One97 Communications & Oorja in a bitter split; Oorja founder Rajiv Madhok out of One97 board

One97 Communications & Oorja in a bitter split; Oorja founder Rajiv Madhok out of One97 board

Mobile Internet firm One97 Communications has split from its mobile marketing subsidiary Oorja Mobile Services Pvt Ltd. While Oorja founder Rajiv Madhok maintains the disengagement (where One97 transferred its majority holding in Oorja) was as per pre-decided option, One97 Communications' founder Vijay Shekhar Sharma told Techcircle the split had to do with differences over the way Oorja was being run and 'funded'.

Noida-based Oorja was founded by Rajiv Madhok (CEO) in November 2007 and its other top management include Deepak Mittal (CTO) and Shakti Saravanan (CMO). One97 Communications had acquired a majority stake (55 per cent) in Oorja for Rs 98.5 lakh in February 2008, making it a subsidiary. This was just three months after the startup was founded.

Madhok had also received some shares of One97 and also joined the board of the mobile Internet company.

In an email to employees last week, Sharma said:  "One97 no more holds any shares or business/technology interest in Oorja."

Talking to Techcircle, Sharma said "There has been no money exchange between the two companies and there definitely hasn't been any buyback." We asked him whether One97 recovered its original investment, but he declined to comment.

Talking about the reasons for the split, he said One97 board and Madhok had differences in the way Oorja's business was being run and the way the startup was funding its business. He did not specify what he meant by the differences over funding of the business but added: "We at One97 were not very happy with what was happening."

Earlier, speaking to Techcircle Madhok of Oorja had said: "At the time of the inception of Oorja, it was a pre-decided option (of splitting with One97) that could be executed by us when we thought the timing was right. We just thought that this is the appropriate time to concentrate on the product line that we wished to chase hence decided on the split."

Madhok had also mentioned that as part of the deal, some shares of One97 have been given back to the company, a claim that was refuted by Sharma.

Sharma also refuted claims made by Madhok on a consensus for splitting after a time period. "Oorja did not have any pre-decided options of splitting from One97 and it was One97 (and not Oorja) that decided to part ways," he told Techcircle.

Under the deal, pre-call and analytics business of Oorja have now moved to One97, while Oorja will continue with mobile advertising and post-call notification business. Also, Oorja cannot pursue any of One97's lines of business (content, prepaid, pre-call and the likes). The two companies have also reached mutual non-solicitation agreement, which means no movement of people between the two companies.

"Madhok stills holds shares of One97, although he is no longer part of  the board of One97," said Sharma.

We tried getting in touch with Madhok again for further clarifications on the matter, but he could not be immediately reached.

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