Arvind Rao has stepped down from his post of Managing Director and Chief Executive Officer of telecom value-added service provider OnMobile on Tuesday following allegations of financial irregularities in the company.

The company said in a statement that, "Recognising that these weaknesses took place during his tenure, Arvind Rao has submitted his resignation from the position as Managing Director and CEO with immediate effect and the Board has accepted the same."

The statement also said that the review has noticed some weaknesses but strong alternate controls prevented losses for the company. The irregularities were revealed after a special review of corporate governance procedures by the company's legal advisor Amarchand Mangaldas, Suresh & Shroff Co.

The findings were supported by the audit firm KPMG, which found weaknesses in some processes. There are serious allegations of financial misappropriation against promoter and CEO Arvind Rao. Co-founder and Executive Director Mouli Raman will act as the interim Managing Director while the company looks for a new CEO.

The shares of the company offset initial lose and gained 7.44 percent to Rs 36.10 on the Bombay Stock Exchange (BSE). On the National Stock Exchange (NSE), the shares increased 7.44 percent to Rs 36.10.