1. Nokia’s Chennai plant draws buyers

Nokia’s Chennai plant draws buyers

The Finnish telecom network major says its focus at the moment is to get the asset-freeze lifted

By: | Chennai | Published: March 21, 2015 2:55 AM

Amid the clamour for revival of Nokia’s Chennai handset manufacturing plant,  the Finnish telecom network major, which is no longer in the business of making mobile phones, has said it has been approached by parties interested in buying the facility.

“It has been approached by parties interested in buying the Chennai facility, but due to confidentiality reasons we will not comment further,” Nokia said in a response e-mailed to FE.

The company, which sold its entire device and services business to Microsoft for $7.5 billion last year, could not include the Chennai plant, one of its largest handset making facilities, in the deal because the asset was frozen by the central government following a tax litigation.

The facility was running for some time even after the deal, as Microsoft entered into a pact with Nokia for buying handsets made at the Chennai plant, ostensibly to keep jobs at the beleaguered plant uninterrupted, but Microsoft terminated the deal after some months, forcing Nokia to close the plant on November 1, 2014, after giving a severance package to the agitating employees.

The demand for revival of the now-defunct plant started with the Tamil Nadu government and other state political parties raking up the issue, saying the closure of the MNC giant’s lone India plant had sent wrong signals to the investor community across the globe. Coinciding with this, reports of major companies eyeing to buy out the plant came in the open, some even naming specific firms.

Nokia said the company’s focus at the moment was to get the asset-freeze lifted. “We have consistently said since October that with production at Chennai suspended, we call on the government to lift the asset freeze imposed by tax authorities so we can explore potential opportunities for sale,” Nokia said. It further said this was an urgent prerogative not only for Nokia. “We believe an eventual sale would offer a brighter option for employment in the region and support the government’s Make in India initiative,” it said.

In a bid to restore investor confidence, the Tamil Nadu government in February asked the Centre to lift the asset freeze on the Nokia facility in order to help other handset makers willing to buy the unit.

Speaking at the maiden NITI Aayog meeting in New Delhi, Tamil Nadu CM O Pannerselvam had said: “Retrospective amendments to the Income Tax Act in 2012 with effect from 1976 and levy of a huge penalty on the world’s largest mobile handset manufacturing plant located in Tamil Nadu resulted in the closure of the unit. Other handset manufacturers are willing to step in to open the unit and this has to be facilitated by lifting the asset-freeze imposed by the tax authorities.”

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  1. M
    Mangoman
    Mar 21, 2015 at 9:46 pm
    The et-freeze can be lifted prided the prospective buyer puts the money in an escrow account in India!! There's absolutely no-doubt Nokia cheated on due-tax and then indulged in chest-thumping to prove innocence; the same strategy that was undertaken by Vodafone!! Nokia shut down the plant to put pressure on the govt, blaming the govt for the loss of jobs. Again, Cairn Energy terminated 200 people because they "didn't have capital to pay them after the govt. stopped them from selling the remaining stake to Vedanta Resources!! Nokia doesn't sell too many phones in India anyways and they are a small marginal player that caters to entry-level basic handsets; those handsets are imported from Vietnam because they have lower taxes than us! If India tomorrow raises tariff on mobiles imported from Vietnam, Nokia's hide-and-seek game will be over in India!! They closed the factory because they were not selling enough phones in India to keep 6000 people in employment, the tax-evasion gave them an excuse to shut-down the plant! The Chennai factory belongs to govt. of India and the govt. should auction it off the prospective buyers to realise the tax dues if Nokia fails to pay; it's that simple!!
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