Fairval

Notes on Indian equities, sectors and economy

Arvind Rao’s greek tragedy at Onmobile

Posted by fairval on August 3, 2012

Great article in Forbes India explaining what went wrong with Onmobile. Really tragic, since it all started with honest intentions..Rao borrowed money to buy his own stock, and got caught in a debt spiral.. (Great job, IG and team)

Why Arvind Rao and OnMobile went down a dark road

Excerpts..

On November 23, 2010, Arvind Rao, the 53-year-old co-founder and CEO of OnMobile, bought approximately 6 lakh shares of his company from the open market, representing a little over 1% of the company’s total shares. Rao already owned over 10% of the company’s shares. At Rs 277 a share, he had to pony up nearly Rs 16.5 crore to acquire them.

He went ahead and borrowed money to buy the shares, thinking nothing of the interest it entailed or the fact that he’d need to put up nearly half his existing shareholding as collateral. That would turn out to be the worst decision he ever made…

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

 
%d bloggers like this: