GICS Industry: Softwarel Sub Industry: Application Softwarel Website: www.onmobile.

com

OnMobile Global Ltd

Key Stock Indicators
NSE Ticker: Bloomberg Ticker: Face value / Share: Div. Yield (%): ONMOBILE ONMB:IN 10.0 0.0 CMP (as on 13 Apr 2011Rs/share): 52-week range up to 13 Apr 2011 (Rs) (H/L): Market Cap as on 13 Apr 2011 (Rs mn): Enterprise Value as on 13 Apr 2011 (Rs mn): Div. Yield (%): 0.0 268.0 423.7/180.5 15,770 15,694 Shares outstanding (mn): Free Float (%): Average daily volumes (12 months): Beta (2 year): 58.8 51.5 409,480 1.3

Onmobile Global Ltd (OGL) was incorporated in 2000 and is headquartered in Bangalore. The company is one of the largest white-labelled data and value added services (VAS) provider for mobile, landline and media service companies. The employee strength of the company was 1,132 as on March 2010.

Key Financial Indicators

Revenue (Rs mn) EBITDA ma rgins (%) PAT (Rs mn) PAT ma rgins (%) Gea ring (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m. : Not meaningful

KEY HIGHLIGHTS
OGL restructured its business in FY11 OGL entered into a partnership with Starfish Mobile, a content aggregator to offer ring back tones (RBT) which allows a user to set a song to replace a standard tone and also IVR (interactive voice response) to mobile subscribers in Africa. The deal helps OGL in expanding its market reach by providing value-added services in the African market. OGL contracted a long term partnership with VIVO Telecom (a mobile operator) in Brazil to tap large un-served market starting with RBT. This initial deployment provides the company an access to Brazilian markets where it can enhance its product portfolio and offer a wide range of products to its customers. OGL acquired Dilithium Networks 3G Video technology. The acquisition provides OGL with Dilithiums patent portfolio of over 175 patents in the advanced video technologies. Dilithiums technology enables the delivery of novel 3G value-added services by offering superior quality and scale to the creation, adaptation and distribution of all types of multimedia assets. OGL and Madison World planned to launch mobile marketing in FY10 opening up new direct sales and revenue channels for marketers by leveraging the mobile reach, installed infrastructure and telecom operator relationships and the marketing and advertising capabilities etc of Madison World. OGL deploys new services & products in FY10 During the year the company launched OnMobile Churn Management product in India for RBT. This has reduced churn on RBT by a notable percentage. OGL also launched Reverse RBT through which the company is offering users the experience to listen to their own choice of music. The company also launched the next version of the OnMobile Corporate RBT product allowing enterprises greater control and flexibility on the provisioning of RBT for their employees. The company launched new tuned versions of four south Indian languages and Hindi for the Indian market and Bengali for the Bangladesh market. The company also launched a new platform for speech recognition products for the phone that uses distributed speech architecture. The company launched Social Home which allows users to see all their feeds from social networks on a single screen including Facebook, Linked In etc. The company developed its subscription Manager to offer more flexibility in charging, packaging and bundling of their products. The other products/services offered were Social Address Book, Voice Portal, Messaging Platform, telephone, pollenStudio 2.0.

Mar-08 2,622.3 41.6 -12.0 -0.5 0.1 -0.2 n.m 6.7 8.2 n.m 27.5

Mar-09 4,136.2 33.7 843.5 20.4 14.6 21.9 3.9 23.4 17.8 11.3

Mar-10 4,597.3 19.6 437.4 9.5 0.6 7.5 35.9 5.4 13.1 11.4 17.4

Shareholding (As on Mar 31,2011)

DII 5% Others 23%

FII 23%

Promoter 49%

KEY RISKS
Language barriers and limited availability of local content hamper Mobile VAS industry growth Industry concentration risk as products are targeted towards end user telecom subscribers Geographic concentration risk as India contributes to 75% of the revenues Service concentration risk as the company depends on music related services.

Indexed price chart

(index) 140 120 100 80 60 40 20
Returns (%) YTD 1-m 16 7 3-m 0 3 12-m -35 11

('000) 7000 6000 5000 4000 3000 2000 1000 0 Nov-10

Stock Performances vis--vis market

0 Apr-10 Dec-10 Aug-10 Sep-10 Oct-10 Feb-11 Jun-10 Jul-10 May-10 Mar-11 Jan-11

ONMOBI LE NI FTY

-32 12

Volumes (RHS)

ONMOBILE

NIFTY

Note: 1) YTD returns are since Apr 01, 2010 to Apr 13, 2011. 2) 1-m, 3-m and 12-m returns are up to Apr 13, 2011

CRISIL COMPANY REPORT | 1

OnMobile Global Ltd

BACKGROUND
OGL was incorporated in the year 2000 and is headquartered in Bangalore. The company is one of the largest white-labelled data and VAS provider for mobile, landline and media service companies. The company has 5 product lines namely speech products (speech ports, voice based search), network products (missed call alert, ring back tones), messaging and m-commerce (cell broadcast, mobile advertising etc), applications (music, infotainment etc), data products (phone back up, social address book etc). The products of the company span all mobile access channels such as Voice, SMS, WAP, USSD. The company has a presence in 52 countries and has a market reach of 1,016 million (mn) and 105 million unique users/ month. The contribution of exports was 25% in FY10. The company has various business partners like Telcom partners (Airtel, Aircel, BSNL etc), Media houses (Espn, Star, M-TV etc ), M-commerce partners (Vodafone , IRCTC, make my trip etc.), Data Services partners (Nokia, Indosat etc), Technology partners (IBM, Symbian). OGL entered into Chinese markets in FY11 with its video calling software Stack which will be embedded in handsets and chipsets, including Android. The company generates revenues out of the licensing of its software. In FY11, the company introduced Karaophone which is a service that allows the users to access social networks and choose a song of their choice. In FY11, the company also entered into the Egyptian markets to offer VAS like RBT and other music related services for Vodafones customers. In FY10, the company also opened new branch offices in Dubai, Bogota and Bucharest and had significant new deployments in Indonesia and Bangladesh. The company had signed a mediation agreement in FY10 with Telefonica International (Spain) for acquiring exclusive market development and deployment rights to provide the company access to deploy various VAS including RBT, music radio, soccer portal, voice search, etc. in the Latin American telecommunication markets where Telefonica operates. The company made an initial commitment of 37 mn Euros. In FY10, the company also signed a new business agreement with Vodafone Group Services (Vodafone Global) for enabling the company to deploy various VAS including RBT, music radio and several other VAS services in Vodafone Global emerging markets. The company has launched services in Romania and South Africa. The company signed an agreement in March 2010 with a customer in Europe to provide VAS for 5.5 mn Euros.

COMPETITIVE POSITION
Peer Comparison

Revenue (Rs mn) EBITDA ma rgins (%) PAT (Rs mn) PAT ma rgins (%) Gea ring (x) EPS (Rs /s ha re) PE (x) P/BV (x) RoCE (%) RoE (%) EV/EBITDA (x)
n.m: Not meaningful

Onmobile Global Ltd Mar-11 4,597.3 19.6 437.4 9.5 0.6 7.5 35.9 5.4 13.1 11.4 17.4

Tanla Solutions Ltd Mar-10 3,669.8 36.1 283.1 7.7 2.8 6.6 0.2 6.0 3.3 0.3

Saksoft Ltd Mar-10 1,092.1 15.3 87.5 8.0 n.m 8.6 7.3 n.m 68.8 n.m 6.3

FINANCIAL PROFILE
Increase in top line; significant drop in operating margins and PAT in FY10 Top line stood at Rs 4.5 billion (bn) and it increased by ~11% in FY10 as compared to FY09 where it was 4.1 bn due to increase in revenues from telecom value added services by ~14% which was partially compensated by decrease in revenues from software business by ~14%. The value added telecom contributed ~94% of the revenues in FY10 while rest came from the software. The revenues increased due to addition of 12 new customers (5 international telecom operators and remaining in media, M-commerce and others) but the company lost a major customer in the Indian market thereby partially dragging down the revenues. Operating margins decreased by 1410 basis points over the previous year in FY10 and it stood at 19.6%. The decrease was mainly due to increase in employee costs by ~3%, other manufacturing expenses(repairs to plant, building & machinery, insurance etc) by ~10% and other expenses(rent rates and taxes, director fees, traveling & conveyance etc) by ~1%. The net profit of the company became almost half and stood at Rs 437.4 mn in FY10, against Rs 843.5 mn in FY09. The decrease in net profit was due to significant decrease in operating profits and also due to decrease in non operating income (decrease in dividend from investments, profit on sale of assets) by ~24%.

Key Financial Indicators Units Revenue PAT PAT ma rgi ns EBITDA growth PAT growth Gea ring RoCE RoE Rs mil li on Rs mil li on Per cent Per cent Per cent Ti mes Per cent Per cent EBITDA ma rgins Per cent

Mar-08
2,622.3 41.6 -12.0 -0.5 97.2 78.7 n.m 0.1 8.2 n.m

Mar-09
4,136.2 33.7 843.5 20.4 57.7 27.6 n.m 23.4 17.8

Mar-10
4,597.3 19.6 437.4 9.5 11.1 -35.5 -48.1 0.6 13.1 11.4

Revenue growth Per cent

INDUSTRY PROFILE
Telecom Services Wireless The wireless segment has witnessed rapid growth in 2009-10, adding about 192 million subscribers. As of 31st March 2010, the total wireless subscriber base stood at 584 million as compared to 391 million subscribers at the end of March 2009, exhibiting the growth of 49 per cent y-o-y. Deeper penetration into existing areas and expansion into rural India has led to wider availability, while declining tariffs has increased affordability, resulting in proliferation of the service. However, the industry is characterised by severe competition which is expected to intensify further with service expansion of new licensees, implementation of mobile number portability (MNP) and launch of 3G services. Given the shift in the competitive landscape in the mobile services sector, driven by intense pricing pressure, profitability of existing players is expected to remain under pressure. IT services Indian IT services revenues are estimated to be around $34 billion in 2009-10, registering a CAGR of 20 per cent from 2004-05 to 2009-10. During the same period, IT services exports, which accounted for 80 per cent of the revenues, are estimated to have grown at a CAGR of 22 per cent to $27 billion in 2009-10. The industry is highly dependent on the US and UK markets, which contribute to around 75 per cent of export revenues. With IT services deriving a large portion of its revenues from exports, the sector`s profitability is highly correlated to foreign exchange movements. An appreciating rupee is thus a key risk factor. Also, as human resource is the main input in IT services, issues related to non-availability of skilled labor, attrition and wage inflation would also impact Indian IT players. CRISIL COMPANY REPORT | 2

OnMobile Global Ltd

ANNUAL RESULTS

Income Statement (Rs million ) Net Sales Operating Income EBITDA EBITDA Margin Depreciation Interest Other Income PBT PAT PAT Margin No. of shares (Mn No.) Earnings per share (EPS) Cash flow (Rs million ) Pre-tax profit Total tax paid Depreciation Change in working capital Cash flow from operating activities Capital Expenditure Investments and others

Mar-08 2,618.2 2,622.3 1,091.4 41.6 255.6 53.0 65.0 228.4 -12.0 -0.5 57.4 -0.2

Mar-09 4,063.6 4,136.2 1,392.6 33.7 439.7 27.0 225.1 1,142.7 843.5 20.4 57.8 14.6

Mar-10 4,544.0 4,597.3 898.9 19.6 440.7 1.1 171.2 640.3 437.4 9.5 58.5 7.5

Balance sheet (Rs million ) Equity share capital Reserves and surplus Tangible net worth Deferred tax liablity:|asset| Long-term debt Short-term-debt Total debt Current liabilities Total provisions Total liabilities Gross block Net fixed assets Investments Current assets Receivables Inventories Cash Total assets Ratio

Mar-08 574.1 4,113.8 4,687.9 39.3 278.6 0.0 278.6 1,739.1 127.1 6,872.0 1,134.4 864.2 3,193.7 2,814.1 671.1 0.0 1,458.8 6,872.0

Mar-09 578.3 4,188.6 4,767.0 67.2 153.8 21.1 175.0 1,022.1 146.6 6,177.9 1,671.8 932.0 86.7 5,159.1 841.7 0.0 2,855.1 6,177.8

Mar-10 585.2 2,296.6 2,881.7 93.5 1,765.5 41.8 1,807.3 1,331.3 198.7 6,312.5 2,005.0 919.0 677.1 4,716.4 1,029.9 0.0 1,883.1 6,312.5

Mar-08 847.8 -230.9 255.6 811.8 1,684.3 -2,003.0 -2,175.5

Mar-09 1,151.1 -271.2 439.7 -1,646.3 -326.7 -1,307.2 3,107.0

Mar-10 628.3 -176.6 440.7 -168.0 724.4 -2,719.1 -590.4

Revenue growth (%) EBITDA growth(%) PAT growth(%) EBITDA margins(%) Tax rate (%) PAT margins (%) Dividend payout (%) Dividend per share (Rs) BV (Rs) Return on Equity (%) Return on capital employed (%) Gearing (x) Interest coverage (x) Debt/EBITDA (x) Asset turnover (x) Current ratio (x) Gross current assets (days)

Mar-08 97.2 78.7 n.m 41.6 98.7 -0.5 n.m 81.7 n.m 8.2 0.1 12.7 0.3 3.4 6.4 375

Mar-09 57.7 27.6 n.m 33.7 23.7 20.4 82.4 17.8 23.4 51.7 0.1 2.9 4.4 431

Mar-10 11.1 -35.5 -48.1 19.6 27.6 9.5 49.2 11.4 13.1 0.6 840.1 2.0 2.5 3.4 335

Cash flow from investing activities Equity raised/(repaid) Debt raised/(repaid) Dividend (incl. tax) Others (incl extraordinaries)

-4,178.5 3,496.4 275.1 -33.0 2.9

1,799.8 0.5 -103.7 26.4

-3,309.5 34.3 1,632.3 -53.6

Cash flow from financing activities Change in cash position Opening cash Closing cash
n.m : Not meaningful;

3,741.4 1,247.2 211.6 1,458.8

-76.8 1,396.3 1,458.8 2,855.1

1,613.0 -972.1 2,855.1 1,883.1

QUARTERLY RESULTS
Profit and loss account (Rs million) No of Months Revenue EBITDA Interes t Depreci a tion PBT PAT Dec-10 3 1,516.7 366.9 2.2 161.5 213.0 209.1 100.0 24.2 0.1 10.6 14.0 13.8 % of Rev Dec-09 % of Rev 3 1,208.1 284.1 0.7 113.1 175.8 131.7 100.0 23.5 0.1 9.4 14.6 10.9 Sep-10 3 1,430.7 394.1 1.6 128.5 272.0 228.3 100.0 27.5 0.1 9.0 19.0 16.0 % of Rev Dec-10 9 4,241.0 1,100.8 5.0 422.3 698.7 623.2 100.0 26.0 0.1 10.0 16.5 14.7 % of Rev Dec-09 9 3,484.9 781.3 1.7 328.4 456.8 325.4 100.0 22.4 9.4 13.1 9.3 % of Rev

CRISIL COMPANY REPORT | 3

OnMobile Global Ltd

FOCUS CHARTS & TABLES
Rs mn 1,600 1,400 1,200 1,000 800 600 400 200 0 Dec-09 Sep-09 Mar-09 Mar-10 Sep-10 Jun-09 Jun-10

Quarterly sales & y-o-y growth

Dec-09

Mar-09

Sales

Sales growth y-o-y (RHS)

Dec-10

Net Profit

Dec-08

Dec-09

Mar-08

Mar-09

Dec-08

Dec-09

Mar-08

Mar-09

Mar-10

Dec-10

Sep-08

Sep-09

Sep-10

Jun-08

Jun-09

Jun-10

OPM

Mar-10

NPM

Shareholding Pattern (Per cent) Jun 2010 Sep 2010 Promoter 50.2 50.1 FII 19.6 24.0 DII 7.1 6.0 Others 23.2 19.9

Dec 2010 48.5 24.6 5.7 21.2

Mar 2011 48.4 23.4 4.7 23.5

Board of Directors Director Name Arvind Moha n Ra o (Mr.) Henry Huntley Ha ight Iv (Mr.) Cha ndra mouli Ja na kira ma n (Mr.) Na res h Kuma r Ma lhotra (Mr.)

Designation Executive Cha i rma n & Ma na gi ng Director, Promoter-Director Non-Executive Di rector Promoter-Di rector Non-Executive Di rector

Sri da r Arva mudha n Iyenga r (Mr.) Non-Executive Di rector

Ja ya nth Ra ma Va rma (Prof.(Dr.)) Non-Executive Di rector

Additional Disclosure This report has been sponsored by NSE - Investor Protection Fund Trust (NSEIPFT). Disclaimer This report is based on data publicly available or from sources considered reliable. CRISIL Ltd. (CRISIL) does not represent that it is accurate or complete and hence, it should not be relied upon as such. The data / report is subject to change without any prior notice. Opinions expressed herein are our current opinions as on the date of this report. Nothing in this report constitutes investment, legal, accounting or tax advice or any solicitation, whatsoever. The subscriber / user assume the entire risk of any use made of this data / report. CRISIL especially states that, it has no financial liability whatsoever, to the subscribers / users of this report. This report is for the personal information only of the authorised recipient in India only. This report should not be reproduced or redistributed or communicated directly or indirectly in any form to any other person especially outside India or published or copied in whole or in part, for any purpose. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this report. For information please contact 'Client Servicing' at +91-22-33423561, or via e-mail: clientservicing@crisil.com.

CRISIL COMPANY REPORT | 4

Dec-10

Sep-08

Sep-09

Sep-10

Jun-08

Jun-09

Jun-10

Rs/share 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

EPS

Per cent 45 40 35 30 25 20 15 10 5 0

Movement in operating and net margins

Mar-10

Net profit growth y-o-y (RHS)

Dec-10

Sep-09

Sep-10

Jun-09

Jun-10

Per cent 80 70 60 50 40 30 20 10 0 -10

Rs mn 300 250 200 150 100 50 0

Quarterly PAT & y-o-y growth

Per cent 500 400 300 200 100 0 -100