Freedom 251 – Ringing Bells now decides to refund money to customers.

Noida-based Ringing Bells, which has promised to sell smartphones for Rs 251 apiece, has started refunding money to customers due to negative speculation around its claim.

As stated by Mohit Goel,Director of the company, decision was taken to refund money due to lot of negativity around and company has decided to take money from customers only after delivering phones to them. Company is refunding money to those who have paid for booking the phones and giving them an option of cash on delivery.

About 30,000 people paid for booking the phones and over 7 crore people registered for it. The payment was facilitated by CCAvenue and PayU Biz.

“We don’t want customers’ money initially. We have investors to back our project. There is a business model to justify the price. We have a foolproof plan and to whomsoever we have disclosed it has agreed to it. I don’t want to disclose full details as of now,” Goel said.

He said the delivery of Freedom251 smartphones is expected to start in April after which the company will start the second round of bookings.

The payment gateway companies CCAvenue and PayU Biz have sought time till Wednesday to credit back the amount in accounts of all those who have paid. After which the company will send an email seeking confirmation for cash on delivery.

Ringing Bells President Ashok Chaddha had explained earlier that the manufacturing cost of the phone is about Rs 2,500, which will be recovered through a series of measures like economies of scale, innovative marketing, reduction in duties and creating an e-commerce marketplace. “By going for Made in India components, the company can save on the 13.8% duty. The company will be selling online first and thus save the costs incurred on large distribution network,” he said.

Chaddha also rejected speculations of the handset being subsidised by the government. “The phone will be manufactured in Noida and Uttaranchal. Two plants will be set up for Rs 250 crore each with a capacity of 5 lakh phones. The money will come in the form of debt and equity (1.5:1),” he said.

The company asserts to deliver the phones who have booked an order for it but people in industry and some politicians expressed doubt over the claim. Telecom Minister asked the Department of Electronics and IT to look into matter.

Ringing Bells has also come under the scanner of Excise and Income Tax Departments as debates around the feasibility of offering a handset for Rs 251 rages on. According to the sources, the I-T Department is looking into the financial structure of the company and has obtained documents, including those from the Registrar of Companies (RoC), in this regard.

For all who have placed order to deliver this phone will have an uncertainty about the feasibility of delivering such phone at a low cost of Rs. 251. But company claiming to deliver phone by April with confidence and assertiveness adds another story. So, like all, we too have opted to – wait and watch.