Nokia Chennai unit may be made contract manufacturing facility

Written by R Ravichandran | Chennai | Updated: Apr 23 2014, 16:05pm hrs
NokiaNokia's Chennai plant is one of the biggest facilities in the world, employing about 8,000 persons directly. Reuters
Nokia Indias Chennai manufacturing plant will become a contract manufacturer for Microsoft. The global acquisition of Nokia by Microsoft will conclude on April 25 and the Chennai unit has now decided to enter into a services agreement with the new owner to supply handsets from its factory, at least for a period of one year under a contract manufacturing system.

The situation is a complicated one and Nokia is continuing to weigh its options. As there is still time before the closing of the deal, we cannot speculate on possible outcomes at this point. With Chennai, it is worth remembering that we have said we will consider a services agreement with Microsoft should our Indian assets not be able to transfer at the close of the global deal, said a spokesperson of Nokia.

With only two days before concluding its deal with Microsoft, it is highly impossible for Nokia India to settle all its tax disputes as well secure regulatory approvals to enable Chennai factory becoming part of Microsoft. Hence, Nokia India as said in December last that Chennai plant can become a contract manufacturer for Microsoft for one year, the spokesperson said.

Nokia on Monday announced that it expects the transaction, whereby it will sell substantially all of its devices & services business to Microsoft, to close on April 25. The deal, originally announced on September 3, 2013, is now subject only to certain customary closing conditions.

R Soundararajan, leader of Centre of Indian Trade Unions (CITU), which is campaigning in support of Nokia India Thozhilalar Sangam (workers union), told FE, Still we have not received any communication from Nokia India on the status of our workers as well Chennai plant. We will take a call on how to go ahead once the union officially receives notice from the company, he said.

On contract manufacturing, he said, We are not interested if Nokia India will contract manufacture to Microsoft. We are bothered about the job security of 6,600-odd permanent workers. Our concern is that the workers should continue to be employees of Nokia India as always been, irrespective of how the latter source its orders.

Nokia India spokesperson said, We cannot speculate what would happen post-Microsoft deal on April 25. However, we strongly believe that the workers will continue to be employees of Nokia India.