there was this exchange offer videocon had come up a few days back
flat tv 21" with costing 12500/-
get 2500 BACK on your old t.v
so net cost reduces to 10000/-
get a seven year zero coupon bond worth rs.7500/-
(for the non-finance guys it means you will get 7500/- after seven years on presenting the bond to the company)
considering a present value of the bond to be 4000/- at a 10% yield
so net cost reduces to rs.6000/-(12500-2500-4000)
how is the company able to recover cost and make profit selling a 21" flat t.v. for 6000???????????
do you have an answer?????????
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2 comments:
their prdt is so cheap, compared to the market leaders....obviously they make profit
and rest is done by volumes
Could be dumping of all the existing inventories. 20 inch LCD Televisions are now available at 20,000/-. Videocon needs to phase out CRT based TV sets before it becomes obselete. 6000/- is cheap but they will make money on Volumes. + appoximately 20% people would fail to redeem the zero coupon. That would add to the top line growth.
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