Freedom 251 to fly free today after battling FIR, legal action
Ringing Bells, the domestic company which showed at least 7.2 crores people the dream of owning a smartphone for Rs 251, is on course to make history.tech Updated: Jul 07, 2016 11:48 IST
Ringing Bells, the domestic company which showed at least 7.2 crores people the dream of owning a smartphone for Rs 251, is on course to make history.
But the bigger question is will it? The scepticism arises after the company has repeatedly failed to deliver on shipping smartphones to consumers right from day one when managing director of the company Mohit Goel had said that the phones would be in users’ palms by February.
It is July now and the latest date on cross hairs is July 7. Moreover, the company has been embroiled in several controversies starting from underselling the device to not being registered on Bureau of Indian Standards (BIS) which makes it unsafe for usage. The estimated cost of the phone is valued at $60 (Rs 4,125) whereas the phone is being sold for Rs 251 ($4).
Bugs galore and a garment shop?
The dream was so alluring that the website for booking the phone crashed several times. An overload on the servers due to six lakh clicks per second on its website had forced the company to halt bookings. The company had promised that sale would resume after 24 hours but it barely did. Ordering the phone online was a struggle for many as the server directed them to the homepage even if all the required details were entered correctly.
Moreover, there was no limit on the quantity that can be ordered. Even if one enters 0.5 units as quantity, the system would accept it and just half the price. Ashok Chadha, the company’s president, had said at the launch that after 2.5 lakh units were sold on the website, it would stop accepting orders but that didn’t happen too and the company reached a mammoth registration order of 7.2 crores.
What is even more interesting that the company had registered the address of a garment shop to be their office. According to a Business Standard report that quotes a Ministry of Corporate Affairs (MCA) filing, the registered office is “Old-678-B-New-I-X-6273 G/F Mukharjee Gali, Gandhi Nagar New Delhi - 110031 Delhi - INDIA”. Gandhi Nagar market, a bustling East Delhi locality, is a wholesale hub of local textiles and ready-made garments.
BPO files FIR
However, it was just the beginning as soon a BPO company filed a complaint against Ringing Bells Private Ltd accusing it of cheating and non-payment of dues. Ringing Bells CEO Mohit Kumar Goel had hired the BPO firm – Cyfuture – on February 16 to handle customer calls.
Stating that he had lodged a complaint with the Gautam Budh Nagar senior superintendent of police’s office at Sector 14-A, Cyfuture CEO Anuj Bairthi said: “I had gone to the Noida Phase-II police station the previous day to lodge an FIR against the Ringing Bells founder after it terminated our agreement without serving us a month’s notice. However, the police said the FIR can be filed only after receiving permission from the SSP or SP (crime). Therefore, I have submitted the complaint on Friday… my first move towards lodging an FIR.”
Goel had denied Bairthi’s allegations, contending that he had paid Cyfuture a remuneration of Rs 7.6 lakh before terminating the contract over “poor quality” of services. “A clause in our agreement states that the employer is free to terminate the agreement without notice if the services provided did not meet our expectations. We decided to terminate the agreement with Cyfuture after 10,000 customers told us through e-mail that they were not satisfied with the BPO service. Also, we found during an inspection that Cyfuture had kept only 40 staffers against the promised number of 100,” the Ringing Bells CEO said. The company now plans to hire a new BPO to handle customers, he had said.
Reinforcing belief in the dream
The company had to do something to save its image as they had repeatedly failed on its promises. It started refunding money it had collected from people and made the phone cash-on-delivery. “There was a lot of negativity around us so we have decided to take money from customers only after delivering phones to them. We are refunding money to those who have paid for booking the phones and giving them an option of cash on delivery,” Goel had said.
The opening page of the website of Freedom 251 at that point in time said that the company assured customers of its “best intentions” and says fresh bookings have been closed. The letter from the Freedom 251 team also said that the company has decided to offer only cash-on-delivery to avoid any inconvenience and is in the process of compiling all the emails it received from customers and will issue phones to the first 2.5 million registrations “very soon”.
There was no reference to the fact that the management was forced to refund its customers the entire booking money of Rs 63 crore raised during the initial registration, priced at Rs 251. These are yet to see the light of day even though the promised time (mid-April) when the first lot was supposed to be delivered had passed.
Next the company faced legal hurdles. The three key people behind the idea of Freedom 251 — Mohit Kumar Goel, Dharna Garg and Ashok Kumar Chadha — were fighting cases in the Allahabad High Court to avoid arrests for collecting money through an alleged Ponzi scheme.
A Ponzi scheme is a fraudulent money collection cycle in which investors are paid returns from newly collected investments rather than from profit made through legitimate business operations. While Goel is the majority stake holder in Ringing Bells, the company behind Freedom 251, Chadha is the president. Garg is Goel’s wife and does not have any ownership rights directly.
The promoters were dragged to court on the basis of a first information report (FIR) filed by Kirit Somaiya, a member of Parliament. The FIR accused Goel and the company of cheating and dishonesty under Section 420 of the Indian Penal Code, among others. However, Abhishek Vikram, the promoters’ lawyer, had said taht the FIR is an attempt to derail the launch.
Lies or inconsistencies
And then there were inconsistencies in statements. According to another report, during the February 18 launch event, Chadha and Goel had said the handsets would be manufactured at company-owned units in Uttarakhand. Six days later, he told Business Standard that the devices were being imported from third-party manufacturers in Taiwan and would reach customers from mid-April.
This version also changed within a fortnight, the paper reported. Later they said that the devices would be made at two plants in Noida and Janakpuri in Delhi, operated by “partners” of the company.
The promoters’ list of woes increased after Adcom Mobiles, the seller of the Freedom 251 prototypes that Chadha and Goel showcased during the launch graced by Bharatiya Janata Party veteran Murli Manohar Joshi, threatened to sue the company over violation of usage rights. Ringing Bells did not have rights to use its phones commercially, Sanjeev Bhatia, founder and chairman of Advantage Computers (Adcom), had alleged.
More back and forth and meeting the PM
Since then, the company has gone back and forth with the delivery dates of the Rs 251 smartphone and also has not accepted new orders. Goel had earlier said that the delivery will finally begin from July 6 and not June 30 as was announced earlier. He had also said that they are trying to meet Prime Minister Narendra Modi for garnering his support under the Make in India initiative.
According to Ringing Bells’ Founder and CEO Mohit Goel, they are ready with nearly two lakh ‘Freedom 251’ handsets. “In the meanwhile, we have prepared a letter requesting a meeting with our Prime Minister to pitch our case as a domestic smartphone maker which wishes to contribute towards ‘Make in India’ initiative,” Goel had said.
“We are planning to organise a launch event in the capital on July 7, a day after starting the delivery,” Goel had added. In an earlier interview to IANS, Goel had announced June 30 the date for delivery, adding that once he is done with this first phase of delivery (of two lakh phones), he will open registration again for those who wish to buy the handset.
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.“We learned from our mistakes and decided to go silent till we come out with the product. Now we have a 4-inch, dual-SIM phone ready for delivery. I feel vindicated,” he had said.
According to Goel, he is facing a loss of Rs 140-Rs 150 per handset, for which parts were imported from Taiwan, but hopes to make profit on volumes. 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 for selfie and a 1,800 mAh battery. It runs on Android 5.1 (Lollipop).
The phone is available in two colours -- black and white -- with centrally aligned rear camera and branding on the back panel. It has a speaker just alongside the branding. The device displays the Indian Tricolour when you switch it on. The company has incorporated all the basic Google apps in the handset.