Last year, Microsoft acquired Nokia’s devices and services for a whopping sum of $ 7.2 billion. The deal is expected to close tomorrow. While Nokia asserted that it is doing “all it can” to ensure the Chennai plant transfer, it is now confirmed that the factory isn’t becoming part of the acquisition.
It all started a couple of years ago, when the government of India made some amendments to its tax laws, which along with several other factors roped Nokia’s Sriperumbudur plant into court. Worried about several tax disputes, Stephen Elop, Nokia’s then-CEO, paid a visit to India to reach a solution with Indian authorities. Fast forward 10 months, Nokia was ordered to pay Rs 22.5 billion into an escrow account by Delhi High Court. Nokia took the case to the higher Supreme Court of India hoping to get the initial decision changed, but to its dismay, the Supreme Court ordered Nokia to pay up to get the factory back. These tax disputes prevented Nokia from transferring Chennai-based plant’s assets to Microsoft.
Last month, Tamil Nadu state government added another $414 million tax sum, which Nokia found “absurd”. Over the past few weeks, Nokia ensured that whatever happens to the Chennai factory, it won’t affect its buyout deal with Microsoft. It even said that it is doing “all it can” to ensure the plant transfers to Microsoft. But today a Nokia India spokeswoman confirmed that Chennai-based factory isn’t going to become a part of the deal, “We are leaving out the plant because of the tax issues,” said Poonam Kaul. Whether will it affect the original terms of the deal are yet to be learned.
Nokia’s Sriperumbudur plant employs around 8,000 staff, and over 21,000 people work on a contract basis. Over the last few months, Nokia downsized the production at the plant and transferred several equipment to its China and Vietnam plants. This made the workers worried about their jobs. Two days ago, it was heard that HTC might be interested in purchasing the factory, however, that isn’t happening either. Nokia offered VRS to the employees, which includes 3 months salary and Rs 2 lakh (~$3300), but the employees insisted on saving their jobs.