Nokia switches off Chennai plant that produced 800 mn handsets

Written by Sajan C Kumar | Chennai | Updated: Nov 1 2014, 13:50pm hrs
Nokia Chennai plant900-odd employees of the Chennai plant have signed the severance package offered by Nokia management.
It is curtains for Nokia's Chennai factory. From Saturday there will be no production at the plant with the remaining 900-odd employees having signed the severance package offered by Nokia management.

As part of the package, an employee who has put in the maximum service (above eight years) will be receiving an amount of Rs 9.5 lakh and those who put in a minimum of four years will be getting Rs 6 lakh and above, depending up on the seniority.

When contacted, Saravanakumar, president, Nokia India Thozhilalar Sangham ( workers union) confirmed that employees have signed the severance package documents at the labour department on Friday.

Nokia had invested close to Rs 1,900 crore in the plant, which had produced 800 million handsets till March 2014. It has been exporting handsets produced at the Chennai plant to various countries.

The management has agreed to a major demand put forth by the union that in future if the company decides to restart or sell it to any third-party to run the plant, the current workforce will be given preference for jobs.

The union also urged the Nokia management to complete the settlement process within next 10 days, and has asked the I-T department to give relief on the severance package under I-T Act, including to those 5,600 odd workers who opted for voluntary retirement scheme (VRS) in May this year, Saravanakumar told FE.

On Thursday, a marathon discussion among officials of the Tamil Nadu labour department, Nokia management and workers union had taken place, before agreeing to the severance package, after it was clear that production will be halted.

Nokias Chennai production facility was kept out of its $ 7.2-billion devices and services deal with Microsoft, as the Delhi High Court had frozen assets due to a tax litigation in India. It was entangled in a R21,000-crore tax dispute with the Centre and was slapped with a R2,500-crore value-added tax claim by the commercial tax department of Tamil Nadu.

Nokia had later entered into third-party contract agreement with Microsoft for production of handsets, in order to keep the plant running for the time being and as well as sort out labour issues.

Post the wrapping of the deal, Nokia had introduced VRS for the Chennai plant employees and around 5,600 had opted for it. Nokia had also rolled out Bridge programme for the employees in order to get them trained in other skills and to place them in other companies.