Companies & Sectors
Facing losses, 'Freedom 251' maker seeks government help before launch
As consumers wait to see the cheapest smartphone (less than $4) at its scheduled launch in the capital on Thursday, its Noida-based makers have made another pitch for the government's support to make their loss-making venture "work for millions" who don't own such a phone.
 
According to Ringing Bells Pvt Ltd CEO Mohit Goel, he initially faced Rs 930 loss on each handset that cost him Rs 1180 and for which parts were imported from Taiwan.
 
"I recovered Rs 700-800 from app developers and revenue generated through advertisements on Freedom 251 website. After selling the device for Rs 251 (cash on delivery), the total loss per handset is expected to be in the range of Rs 180-270," Goel told IANS. 
 
The first batch of 5,000 'Freedom 251' devices will finally be out for delivery from July 8 and the receiver will have to pay Rs 291 (including Rs 40 as delivery charge) to get the unit, says Goel.
 
"In order to digitally-empower every Indian, if I can get government support under the Digital India programme, I can ensure timely delivery of 'Freedom 251' phone to all citizens at the same price," Goel said on the eve of the launch event.
 
In a letter written to the Prime Minister's Office dated June 28 asking for a meeting with Narendra Modi, Ringing Bells said: "We have brought 'Freedom 251' which we offer on 'Cash on Delivery' terms but we have a gap between the BOM (Bill of Materials) and the Selling Price. We, therefore, humble request government support to actualise the objective to cascade the availability and usage of smartphones all through the far reaches of our great nation".
 
Goel's ambition is huge. He says if the government is willing to dole out Rs 50,000 crore, he can ensure that 750 million of India's population would become part of digital India by owning a smartphone at Rs 251.
 
Bringing some modesty into the equation about the enormity of his demand, Goel says that the government need not give his company the money but can get it manufactured by another vendor.
 
"The government can make the phone -- under our Freedom brand -- from some other vendor. I have no objection to it. To make such phone for every Indian citizen, the government needs to allocate funds from its Digital India initiative," he said.
 
Having learnt his lessens from the controversial February launch when Ringing Bells invited senior BJP leader Murli Manohar Joshi, this time, Goel wants to play safe and is not inviting any politician for the launch.
 
"I want to keep this event controversy-free. I have proved that a smartphone is actually possible in this kind of investment. But to fulfil a mammoth handset order that runs in crores, we badly need government's support," he added.
 
To generate more revenue, he plans to go to iCloud (cloud storage and cloud computing service from Apple) and begin a software called "WhiteCloud".
 
"The aim is to make and provide at least 100 new apps online to 'Freedom 251' owners and charge them bare minimum -- to the tune of Rs 1 to Rs 3 per app -- to generate revenue," he said.
 
After delivering 5,000 phones in the first batch, Goel says he will wait for customers' feedback. "I am ready with 500 service centres pan-India to address people's queries," he claimed.
 
The company will also showcase a 32-inch high-definition LED television -- also called "Freedom" -- at the launch event.
 
"These will be the cheapest television sets in India and will be available for less than Rs 10,000. Online registration for the TV sets will be open from July 25 with delivery to be made from August 1," Goel said, claiming that the company currently has one lakh such pieces in stock.
 
In comparison, the price of a 32-inch HD LED TV sets normally begins from Rs 13,000 in online markets.
 
In an earlier interview to IANS, Goel had also claimed that they are ready with nearly two lakh 'Freedom 251' handsets. 
 
The company had in mid-February this year planned to deliver 25 lakh handsets before June 30. However, it received over seven crore registrations before its payment gateway crashed within three days. 
 
The 3G device has a 1.3GHz quad-core processor, 1GB of RAM and 8GB of internal memory and supports external memory cards of up to 32GB. 
 
The company has offered an 8MP primary camera with flash, a 3.2MP front camera and a 1,800 mAh battery. It runs on Android 5.1 (Lollipop). 
 
The phone would be available in two colours -- black and white. 
 
The device displays the Indian Tricolour when you switch it on. It will incorporate all the basic Google apps in the handset, according to Goel. 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

TRAI to set service quality norms for mobile data
Telecom regulator TRAI has said it will soon float a consultation paper to decide on the service quality norms for mobile data.
 
TRAI Chairman R.S. Sharma said a consultation paper to fix quality of service benchmark for wireless data will be issued soon, which will be put on the TRAI Analytics Portal.
 
Sharma was speaking at the launch of 'TRAI Myspeed App' to measure the real time speed of mobile internet.
 
The consultation paper will discuss the average criteria of data speed that can be assured, Sharma said.
 
Separately on Tuesday, TRAI also issued a draft regulation seeking to extend the validity of special data packs to 365 days from the current 90 days.
 
“After examination of various aspects of the issue, the Authority feels a longer validity of 365 days instead of the current 90 days could be beneficial for marginal consumers, first-time users and price-sensitive consumers,” TRAI said in a statement.
 
The draft has been put in public domain on which comments are sought till July 26.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

User

Three Major Changes in Bond Market That would Create a Big Impact
The regulators in India continue to make changes to streamline the regulatory regime surrounding the Indian bond market. Lately, there has been a number of changes which is likely to cause a positive impact, which otherwise has been performing well during the last one year. There seems to be some effort from the government to push all the regulators towards a common goal. There are three changes, of which two have already come and one is expected to come, that we are bullish about, first, issue of debt securities through electronic book building mechanism, second, changes in the deposit rules for the companies to allow issuance of listed unsecured corporate bonds and third, RBI’s draft notification to allow FPIs to invest in corporate bonds. Let us discuss each of the above separately.
 
Issue of debt securities through electronic book mechanism
Securities and Exchange Board of India (SEBI) vide circular CIR/IMD/DF1/48/2016 dated on 21 April 2016 had provided a mandatory framework for issue of debt securities by private placement with an issue size excess of Rs500 crore through an electronic book mechanism (EBM). One such requirement of the circular stated that EBM shall be provided by the recognized stock exchanges after approval from SEBI. Accordingly, SEBI has granted its approval to NSE and BSE to act as EBP. By this, all the issuers of debt securities and market participants shall mandatorily make such private placement offer only through the EBM for their issuances with effect from 1 July 2016.
 
The old mechanism through which debt securities were issued on private placement basis in primary market lacked transparency. However, the EBM will enable efficient price discovery, reduction in times and cost, transparency among other things.
 
Changes in the Deposit Rules
Until recently, the Companies (Acceptance of Deposits) Rules, 2014 barred the corporates from issuing unsecured debt instruments. However, the Ministry of Corporate Affairs (MCA) vide notification dated 29 June 2016 issued the Companies (Acceptance of Deposits) Amendment Rules, 2016 (Amendment Rules) thereby providing relaxation with respect to issuance of corporate bonds.
 
The Amendment Rules has addressed this issue by excluding listed unsecured non-convertible debentures (NCDs) from the definition of deposits. Earlier, corporates, other than financial entities, were allowed to issue either secured bonds or bonds compulsorily convertible into equity within a period of five years from the date of issuance, anything apart from the said were treated as deposits. 
 
There is however a disconnect with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations 2015), which requires the maintenance of 100% asset cover for discharging the principal amount at all the times, except in case of unsecured debt securities issued by regulated financial sector entities eligible for meeting capital requirements as specified by respective regulators. Therefore, unless necessary changes are made in the Listing Regulations 2015, the non-financial entities will not be able to take the benefit of this change.
 
The situation, however, will not be any different for the financial entities, since, they were allowed issue unsecured bonds in accordance with the directives issued by their regulators.
The guidelines framed by Reserve Bank of India (RBI) allow the non-banking financial companies (NBFCs) to issue unsecured NCDs with a maturity of more than one year and with the minimum subscription amount being Rs1 crore per investor. This is why the bond market in India has been mainly dominated by the NBFCs during the last few years and the same can be viewed in the figure below.
 
 
In many of the developed countries bonds are issued without creation of security interest, subject to certain compliances, so as to enable easy raising of funds by the corporates.  Most corporates, other than NBFCs, do not have assets to create charge in favour of bond or debenture holders, as the assets are already charged in favour of banks. It is counter intuitive to expect a corporate to issue secured bonds; if the corporate had security to offer, it may be easier to access bank loans. It is when companies exhaust their security interests that they opt for bonds. Bonds are an incremental, additional source of funding, and not the first source of borrowing for most companies. 
 
Investments by Foreign Portfolio Investors (FPIs)
Another significant change that is all set to come is that the foreign portfolio investors (FPI) will now be allowed to make investments in unsecured corporate bonds and securitized debt instruments. RBI issued a draft circular on 17 June 2016 laying down new norms for FPI investments. The draft circular states that the FPIs will now be able to invest in primary issues of NCDs or bonds by public companies issued in demat form. However, the funds so raised cannot be invested for real estate activities, purchase of land, investing in capital markets or on-lending to other entities. Once put to effect, this circular can turn out to be a huge boost for the Indian capital markets. 
 
Each of the changes that we discussed in this article has come from different regulators and all of them facilitate is likely to facilitate the growth of the Indian capital markets. This entire episode can be summed to say that the heydays of the Indian capital market are soon to come.
 
(Abhirup Ghosh is a Senior Manager in Financial Services Division at Vinod Kothari Consultants Pvt Ltd. Saurabh Dugar also works in the same firm.)

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)