Proposed public issue of 10,900,545 equity shares of face value Rs 10 targeted at an issue size in the range of Rs 3,500-4,500 million
CRISIL has assigned a CRISIL IPO Grade "4/5" (pronounced "four on five") to the proposed initial public offer of OnMobile Global Ltd. (OGL). This grade indicates that the fundamentals of the issue are above average relative to other listed equity securities in India.
The grading reflects OGL's position as the largest player in the mobile value-added services (VAS) market in India, and its strong presence in the voice portal and ring back tone (RBT) segments of the VAS market. The grading also reflects OGL's ability to leverage on the unique voice recognition capability of its platform as telecom operators in India expand coverage into rural areas, and its ability to offer customer contact products to goods and services companies by virtue of having a voice channel relationship with almost all telecom operators. The grading also factors the management's strong understanding of market dynamics, as reflected in OGL's consistent track record in product innovation, and pro-activeness in setting up a corporate governance system in the company, as indicated by the appointment of independent directors over a year ago. The grading is tempered by the fact that OGL has low bargaining power with its customers i.e. telecom operators, as it does not brand its products and depends on the operators to take its products to the market. The grading also reflects the anticipated change in OGL's revenue profile, as it opens up its proprietary platform to third parties for applications development. This will cause the business mix to move from the current content cum platform mix to more of the latter.
About the company
OGL is the largest mobile VAS provider in the Indian market. The company was promoted by two first generation entrepreneurs - Mr Arvind Rao, and Mr Chandramouli Janakiraman. The company was originally incorporated as Onscan Technologies India Pvt Ltd in September 2000 by its promoter OnMobile Systems Inc (OMSI). OMSI itself was an incubated start-up of Infosys Technologies Ltd, incorporated under the Delaware General Corporation Law in December 1999.
At the core of OGL's offering to telecom operators is a platform named MMP 2500 - a combination of standard hardware and OGL software - which is technology and handset neutral. Leveraging on this platform, OGL provides a range of services such as ringtones, information, RBT, and m-commerce to telecom subscribers. Currently, the only way to develop applications on the MMP 2500 platform is proprietary with OGL. The company, over the next few months, proposes to throw open the platform to third parties for putting their own applications.
For the year ended March 2007, the company reported a net profit of Rs 337 million on a turnover of Rs 1,330 million. This is as compared to net profits of Rs 248 million and revenues of Rs 826 million in 2005-06.
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