Info-tech

8 years, 800 m handsets later, Nokia shutters Chennai plant

TE Raja Simhan Chennai | Updated on March 12, 2018

The Tamil Nadu Government asked Nokia to pay ₹2,400 crore as VATstating that handsets made at Sriperumbudur plant were sold in India.

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It's goodbye to Nokia, said a member of the Nokia Employees Union.

Evaluating options to minimise impact on existing employees at the unit

The 800-plus remaining employees at Nokia’s Sriperumbdur plant now have no choice but to opt for a voluntary retirement scheme as operations are to be suspended from November 1.

“It is time for us to say goodbye to Nokia,” said a member of the Nokia Employees Union, which had a long meeting with the Labour Commissioner on Monday to find a solution to their plea of continuing work at the plant.

No Government aid

“We are helpless now as all options to keep the factory running have been exhausted,” said the member, who did not want to be named. The Commissioner had asked the union and management to sort out the issue and revert on October 30, sources said. The union even sought interventions from the Centre and State Governments, but could not find any help, he said.

Nokia officials could not be reached for comment on the options they are considering for the remaining employees left at the plant.

Nokia earlier this month had said that production of mobile handsets at Nokia’s largest manufacturing plant at Sriperumbudur will be suspended from November 1 post termination of services agreement with software major Microsoft.

Due to the liens on the Nokia handset manufacturing facility in Chennai, the plant was left out of the Devices and Services deal with Microsoft, finalised on April 25, 2014. As a consequence, Nokia entered into a transitional services agreement with Microsoft to address their immediate production needs and to keep the factory operational.

In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from November 1, said a statement from the company spokesperson. Nokia then said that it was evaluating options to minimise the impact on existing employees at the manufacturing facility. It will share information once details have been finalised.

The problem for Nokia started in October 2013 when it was embroiled in a ₹21,000-crore tax case with the Income-Tax Department for allegedly violating withholding tax norms since 2006 while making royalty payments to its parent company in Finland.

Tax norms dispute

Next was a salvo from the Tamil Nadu Government, asking Nokia to pay ₹2,400 crore as value-added tax, stating that handsets made at its Sriperumbudur plant were also sold in India.

The company has filed a writ petition in the Madras High Court against the claim. Nokia India resorted to manpower reduction due to the uncertainty over the I-T dispute following which authorities froze the assets. The issue could not be resolved before March 31 to enable Nokia to transfer the asset to Microsoft as part of a $7.4-billion global deal.

Published on October 28, 2014

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