shares) payable under the share purchase agreement as below:

1. Euros 18,735,192 in Cash

2. 423,722 equity shares (including bonus shares) of the Company payable to Founders of Vox valued at Euros 2,279,231 based on independent valuation and approved by the Foreign Investment and Promotion Board vide their letter dated September 5, 2007

3. Euros 3,520,000 in cash subsequent to an earn out valuation adjustment as mentioned in the share purchase agreement, payable to the founders of Vox and

4. Euros 900,000 payable in Cash to the eligible key employees of Vox.

Accordingly, the Company has issued 423,722 equity shares of Rs 10/- each and paid Euros 18,735,192 of which Euros 2,543,192 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 Euros 4,420,000 (Rs 278,636,800/-) is shown as deferred payment liability in the Balance Sheet.

b. In terms of the share purchase agreement, the Company vide resolution of Compensation Committee of the Board dated February 27, 2008 has granted 74,360 options exercisable at Rs 299/- per option, for a total value aggregating to Euros 400,000 to the key employees other than the founders of Vox.

10. Investment in Ver se Innovation Private limited

During the year the Company has vide resolution of the Board of Directors dated July 12, 2007 and the subscription cum shareholders agreement signed by and between the Company and the promoters of Ver se Innovation Private Limited (“Ver se”) on October 26, 2007 has acquired 51% equity share capital of Ver se consisting of 10,412 equity shares for a total consideration of Rs 22,000,556/-.

The Company has further agreed to a capital commitment in Ver se up to Rs. 66,000,000/- 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 shareholders agreement.

11. Effective July 1, 2007, the operations of OnMobile Australia Pty Ltd has been transferred to OnMobile Global Ltd. As a result of this, contractual costs effective July 1, 2007 have since been transferred and booked in branch operations. OnMobile Australia Pty Limited will be deregistered in due course.

12. Details of purchase and sale of investments during the year :

Name of the fundPurchased Sold


Units Amount

Short Term Investments ING Liquid Fund - Super IP - Daily Dividend 43,229,991 432,548,252 40,227,679 402,515,230ICICI Prudential Flexible Income Plan - Daily Dividend 66,445,714 702,563,756 52,239,886 552,358,438DBS Chola Liquid Fund 30,065,043 300,730,628 30,065,043 300,730,628DWS Credit Opportunities Cash Fund 6,013,681 60,462,750 6,013,681 60,462,750Principal Floating Rate MF 10,058,006 100,703,773 10,058,006 100,703,773 Templeton Long Term Plan Institutional Option - Dividend Reinvestment 20,045,226 201,043,590 20,045,226 201,043,590 Tata Mutual Fund 77,618,570 778,949,820 77,618,570 778,948,922Kotak Fixed Maturity Plan 3 M Series 8 639,274 6,270,143 26,371,445 263,714,451.51 Kotak Fixed Maturity Plan 3 M Series 16 26,425,851 264,258,513 26,425,851 264,258,513.00 ABN AMRO Fixed Term Plan 752,782 7,617,526 26,394,501 264,995,321.Reliance Interval Fund 367,304 3,626,166 2,367,304 204,433,045Pru ICICI Fixed Maturity Plan Series 35 134,925 1,494,836 25,883,912 258,839,123LIC MF Liquid Plus Fund - Daily Dividend 25,185,625 251,858,082 29,990,802 302,423,387HSBC Liquid Plus Fund 5,205,084 52,116,425 5,205,084 52,116,425Lotus India Liquid Plus Fund - IP - Daily Dividend 30,073,763 301,209,786 30,073,763 301,209,786Birla Sun life Liquid Plus 15,144,197 151,544,952 10,023,681 100,304,973ING Fixed Maturity Fund - 42 Institutional Dividend 30,010,048 300,100,482 - -HDFC FMP 90D January 2008 (VI) - Wholesale Plan Dividend 50,000,000 500,000,000 - -Standard Chartered Fixed Maturity Plan - Quarterly Series 25 - Dividend 10,086,574 100,866,000 - -ABN AMRO Interval Fund Quarterly Plan H Interval Div-Redemption 40,000,000 400,000,000 - -

89

Name of the fundPurchased Sold


Units Amount

Templeton Quarterly Interval Plan - Plan B - Institutional - Dividends Payout 24,974,276 250,000,000 - -Birla Sunlife Quarterly Interval - Series 9 - Dividends Payout 10,023,681 100,304,973 - -BSL Quarterly Interval Fund Series 9 25,000,000 250,000,000 - -ICICI Prudential Interval Fund II Quarterly Interval Plan E 29,186,524 291,865,242 - -Tata Fixed Income Portfolio A3 24,988,505 250,000,000 - -Tata Dynamic Bond Fund Option B – Dividend 17,002,038 172,868,217 - -DWS Quarterly Interval Fund-Series 1-Dividend Plan 10,000,000 100,000,000 - -Fidelity Liquid Plus Inst - Daily Dividend 5,011,320 50,118,716 - -Mirae Asset Liquid Fund-Institutional-Dividend Plan (Daily) 50,078 50,147,979 - -Principal Floating Rate Fund FMP Insti. Option - Dividend Reinvestment Daily 4,999,102 50,052,507 - -JP Morgan India liquid fund -Dividend Plan-Reinvest 5,000,813 50,052,641 - -Tata Floater Fund – Daily Dividend 457,225 4,588,527 199,290.256 2,000,000Kotak Quarterly Interest Plan 649,753 6,500,000 - -SICAV 3M – SOGEMONEPLUS 12 14,635,495 6.5 8,905,435SOGEMONEVAL 100 34,862,379 110 38,654,610BMTN 2 19,927,105 - -Total 644,845,087 6,613,889,261 419,203,841 4,458,618,401

13. Employee Benefi ts:

The Company has adopted the Accounting Standard 15 (Revised 2005) - “Employee Benefi ts” with effect from April 01, 2007, the details of which are given below:

I. Defi ned Contribution Plans

During the year, the Company has recognized the following

amount in the Profi t and Loss Account-

ParticularsFor the year endedMarch 31, 2008 Rs.

Employers’ Contribution to Provident Fund 23,252,574 *

* Included in Contribution to provident and other funds (Refer Schedule 11)

II. Defi ned Benefi t Plan

a) Defi ned Benefi t Plan (Leave Encashment):

In accordance with Accounting Standard 15 (Revised 2005) - “Employee Benefi ts, the transitional liability of Rs 16,167,298/- in respect of unutilised leave salary existing as on April 01, 2007 has been adjusted against opening balance of surplus in Profi t & Loss account, net of deferred tax adjustment of Rs 5,438,000/-.

Leave encashment benefi t expensed in the Profi t & Loss Account for the year was Rs. 26,120,186/-Such liability was hitherto calculated on estimated payout basis. However in the current year the liability was estimated on cost of compensated absences and the impact being profi ts for the current year lower by Rs. 9,201,813/-.

b) Contribution to Gratuity Fund:

In accordance with Accounting Standard 15 (Revised 2005) “Employee Benefi ts”, actuarial valuation as on March 31, 2008 was done in respect of the aforesaid defi ned benefi t plan of Gratuity based on the following assumptions.


Discount Rate 8.25% p.a.Expected Rate of Return on Plan Assets 7.50% p.a.Salary Escalation Rate 10.0% p.a. for fi rst 4 years &

7.0% p.a. thereafter

The estimates of rate of escalation in salary considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors including supply and demand in the employment market.

Change in Present Value of Obligation:-


Present Value of Obligation as at April 1, 2007 4,924,492

Current Service Cost 2,299,991

Interest on Defi ned Benefi t Obligation 382,536

Benefi ts Paid -

Net Actuarial Losses / (Gains) Recognized in Year 3,246,806

Past Service Cost -

Losses / (Gains) on “Curtailments & Settlements” -

Closing Present Value of Obligations 10,853,825

90

Change in the Fair Value of Assets


Opening Fair Value of Plan Assets 1,820,521Expected Return on Plan Assets 166,067Actuarial Gains / (Losses) 157,932Assets Distributed on Settlements -Contributions by Employer 5,090,974Assets Acquired due to Acquisition -Exchange Difference on Foreign Plans -Benefi ts Paid -Closing Fair Value of Plan Assets 7,235,494

Reconciliation of Present Value of Defi ned Benefi t Obligation and the Fair Value of plan assets:


Closing Present Value of Funded Obligations 10,853,825Closing Fair Value of Plan Assets (7,235,494)Closing Funded Status 3,618,331Unrecognized Actuarial (gains) / losses -Unfunded Net Asset / (Liability) recognised in Balance Sheet -

Amount recognized in the Balance Sheet


Closing Present value of obligations 10,853,825Closing Fair Value of plan assets (7,234,494)Liability Recognised in the Balance Sheet 3,618,331

Expenses recognized in the Profi t & Loss Account


March 31, 2008Current Service Cost 2,299,991Past Service Cost -Interest Cost 382,536Expected Return on Plan Assets (166,067)Actuarial (Losses) / Gain 3,088,874Losses / (Gains) on “Curtailments & Settlements” -Total Expenses to be recognized in the Profi t & Loss Account 5,605,334

This being the fi rst year of adoption of Accounting Standard 15 (Revised 2005) - “Employee Benefi ts”, no comparative information and other disclosures relating to previous year have been provided in this account.

In respect of PT OnMobile Indonesia, since the Company was established in February 2007 and the employees joined the Company in July 2007, the Company believes that the PSAK 24 (Revision 2004) does not materially affect its current fi nancial position and results of operations.

14. Operating leases

The Company is obligated under non-cancelable operating lease for offi ce space. Total rental expense and future lease payments under non-cancelable operating lease for offi ce space are as follows:


endedMarch 31, 2008

For the year ended

March 31, 2007Rental expense charged to Profi t and Loss account 71,146,312 35,142,908Future lease payments Not later than 1 year 84,467,115 39,918,473Later than 1 year and not later than5 years 253,264,573 172,933,887

15. Employee Stock Option Plans

(a) During the year 2003-2004 the Company introduced ‘OnMobile Employees Stock Option Plan – I 2003’ and ‘OnMobile Employees Stock Option Plan – II 2003’ for the benefi t of the employees, as approved by the Board of Directors in the meeting held on October 31, 2003 and December 4, 2003 respectively and Extra Ordinary General Meeting held on March 5, 2001 ,November 29, 2003 and December 30,2003 and the Company had appropriated 1,026,000 and 114,000 equity shares of Rs.10/- each respectively to be granted to the eligible employees. The options were granted at the discretion of the Compensation Committee at the exercise price determined by them. In accordance with the terms of the stock option plans, 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 fi rst Vesting.

Numbers of options granted, exercised and forfeited during the year under the said scheme are given below:



Options granted outstanding at the beginning of the year 130,113 1,060,376

Granted during the year 32,923 71,899 Exercised during the year 23,188 972,681 Forfeited during the year 6,303 29,471Increase in the options consequent to issuance of bonus shares as discussed in Note 4 above

1,602,540 -

Options granted outstanding at the end of the year 1,736,085 130,113

Grants outstanding which are vested as at Balance Sheet date including increase due to issuance of bonus shares

599,079 937,774

91

(b) During the year 2006-2007 the Company introduced ‘OnMobile Employees Stock Option Plan – III 2006’ vide Board Resolution dated July 24, 2006 and Shareholders Resolution dated July 24, 2006. A total of 61,567 options had been appropriated to be granted to the eligible directors and employees. The options to the directors were granted at the discretion of the Board of Directors and the options to the employees were granted by Compensation Committee at the exercise price determined by them respectively. In accordance with the terms of the stock option plans, 25% of such Options granted would vest at the end of twelve (12) months from the date the Optionee becomes an employee/director 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 fi rst Vesting.

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 profi t and loss account. Accordingly, the compensation charge thereon in the current period is Rs. 229,167/-.

(c) During the year 2007-2008 the Company introduced ‘OnMobile Employees Stock Option Plan – I and Plan-II 2007’ vide Board Resolution dated July 12, 2007 and Shareholders Resolution dated August 17, 2007. A total of 975,000 and 74,360 options respectively have been appropriated to be granted to the eligible employees.

In accordance with the terms of ‘OnMobile Employees Stock Option Plan – I 2007’, 25% of the Options granted would vest at the end of twelve (12) months from the date the Optionee becomes an employee/director 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 fi rst Vesting.

In accordance with ‘OnMobile Employees Stock Option Plan – II 2007’, approved by the Compensation Committee of the Board on February 27, 2008, 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.

Details of options granted under the schemes discussed in Para b and c above are given below:

Particulars For the year endedMarch 31,2008

For the year endedMarch 31,2007

Options granted outstanding at the beginning of the year - -

Granted during the year 1,253,101 - Exercised during the year - - Forfeited during the year 43,563 - Options granted outstanding at the end of the year 1,209,538 -

Weighted average remaining con-tractual life (years) at the year end 4.3 -

Weighted average exercise price per option (after adjusting for Bonus issue)

320.22 -

Range of exercise price (after adjusting for bonus issue)

Rs 261.54 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 profi t and loss account. Accordingly, the compensation charge thereon in the current year is Rs. 1,411,983/-.

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 profi t for the year ended March 31, 2008 would have been lower by Rs. 26,998,954/- and basic and diluted EPS would have been revised to Rs. 12.0 and Rs. 11.1 respectively as compared to Rs. 12.6 and 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 4 years, an expected dividend rate of 1% on the underlying equity shares, volatility in the share price of 47% and a risk free rate of 8%. The Company’s calculations are based on

92

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 fl uctuations.

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 identifi ed to geographical locations and the secondary segment details are given below:


March 31, 2008For the year ended

March 31, 2007I Revenue In India 2,212,435,392 1,301,340,653 In France 106,529,400 - Rest of the World 299,200,021 28,376,208II Total carrying amount of Segmental Assets, by geographical location In India 3,233,801,424 1,135,910,445 In France 291,044,472 - Rest of the World 88,917,527 22,608,604III Cost incurred for purchase of tangible & intangible assets, by geographical

location In India 811,555,388 255,142,140 In France 2,481,492 - Rest of the World 23,456,259 8,466,784

17. Transactions with Related Parties

I. List of Related parties and relationship:

Sl No

Relationship Related parties

(i) Controlling EnterprisesHolding Company OnMobile Systems Inc., USA (upto February 18,2008)Associate Company OnMobile Systems Inc., USA (w.e.f from February 19, 2008)

(ii) Other related parties with whom the Company had transactionsKey Management Personnel Arvind Rao

Chandramouli JanakiramanVirendra GuptaShailendra Sharma

93

II. Transactions with Related Parties:

Amount in Rs

Nature of transactions

Holding Company Associate Company Key Management Personnel TotalMarch 31,

2008March

31, 2007March

31, 2008March 31,

2007March

31, 2008March 31,

2007March 31,

2008March

31, 20071 Remuneration

Arvind Rao - - - - 8,845,672 13,849,126 8,845,672 13,849,126

Chandramouli Janakiraman - - - - 5,389,370 2,711,002 5,389,370 2,711,002

Virendra Gupta - - - - 17,75,670 - 17,75,670 -

Shailendra Sharma - - - - 11,25,000 - 11,25,000 -

Krishna Jha - - - - - 825,000 - 825,000

Hemant Attray - - - - - 825,000 - 825,000

Total - - - - 17,135,712 18,210,128 17,135,712 18,210,128

2 Amount Payable

OnMobile Systems Inc. - 73,285,441 1,007,019,813 - - - 1,007,019,813 73,285,441

Total - 73,285,441 1,007,019,813 - - - 1,007,019,813 73,285,441

3 Amount Receivable

Other Advances - - - - - - - -

Arvind Rao - - - - 852,173 2,096,736 852,173 2,096,736

Chandramouli Janakiraman - - - - - 13,031 - 13,031

Total - - - - 852,173 2,109,767 852,173 2,109,767

Notes:1. Related party relationships are as identifi ed by the Company on the basis of information available and accepted by the auditors.2. No amount has been written off or written back during the period in respect of debts due from or to related party.3. Directors in erstwhile subsidiary ITfi nity Solutions Private Limited amalgamated into the Company with appointment date of April 1, 2006

have not been included as key managerial personnel.


The earnings per share, computed as per requirements of Accounting Standard 20 – “Earnings per Share”, is as under:



Profi t after tax as per the Profi t & Loss Account 603,095,422 337,195,952

Weighted Average number of Shares for Basic EPS 47,916,994 26,634,907

Add: Effect of Convertible Preference Shares and Stock Options outstanding 3,942,651 22,338,870

Weighted Average Number of equity shares for diluted EPS 51,859,645 48,973,777

Rs. Rs.

Nominal value of equity shares 10.00 10.00

Earnings Per Share

Basic 13 13

Diluted 12 7

Note: Consequent to issuance of bonus shares as discussed in Note 4 above, the calculation of basic and diluted earnings per share has been adjusted for the increase in the number of equity Shares outstanding as a result of the issuance of bonus equity shares, for all the years presented.

19. Accounting For Taxes On Income

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. 14,829,411/- for the current year, which has been debited to the Profi t & Loss account. Details of Deferred Tax Asset and Liabilities are:

94

Particulars Deferred Tax (Assets)/ Li-abilities as on April 1, 2007 Adjustment Current year (credit)/charge Deferred Tax (Assets)/ Liabili-

ties as on March 31, 2008Difference between book & tax depreciation 33,733,100 - 32,134,496 65,867,596Others (Provision for gratuity, leave encashment etc.,) (3,872,000) - (22,542,985) (26,414,985)Deferred Tax (ITfi nity) at the time of Amalgamation - (200,100) - (200,100)Total 29,861,100 (200,100) 9,591,511 39,252,511

Out of the above credit Rs 5,438,000/- has been credited to the General reserve on account of transitional provisions as per revised Accounting Standard 15 -“Employee Benefi ts” (Revised 2005).

In respect of the OnMobile Singapore Pte Ltd, deferred tax assets have not been recognized in respect of items:

Particulars As at March 31, 2008 As at March 31, 2007Unutilised tax losses Rs. 193,697 Rs. 242,904

Deferred tax assets in respect of the above items have not been recognized in the fi nancial statements of the Subsidiary as the probability of future taxable profi ts being available to utilize such benefi ts cannot be reliably established.

20. 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.

21. The details of Provisions under Accounting Standard-29 “Provisions, Contingent liabilities and Contingent assets” is as under:-

Sl. No. Nature of Expense Probable outfl ow estimated within

Provision outstanding as at April 1, 2007

Provision madeduring the year

Provision utilized during the year

Provision reversed during the year

Provision outstandingas at March 31, 2008

1 Other provi-sions- warranties & customer credits

3 years 34,897,203 188,963,416 144,185,499 2,473,410 77,201,710

22. Disclosure on Derivative Instruments

There are no outstanding forward exchange contracts entered into by the Company as on March 31, 2008. Foreign Currency exposures as at March 31, 2008 that have not been hedged by a derivative instrument or otherwise:

ParticularsAs at

March 31, 2008Amount (Rs.)

As atMarch 31, 2007Amount (Rs.)

As atMarch 31, 2008

Amount (Foreign Currency)

As atMarch 31, 2007

Amount (Foreign Currency)Due from: Debtors against export of services/goods 52,804,844 - AUD 1,442,904 -

58,431,557 1,132,474 USD 1,406,681 USD 28,495 890,839 - GBP 10,347 -

6,003,397 - BDT 10,215,950 -630,420 - EURO 10,000 -

Against Advances 2,630,696 - USD 65,932 -Due to: Creditors against import of goods and services 74,697,145 73,285,441 USD 1,872,109 USD 1,674,713Voxmobili Payable 278,636,800 - EUR 4,420,000 -

23. In respect of Voxmobili SA, research tax rebate accrued as other income during the period amounted to Rs. 3,490,150/- and total tax

receivable outstanding at March 31, 2008 amounted to Rs. 26,262,898/-.

24. Previous year’s fi gures have been regrouped/reclassifi ed wherever necessary.

Signatures to Schedule 1 to 15





Rajesh MoortiChief Financial Offi cer

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Notice is hereby given that the Eighth Annual General Meeting (AGM) of the Members of OnMobile Global Limited will be held on Friday, August 01, 2008, at 10.00 A.M. at Hotel Royal Orchid, 01, Golf Avenue, adjoining KGA Golf course, Airport Road, Bangalore – 560 008, India to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the audited Balance Sheet of the Company as at March 31, 2008, and the Profi t and Loss account for the fi nancial year ended as on that date and the Reports of the Directors and Auditors thereon.

2. To appoint a Director in place of Mr. Henry Huntly Haight IV who retires by rotation and, being eligible offers himself for re-appointment.

3. To re-appoint M/s. Deloitte Haskins & Sells, Chartered Accountants, as statutory auditors of the Company from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to fi x 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 offi ce 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

4. To consider and if thought fi t, to pass with or without modifi cation, the following resolution as an Ordinary Resolution:

“RESOLVED that, pursuant to the provisions of Section 309 of the Companies Act, 1956 and other applicable provisions of the Companies Act, 1956, if any, the directors of the Company (other than the Managing Director and/ whole-time Director) be paid commission, of an amount not exceeding 1% of the net profi ts of the Company computed in accordance with the provisions of the Section 198(1) of the Companies Act, 1956 or an amount varying from Rs.10,00,000/- (Rupees Ten Lakhs) to Rs.20,00,000 (Rupees Twenty Lakhs) per director, which ever is lower and the same be distributed amongst them based on the performance of the non-executive and/or independent director(s), in such

Notice

proportion and in such manner as may be decided by the Board of Directors from time to time.

RESOLVED FURTHER that, the above payments shall be made in respect of the profi ts of the Company for each year of a period of fi ve years commencing from April 01, 2007 to March 31, 2012.

RESOLVED FURTHER that, pursuant to the provisions of Section 309 of the Companies Act, 1956 and other applicable provisions of the Companies Act, 1956, if any, and the Company’s Employee Stock Option Plan – III, 2006, the stock options, amounting to 2000 stock options per director (including any bonus adjustment thereto as allowed under the Employee Stock Option Plan – III, 2006), granted under the terms of the ESOP – III, 2006 by the Board of Directors of the Company during the previous fi nancial year ending March 31, 2008, be and is hereby approved.

RESOLVED FURTHER that, the Board of Directors be and are hereby authorised to take such steps as may be necessary to give effect to the above resolution.

5. To consider and if thought fi t to pass with or without modifi cation, the following resolution as an Ordinary Resolution:

“RESOLVED that, pursuant to the provisions of Sections 269, 198, 309 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, and subject to the approval of Central Government, if required and / or such other approvals as may be necessary, the Company hereby accords its approval for payment of remuneration to Mr. Arvind Rao, Managing Director of the Company on the terms and conditions as are set out in the Explanatory Statement with discretion to the Board of Directors to alter and vary the terms and conditions from time to time in such manner as it may deem fi t in the best interest of the Company within the limits specifi ed under Section 198 and Schedule XIII of the Companies Act, 1956, including any statutory modifi cation thereto, for the time being in force or any amendments and/or modifi cations that may hereafter be made by the Central Government

RESOLVED FURTHER that, notwithstanding anything stated hereinabove where in any fi nancial year in case of loss or inadequate profi t, Mr. Arvind Rao Managing Director, shall be paid a remuneration by way of salary, bonus and other

97

allowances not exceeding the limits prescribed under Section II of Schedule XIII to the Companies Act, 1956 (including any statutory modifi cations or re-enactment(s) thereof, for the time being in force), or such other limits as may be prescribed by the Government from time to time as minimum remuneration.

RESOLVED FURTHER that, Mr. Arvind Rao, Managing Director shall continue in his offi ce of Managing Director of the Company till July 23, 2011, until otherwise decided by the Board of Directors.”

“RESOLVED FURTHER that, the Board of Directors of the Company be and is hereby authorized to take such steps as may be necessary to give effect to this resolution.”


“RESOLVED that, pursuant to the provisions of Sections 269, 198, 309 read with Schedule XIII and other applicable provisions, if any, of the Companies Act, 1956, and subject to the approval of Central Government, if required and / or such other approvals as may be necessary, the Company hereby accords its approval for payment of remuneration to Mr. Chandramouli Janakiraman, whole-time Director of the Company on the terms and conditions as are set out in the Explanatory Statement with discretion to the Board of Directors to alter and vary the terms and conditions from time to time in such manner as it may deem fi t in the best interest of the Company within the limits specifi ed under Section 198 and Schedule XIII of the Companies Act, 1956, including any statutory modifi cation thereto, for the time being in force or any amendments and/or modifi cations that may hereafter be made by the Central Government

RESOLVED FURTHER that, notwithstanding anything stated hereinabove where in any fi nancial year in case of loss or inadequate profi t, Mr. Chandramouli Janakiraman, Whole-Time Director, shall be paid a remuneration by way of salary, bonus and other allowances not exceeding the limits prescribed under Section II of Schedule XIII of the Companies Act, 1956 (including any statutory modifi cations or re-enactment(s) thereof, for the time being in force), or such other limits as may be prescribed by the Government from time to time as minimum remuneration.

RESOLVED FURTHER that Mr. Chandramouli Janakiraman, whole-time Director shall continue in his offi ce of whole-time Director of the Company till July 23, 2011, until otherwise decided by the Board of Directors.”

RESOLVED FURTHER that, the Board of Directors of the Company be and is hereby authorized to take such steps as may be necessary to give effect to this resolution.”

7. To consider and if thought fi t, to pass with or without modifi cation(s), the following resolution as a Special Resolution:

“RESOLVED that, pursuant to Sec 81 (1A) and other applicable provisions, of the Companies Act, 1956 and in accordance with the provisions of the Articles of Association of the Company and subject to consent of the Securities and Exchange Board of India (SEBI) if any, and other concerned authorities approvals, as may be necessary, consent of the members be and is hereby accorded to the Board of Directors to offer, issue and allot 106,022 Equity Shares of OnMobile Global Limited of face value Rs. 10/- each representing € 1,000,000 (Euros One Million) equivalent to INR 66,622,200 (Rupees six crores sixty six lakhs twenty two thousand two hundred only) be issued to Laurent Balaine, Eric Le Flour, Frédéric Souffl et, founders of Telisma and their employees, from the unissued share capital of the Company, at the rate of Rs. 628.41 per equity share, pursuant to the Share Purchase Agreement(s) (‘SPA’) entered into between the Company and Telisma SA and its shareholders, in such manner and in such mode and subject to such terms and conditions and at such time as the Board of Directors of the Company may deem fi t and proper.

RESOLVED FURTHER that, the Board be and is hereby authorised to take necessary steps for listing of the shares allotted under the Share Purchase Agreement(s) (SPA), on the Stock Exchange(s) where the Company’s shares are listed, as per the terms and conditions of the Listing Agreement with the concerned Stock Exchanges and other applicable guidelines, rules and regulations.

RESOLVED FURTHER that‚ the new Equity Shares shall be subject to the Memorandum and Articles of Association of the Company and shall rank in all respects (including voting rights) pari passu with the existing Equity Shares except that the new Equity Shares will be entitled to dividend only in proportion to the amount of capital paid up thereon for the period during which such capital was with the Company

RESOLVED FURTHER that, the Board of Directors of the Company be and are hereby authorized to take such steps as may be necessary to give effect to this resolution.”

8. To consider and if thought fi t, to pass with or without modifi cation, the following resolution as a Special Resolution:

98

“RESOLVED that, pursuant to Section 81(1A) and other applicable provisions of the Companies Act, 1956, 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 modifi cation(s) or re-enactment of the Act or the SEBI Guidelines, for the time being in force), in accordance with the provisions contained in the Articles of Association, and subject to such other approvals, permissions and sanctions as may be necessary, the draft “Employees Stock Option Plan II, 2008” placed before this meeting duly initialed by the Chairman for identifi cation, be and is hereby approved.

RESOLVED FURTHER that, the consent of the shareholders be and is hereby accorded to the Board of Directors (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) to earmark 100,000 Equity Shares of the Company as stock options for the employees of the Subsidiary Company – “Telisma S A, to be issued under the said Employee Stock Option Plan II, 2008 at such exercise price as per the terms of the Share Purchase Agreement(s) (‘SPA’) entered into between the Company and Telisma S A and its shareholders, in such manner and in such mode and subject to such terms and conditions and at such time as the Board of Directors of the Company may deem fi t and proper in accordance with the applicable statutory guidelines, regulations and laws in this regard from time to time.

RESOLVED FURTHER that, pursuant to the applicable provisions of the Companies Act, 1956, Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 the consent and approval of the members be and is hereby accorded to the Board of Directors to create, offer, issue, and allot equity shares of the Company to eligible employees as defi ned under the aforesaid Employees Stock Option Plan II, 2008.

RESOLVED FURTHER that, the Board be and is hereby authorised to take necessary steps for listing of the shares allotted under the Employees Stock Option Scheme, on the Stock Exchange(s) where the Company’s shares are listed, as per the terms and conditions of the Listing Agreement with the concerned Stock Exchanges and other applicable guidelines, rules and regulations.

RESOLVED FURTHER that, the Board of Director and/or the committee thereof be and are hereby authorised to adopt, and implement the Employee Stock Option Plan II, 2008 subject to such terms and conditions as may be decided and imposed from

time to time and to take such steps as may be necessary to give effect to this resolution .”

9. To consider and if thought fi t, to pass with or without modifi cation, the following resolution as a Special Resolution:

“RESOLVED that, pursuant to Section 81(1A) and other applicable provisions of the Companies Act, 1956, 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 modifi cation(s) or re-enactment of the Act or the SEBI Guidelines, for the time being in force), in accordance with the provisions contained in the Articles of Association, and subject to such other approvals, permissions and sanctions as may be necessary, the draft “Employees Stock Option Plan III, 2008” placed before this meeting duly initialed by the Chairman for identifi cation, be and is hereby approved.

RESOLVED FURTHER that, the consent of the shareholders be and is hereby accorded to the Board of Directors (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) to earmark 1,150,000 Equity Shares of the Company as stock options for the employees of the Company and/or employees of its subsidiaries, to be issued under the said Employee Stock Option Plan III, 2008 at the exercise price to be determined by the Board or any committee of the Board in accordance with the applicable statutory guidelines, regulations and laws in this regard, from time to time

RESOLVED FURTHER that, pursuant to the applicable provisions of the Companies Act, 1956, Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 the consent and approval of the members be and is hereby accorded to the Board of Directors to create, offer, issue, and allot equity shares of the Company to eligible employees as defi ned under the aforesaid Employees Stock Option Plan III, 2008.

RESOLVED FURTHER that, the Board be and is hereby authorised to take necessary steps for listing of the shares allotted under the Employees Stock Option Scheme, on the Stock Exchange(s) where the Company’s shares are listed, as per the terms and conditions of the Listing Agreement with the concerned Stock Exchanges and other applicable guidelines, rules and regulations.

RESOLVED FURTHER that, the Board of Director and/or the committee thereof be and are hereby authorised to adopt, and

99

implement the Employee Stock Option Plan III, 2008 subject to such terms and conditions as may be decided and imposed from time to time and to take such steps as may be necessary to give effect to this resolution .”


“RESOLVED THAT pursuant to the provisions of the Foreign Exchange Management Act, 1999 and other relevant provisions thereto, Branch Offi ce(s) or a Subsidiary (ies) of the Company be opened in such country (ies), in such manner and in such mode and subject to such terms and conditions and at such time as the Board of Directors of the Company may deem fi t and proper, subject to the regulation(s) and law(s) of the respective country (ies).”

11. To Consider and if thought fi t, to pass with or without modifi cation, the following resolution as a Special Resolution:

“RESOLVED THAT, the approval be and is hereby granted for the clarifi cations to the Company’s previous approvals to the Employees Stock Option Plan I, 2007, Employees Stock Option Plan II, 2007 and Employees Stock Option Plan I, 2008 and that it is clarifi ed herewith that these plans shall be deemed to have been approved as separate resolutions as required under Clause 6.3 of 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 modifi cation(s) or re-enactment of the Act or the SEBI Guidelines, for the time being in force), as the Company had circulated all the details required under the provisions of the SEBI Guidelines including the details required under Clause 22.2A of the SEBI Guidelines and accordingly these plans be and are hereby clarifi ed and understood accordingly.”

Registered offi ce: By Order of the Board of DirectorsNo. 26, Bannerghatta Road, For OnMobile Global LimitedJP Nagar, 3rd Phase, Srikiran DBangalore – 560 076, Company SecretaryIndia.

Date: May 02, 2008Place: Bangalore

Notes:1. Explanatory Statement pursuant to Section 173(2) of the

Companies Act, 1956 is annexed hereto.

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 offi ce of the Company not less than 48 hours before the commencement of the meeting.

4. Member/proxies should bring duly fi lled attendance slips sent herewith to attend the meeting.

5. The Register of Directors’ shareholding, 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 offi ce of the Company.

7. The Register of Members and share transfer books will remain closed from 29/07/2008 to 01/08/2008 (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. Henry Huntly Haight IV, Director, retires by rotation and being eligible, offers himself for re-appointment. A brief resume of Mr. Henry Huntly Haight IV is given below:

Mr. Henry Huntly Haight IV 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 Offi cer in Argo Global Capital, LLC. He has been appointed as a non-executive Director by the shareholders of our Company at the AGM held on August 17, 2007. Mr. Haight is on the Board of the following other Companies:

1. OnMobile Systems, Inc.2. Genelabs Technology Inc.3. Maxager Technology Inc.4. Argo Global Capital, Inc.5. Argo Holding, LP.

100

6. Argo Global Capital Corp.7. Telecom Investment Inc.8. Neural Technologies, Inc9. NT310. Chinatron Group Holdings Limited11. Argnor Wireless Ventures B.V. 12. SP Industries Inc.

Mr. Henry Huntly Haight IV does not hold any shares in the Company.

The Board considers it in the interest of the Company to appoint Mr. Henry Huntly Haight IV as a Director.

None of the Directors, except Mr. Henry Huntly Haight IV, is interested or concerned in these Resolutions.

Explanatory Statement under section 173(2) of the Companies Act, 1956

Item 4

The Board of Directors at their meeting held on April 21, 2007 (when the Company was a private limited Company), proposed the payment of following remuneration:

NameFixed salary (includes perquisites

and contribution to PF)Variable pay Sitting fees Commission

Total Compensation

H H Haight IV - - 280,000 1,000,000 1,280,000Naresh K Malhotra - - 240,000 1,000,000 1,240,000Sridar A Iyengar - - 160,000 1,000,000 1,160,000Jayanth R Varma - - 160,000 1,000,000 1,160,000Vikram S Kirloskar - - 120,000 1,000,000 1,120,000

Further the members of the Company at their Seventh Annual General Meeting held on August 17, 2007 approved the appointment of Mr. Sridar A Iyengar, Mr. Naresh K Malhotra, Mr. Vikram S Kirloskar and Prof. Jayanth R Varma as the independent directors of the Company and Mr. H H Haight IV as the non-executive director of the Company.

The provisions of Section 309 of the Companies Act, 1956 provides that a director who is neither in the whole-time employment nor a Managing Director may be paid remuneration by way of commission, if the Company by special resolution, authorizes such payment.

The proposed resolution would allow the Company to make payment by way of commission to the non-executive directors for a period of fi ve years commencing from April 01, 2007 to March, 31, 2012 in accordance with section 309 of the Companies Act, 1956.

All the directors other than the Managing Director and the whole-time Director are deemed to be interested in the resolution to the extent of the commission payable to them in accordance with the proposed resolution.

The Board of Directors of the Company recommends this resolution to be passed as an Ordinary Resolution for your approval

Item 5

The Compensation Committee of the Board at their meeting held on October 12, 2007 has approved the following remuneration to Mr. Arvind Rao, Managing Director:

Mr. Arvind Rao has been associated with the Company since from February 12, 2001. He was appointed as Managing Director of the Company on July 24, 2006. Mr. Arvind Rao, has over two decades of experience in fi nancial services, IT and the telecom industry. Prior to joining the Company, Mr. Rao has been associated with various reputed organisations such as Schlumberger wireline services, Mckinsey & Co., the Chatterjee group and Gilbert global equity partners at locations such as Thailand, China, Malaysia, USA and India to name a few.

101

Clause ParticularsPeriod of Appointment Appointed as Managing Director, for a period of 5 years effective July

24, 2006Compensation

Details of Compensation Structure Revised Annual (In Rs.)Basic Salary 1,225,800Conveyance Allowance 9,600Medical Reimbursement 15,000Leave Travel Allowance 227,000Special Allowance 1,099,504Providend Fund 147,096Sub Total A 2,724,000Other Benefi tsAnnual House rent paid by the Company 1,255,000Premium car insurance paid by the Company (old) 29,000FBT on the car (old) insurance at the rate of 33.99% on the 20% of the expenditure 2,000Depreciation on car (new) (includes insurance for 1st year) 2,804,000FBT on the depreciation on car (new) 86,000Sub Total B 4,176,000Grand Total 6,900,000Variable Compensation Rs. 6,900,000 as fi xed compensation and with a variable bonus of

50% of the aforesaid fi xed compensation, based on meeting agreed key performance indicators and evaluation by the Compensation Committee. The variable bonus could be less than, or exceed the 50% based on actual performance against agreed targets, and will be determined by the Compensation Committee. The evaluation by the committee will be completed within 30 days of the end of the fi scal year, and the bonus shall be paid upon completion of such evaluation

Transport Fully maintained vehicle(s) including driver, paid for by the Company. After such vehicle is fully depreciated in the Company’s books, the title changes over to him for no consideration subject to the terms and conditions of the Company’s car policy as amended from time to time.

Superannuation Superannuation and other such statutory welfare benefi ts shall be payable in accordance with the regulations under the appropriate laws, if any.

Insurance Medical insurance as per Company practices. Additionally the Company will pay for major medical surgery overseas if he deems this required rather than having such surgery done in India.

Others He shall be entitled to upto 3 club memberships which shall be paid for by the Company

Other Conditions • He shall not engage in any other business confl icting with the business interests of the Company unless approved by the Board of Directors of the Company;

• The Company shall reimburse his travelling expenses in connection with the Company’s business as per the Company’s policy;

102102

Clause Particulars• 20 working days paid vacation per year, accruable; and• He will be covered under accident insurance as per Company

norms and in case of accidents leading to partial disablement the Company will pay short-term disability to him equal to his salary at time of accident, for a period of 12 months post the accident, and in case of total disablement the Company will pay him three years of salary computed at the same rate as that prevailing at the time of accident.

Termination His employment shall be liable to be terminated by either party by giving prior notice of 6 months to the other party or on payment of remuneration in lieu thereof. In the event of the Company terminating his services due to redundancy arising out of strategic changes to the business including the closure of business or change in ownership or control or merger, the Company shall be liable to pay a termination compensation or redundancy payment equivalent to the remuneration of 18 months compensation paid in cash based on previous fi nancial years compensation plus accelerated full vesting of all stock options held at time of termination plus forgiveness of any and all outstanding loans from Company including transfer of any vehicles used by him at time of termination, and any other appropriate statutory compensation applicable to this employment.

Accordingly, subject to the provisions of Section 198, 269, 309, Schedule XIII of the Companies Act, 1956 and other applicable provisions of the Companies Act, 1956, if any, it is now proposed that the Company continue the payment of the aforesaid remuneration to Mr. Arvind Rao, Managing Director for the period of three years commencing from April 01, 2008 and also authorise the Board of Directors of the Company to revise (increase or decrease) the aforesaid remuneration from time to time, as per the resolution of the Board during the period April 01, 2009 till July 23, 2011.

Mr. Arvind Rao, Managing Director is interested in the said resolution to the extent of remuneration and perquisites payable to him. No other Director is interested or concerned in the resolution

The shareholders’ consent is therefore sought for the approval of the payment of remuneration to the Managing Director of the Company.

Item 6

The Compensation Committee of the Board at their meeting held on October 12, 2007 has approved the following remuneration to Mr. Chandramouli Janakiraman, whole time Director:

Mr. Chandramouli Janakiraman has been associated with the Company since from May 12, 2003. He was appointed as a whole-time Director of the Company on July 24, 2006. Mr. Mouli Raman has over 19 years of experience in the software industry. Prior to joining the Company he was an Associate Vice-President and was heading the Internet Products Group in Infosys Technologies Limited.

Details of Compensation Structure Revised Annual (In Rs.)Basic Salary 1,575,000Conveyance Allowance 9,600Medical Reimbursement 15,000Leave Travel Allowance 291,667Special Allowance 710,983Providend Fund 189,000Grand Total 3,500,000Variable Compensation 0 to 50% of the Annual Fixed Compensation as variable based

upon achievement of performance targets as determined by the Compensation Committee. This will be paid annually.

103103

Accordingly, subject to the provisions of Section 198, 269, 309, Schedule XIII of the Companies Act, 1956 and other applicable provisions of the Companies Act, 1956, if any, it is now proposed that the Company continue the payment of the aforesaid remuneration to Mr. Chandramouli Janakiraman, Whole Time Director for the period of three years commencing from April 01, 2008 and also authorise the Board of Directors of the Company to revise (increase or decrease) the aforesaid remuneration from time to time, as per the resolution of the Board during the period April 01, 2009 till July 23, 2011.

Mr. Chandramouli Janakiraman, Whole Time Director is interested in the said resolution to the extent of remuneration and perquisites payable to him. No other Director is interested or concerned in the resolution

The shareholders’ consent is therefore sought for the approval of the payment of remuneration to the Whole Time Director of the Company.

Item 7

The Company had, during the fi rst quarter of fi nancial year 2008-2009 i.e. during April 01 – June 30, 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. 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 fi elds 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. Telisma has its commercial activities in France.

Further, the Board of Directors has 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 (Rupees 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 fi nancial performance of Telisma for the fi nancial 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 Sec 81 (1A) of the Companies Act, 1956, and as per the approval of the Foreign Investment and Promotion Board (FIPB), it is required to issue 106,022 Equity Shares of OnMobile Global Limited of face value Rs. 10 each representing € 1,000,000 (Euros One Million) equivalent to INR 66,622,200 (Rupees six crores sixty six lakhs twenty two thousand two hundred only) to Laurent Balaine, Eric Le Flour, Frédéric Souffl et, founders of Telisma and some of its employees, from the unissued share capital of the Company at Rs. 628.41 per equity share.

The shareholders’ consent is therefore sought by way of special resolution for the issue of 106,022 Equity Shares of the Company by the Board of Directors, to Laurent Balaine, Eric Le Flour, Frederic Souffl et, founders of Telisma and / or to its employees.

A copy of the share purchase agreement entered into between the Company and Telisma S A and its shareholders is available for inspection by any of the members at the Registered Offi ce of the Company on working days, during business hours of the Company.

None of the directors are interested in the said resolution.

Item 8

The Board of Directors of the Company had approved the acquisition of Telisma S A 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 (Rupees 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 fi nancial performance of Telisma as for the fi nancial year ended December 31, 2008 as per the terms of the Share Purchase Agreement (“SPA”) and all other such related agreements placed before the Board of Directors.

Additionally, the Board of Directors had also approved to grant stock options of OnMobile Global Limited, worth € 700,000 (Euros Seven Hundred Thousand only) equivalent to INR 46,635,540 (Rupees four crores sixty six lakhs thirty fi ve thousand fi ve hundred and forty only), to the founders and some employees of Telisma.

104104

Accordingly, considering the need for granting stock options to the employees of the Company’s subsidiary –“Telisma”, subsequent to the signing of the SPA, and since the vesting schedule being different from the existing Stock Option Plans of the Company, the Board of Directors of the Company vide their resolution dated April 30, 2008, noted and considered the need for a new stock option plan which is compliant with the applicable Regulations, as per the details specifi ed below and accordingly approved the introduction and implementation of the new Employee Stock Option Plan II 2008, subject to the members’ approval.

Further, this new Employee Stock Option Plan II, 2008 is compliant with all the guidelines of 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 modifi cation(s) or re-enactment of the Act or the SEBI Guidelines. A copy of the draft Employee Stock Option Plan II, 2008 is available at the registered offi ce of the Company for inspection by the members on working days, during the business hours of the Company. The salient features of the draft Employee Stock Option Plan II, 2008 as required under 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 modifi cation(s) or re-enactment of the Act or the SEBI Guidelines, for the time being in force) are as follows:

Particulars ESOP Plan II, 2008Total number of options to be granted 100,000Classes of employees entitled to participate Employees of Subsidiary CompanyVesting Period Over a period of two years as per the details specifi ed in the plan or as may be

specifi ed by the Compensation Committee of the BoardExercise Price The exercise price of the Options shall be determined by the Compensation

Committee of the Board in accordance with the Share Purchase Agreement(s) signed with Telisma S A and its shareholders.

Exercise Period and process of exercise The Options shall be exercisable at the end of the fourth year from the date of the grant or as may be determined by the Compensation Committee of the Board from time to time.

Appraisal process for determining the eligibility of employees

The eligibility of the employees shall be determined from time to time by the Compensation Committee.

Method which the Company shall use to value its options whether fair value or intrinsic value

The Compensation Committee of the Board shall determine from time to time in accordance with the Share Purchase Agreement(s) signed with Telisma S A and its shareholders.

Maximum Number of Options to be issued per employee The Compensation Committee of the Board shall determine from time to time.

The Company shall conform to the accounting policies specifi ed under the SEBI Guidelines.


The Board of Directors of the Company recommends this resolution as a Special Resolution for members approval.

Item 9

Considering the need for granting stock options for the employees of the Company or any of its subsidiaries, and after considering recommendation of the Board of Directors of the Company post their meeting to be held on July 31, 2008, if any, it is proposed to place for the approval of the members a new stock option plan (Employee Stock Option Plan III, 2008) for making grants upto 2% of the existing paid up share capital of the Company i.e. 1,150,000 options, to the employees of the Company or its subsidiaries, which shall be compliant with all the guidelines of 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 modifi cation or re-enactment of the Act or the SEBI Guidelines. A copy of the draft Employee Stock Option Plan III, 2008 is available at the registered offi ce of the Company for inspection by the members during the business hours of the Company. The salient features of the draft Employee Stock Option Plan III, 2008 as required

103103




Item 7








Item 8



105105

under 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 modifi cation or re-enactment of the Act or the SEBI Guidelines, for the time being in force) are as follows:

Particulars ESOP Plan III, 2008Total number of options to be granted 1,150,000Classes of employees entitled to participate Employees of the Company or its Subsidiary Vesting Period Over a period of four years as per the vesting schedule below:

25% of the 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 or as may be specifi ed by the Compensation Committee of the Board.

Exercise Price The exercise price of the Options shall be determined by the Compensation Committee of the Board in accordance with the applicable Fair Market Value based on the trading price of the Company’s shares on the Stock Exchange.

Exercise Period and process of exercise The Options shall be exercisable at the end of fi rst year from the date of the grant, based on the options vested from time to time or as may be determined by the Compensation Committee of the Board from time to time and upto a period of fi ve years from the date of vesting. The exercises shall be approved from time to time by the Compensation Committee of the Board.

Appraisal process for determining the eligibility of employees The eligibility of the employees shall be determined from time to time by the Compensation Committee.

Method which the Company shall use to value its options whether fair value or intrinsic value

The Compensation Committee of the Board shall determine from time to time.

Maximum Number of Options to be issued per employee The Compensation Committee of the Board shall determine from time to time.

The Company shall conform to the accounting policies specifi ed under the SEBI Guidelines.

None of the directors are interested in the said resolution

The Board of Directors of the Company recommends this resolution to be passed as Special Resolution, for the members approval.

Item 10

The Company in its efforts to expand globally and in order to look at new areas of business has decided to open branch offi ce(s) or subsidiary(ies) in various countries. It is deemed necessary to authorise the Board of Directors to take decisions to set up offi ce(s) or incorporate subsidiary Company(ies) at various business locations subject to such terms and conditions, regulations and law(s) of the respective country(ies) and in such manner as the Board of Directors of the Company may deem fi t and proper”


The Board of Directors of the Company recommends this resolution to be passed as an Ordinary Resolution, for the members approval.

103103




Item 7








Item 8



106

Item 11

Reference is invited to the approval granted to the Employees Stock Option Plan I, 2007, Employees Stock Option Plan II, 2007 and Employees Stock Option Plan I, 2008 in the Annual General Meeting held on August 17, 2007. In this regard, 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 modifi cation(s) or re-enactment of the Act or the SEBI Guidelines, for the time being in force), the Company is required to approve these plans as separate resolutions. Accordingly, as per the intent of the shareholders on August 17, 2007 it is required to clarify that these plans are deemed to be approved as separate resolutions as per Clause 6.3 of SEBI Guidelines and that all the details required under Clause 22.2A of the SEBI Guidelines had been circulated to the members. Hence, it is proposed to seek the clarifi cation and approval of the members accordingly.


The Board of Directors of the Company recommends this resolution to be passed as an Special Resolution, for the members approval.

Registered offi ce: By Order of the Board of DirectorsNo. 26, Bannerghatta Road,JP Nagar, 3rd Phase, For OnMobile Global LimitedBangalore – 560 076, India. Srikiran D Company SecretaryDate: July 05, 2008Place: Bangalore

ONMOBILE GLOBAL LIMITEDRegistered Offi ce: No. 26, Bannerghatta Road, JP Nagar Phase III, Bangalore – 560076, India

Proxy FormEighth Annual General Meeting – August 01, 2008

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 EIGHTH ANNUAL GENERAL MEETING of the Company to be held at Hotel Royal Orchid, 01, Golf Avenue, Adjoining KGA Golf

course, Airport Road, Bangalore – 560 008, India, at 10.00 AM IST on Friday the August 01, 2008 and at any adjournment(s) thereof.

……………………………………........………………please tear here………………………………………………………………………

ONMOBILE GLOBAL LIMITEDRegistered Offi ce: No. 26, Bannerghatta Road, JP Nagar Phase III, Bangalore – 560076, India

Attendance SlipEighth Annual General Meeting – August 01, 2008

Regd. Folio No./DP Client ID

No. of shares held

I/we hereby record my/our presence at the Eighth Annual General Meeting held at Hotel Royal Orchid, 01, Golf Avenue, Adjoining KGA Golf course, Airport Road, Bangalore – 560 008, India at 10.00 AM IST on Friday the August 01, 2008.

……………………………… ….…………………………..Name of the member/proxy Signature of the member/proxy(in BLOCK letters)

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Offi ces in IndiaBangaloreRPS Green Space,No: 165/5, 1st Main,Krishna Raju Layout,J.P Nagar 7th Phase,Bangalore- 560 076

Mumbai#1004, Floor 10, Dalamal House , Nariman Point,Mumbai - 400 021

Sumer plaza, 5th fl oor, Marol Maroshi Road,Marol, Andheri (E),Mumbai - 400 059

Delhi704, Floor 7, Bhikaji Cama Bhawan ,Bhikaji Cama Place,New Delhi - 110 066

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

International Offi cesAustraliaOnMobile Global LimitedLevel 34, 100 Miller Street , N Sydney, NSW - 2060

FranceVoxmobili SA (an OnMobile Company)36, rue Brunel75017 Paris - France

IndonesiaPT OnMobile IndonesiaM-23, Mayapada Tower, 11th Floor,Jl. Jenderal Sudirman Kav. 28Jakarta 12920, Indonesia

MalaysiaOnMobile Global Ltd.Level 16,Menara Hap Seng, Jalan P. Ramlee,50250 Kuala Lumpur, Malaysia

SingaporeOnMobile Singapore Pte. Ltd.APBC Raffl es Place, 30 Raffl es Place,#23-00 Chevron House, Singapore - 048622

44 Management Discussion &Analysis

49 Report of the Auditors

52 Financial Statements

74 Balance Sheet Abstract

75 Report of the Auditors on Consolidated Financial Statements

76 Consolidated Financial Statements

95 Statement Regarding Subsidiary Companies

96 Notice

01 Not Just Hello...

08 Message from the Chairman

10 Company Snapshot

12 Financial Snapshot

14The MVAS Ecosystem

15 Board of Directors

16 Corporate Information

17 Our LeadershipTeam

19 CEO and CFO Certificate

20 Report on Corporate Governance and Shareholder Information

33 Directors’ Report

Contents

OnMobile Global Limited# 26, Bannerghatta Road,

J. P. Nagar 3 Phase,Bangalore - 560 076, India.Phone : +91 80 41802500

Fax : +91 80 41802810Email : [email protected]: www.onmobile.com

rd

OnMobile Global Limited • Annual Report 2007 - 08

APR

ISM

solutio

n(w

ww.prism

.net.in)

onmobile global limited

Technology

mobile revolution

mobile phones

mobile interactivity

empowering lives

enriching lives

favourite songs

business of touching

youre beautiful