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'Nokia India will look for buyer for Chennai unit over tax dispute with govt'

Dec 09 2013, 21:58 IST
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Finnish handset maker Nokia said it will have to look for another buyer for its Chennai manufacturing unit if it cannot transfer the plant to Microsoft due to the tax row with the government. Finnish handset maker Nokia said it will have to look for another buyer for its Chennai manufacturing unit if it cannot transfer the plant to Microsoft due to the tax row with the government.
SummaryNokia unit may have to be segregated if tax dispute in India is not settled before December 12.

Finnish handset maker Nokia today said it will have to look for another buyer for its Chennai, India manufacturing unit if it cannot transfer the plant to Microsoft due to the tax dispute with the government.

US software giant Microsoft had in September agreed to acquire Nokia's devices and services business for USD 7.2 billion. The Chennai unit, which employs about 8,000 persons, was part of the deal.

However, the Nokia unit may have to be segregated if the tax dispute is not settled before December 12 and company may then look at providing contract manufacturing services to the US-based company for about a year, a senior Nokia official said.

Since the facility will have no use for Nokia post the Microsoft deal, they will try to find another buyer for it, the official said.

Nokia today also offered the government that it will deposit Rs 700 crore so that it can fight the case, besides its offer that if authorities allow sale of Chennai unit the firm will deposit the cash generated out of it with them, which will be a minimum Rs 2,250 crore.

"We will do our best to get this deal done. But, we also agreed with Microsoft that if the assets are not transferred to them then we will for concessional period offer contract manufacturing services out of the factory assets and by doing so we will try to secure employment for as many employees possible.

"Given that Nokia will not be needing this assets for its own future operations, we will need to seek to try to find another buyer for this asset here," the official said.

The official said that the company "disputes" the tax claims that have been issued to them.

"It will be in the best interests of the employees and tax officials because what we are offering them is that we will be replace the Chennai factory with cash proceeds that we will receive by selling it to Microsoft.

"We have committed that cash amount will be a minimum of Rs 2,250 crore and if you look at this from a numbers point of view, the case and the claim, is for approximately Rs 2,080 crore," the official added.

Presently, Nokia is trying to enable the de-freezing of the factory assets for its sale to Microsoft.

"We have already today agreed to deposit Rs 700 crore to be able to take this claim and go through court proceedings over the next

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