Microsoft leaves out India unit in Nokia asset deal

Except for Indian & Korean facilities Nokia transfers all factories

Nokia on Friday completed the transfer of its devices and services business to Microsoft, but its Indian and South Korean facilities were kept out of the deal. The odds of transferring Nokia’s Chennai factory to Microsoft later appear slim.

A red-letter day for Microsoft, which bought Nokia's devices and services business for $7.22 billion, it was a ‘Black Friday’ at the Sriperumbudur factory near Chennai.

Nokia said, “Amid uncertainty for our employees in Chennai, Nokia plans to offer a programme of support, including financial assistance, which would give the chance to explore opportunities outside Nokia.”

Microsoft’s India-born Chief Executive Satya Nadella said, “On Friday, we welcome the Nokia devices and services business to our family. The mobile capabilities and assets they bring will advance our transformation.”

“The factory in Masan, South Korea, and the factory in Chennai will stay with Nokia due to the tax liens on Nokia’s assets in India that prevent transfer.”

The income tax department is claiming Rs 21,000 crore in taxes from Nokia and has refused to allow transfer of the plant till its dues are met. The tax dispute is being heard in the Supreme Court. The Tamil Nadu government is also claiming Rs 2,400 crore from Nokia in sales tax. The matter was argued in the high court here last week and the court reserved its order for April 29.

Leaving out the Indian and South Korean facilities would have no bearing on the deal —which involves transfer of six of Nokia’s eight factories across the world — and the once-largest maker of cellphones would be compensated for any retained liabilities, Microsoft said. To a question whether the Chennai facility could be transferred later if Nokia settled its disputes, a Microsoft spokesperson said, “The deal has been completed.” Sources said the factory would not be part of Microsoft at any point.

Nokia did not share details about the deal. A spokesperson said, “Microsoft is the one to comment on its future plans.”

Facts about Nokia's Sriperumbudur factory

Company name: Nokia India

Year of incorporation: 1995

Investment in India: Nokia Finland made an initial investment of Rs 35.6 crore in Nokia India starting in 1996 and has increased to Rs 1858.95 crore which includes production, work paid resources and parked assets

Number of employees: around 8,000 (50% are women) directly & another 25,000 indirectly

Turonver/sales: During the period 2005-06 to 2011-12, it had cumulative turnover/sales of Rs 150700.44 crore.

Number of mobile phone produced: Till March 2014, around 800 million units

Plant's significance: About 50% of Nokia hand-sets were manufactured in India and 40-50% of the production was exported

Source: Delhi High Court's Order in December, 2013