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Finnish handset maker Nokia issued a statement on Monday saying it would transfer all its global assets to Microsoft by April 25. However, the fate of its Chennai facility, which is mired in an income-tax dispute, remains uncertain.
According to Nokia’s statement, it will sell all of its devices and services business to Microsoft to close the deal on April 25. The transaction is now subject only to certain customary closing conditions. The transaction was originally announced on September 3, 2013. Notably, the statement did not mention anything about the company’s Chennai facility or Indian operations.
“The situation is a complicated one, and Nokia is continuing to weigh its options. As there is still time before the closing of the deal, we cannot speculate on possible outcomes at this point. With Chennai, it is worth remembering that we have said we will consider a services agreement with Microsoft, should our Indian assets not be able to transfer at the close of the global deal,” said Nokia India’s spokesperson. Reacting to Monday’s development, M Saravanakumar, president of the Nokia India employees’ union, said the management did not communicate anything to the workers in the factory.
The development comes at a time when the fate of Nokia's manufacturing plant at Sriperumbudur, near Chennai, remains uncertain. Giving the current scenario the plant don't have a choice but to opt for contract manufacturing, which the workers are objecting against.
The income tax department, which slashed a Rs 21,000 crore tax notice on Nokia, has been refusing to transfer the plant till the dues claimed by it is not remitted by the company. The company has also started facing fresh dispute after Tamil Nadu Government's sales tax department issued a Rs 2,400 crore tax notice.
The matter was argued at the Madras High Court last week and today and the Court reserved its order for April 29.
Meanwhile, a source close to the development said “even if India decides to release the assets of Nokia, still the plant cannot be transferred. The company need 48 approvals to transfer the plant, which is next to impossible to get it before the deadline. There is no choice but to opt for contract manufacturing.”
That too may not be for long time, because handsets is a high-technology business and as Nokia has decided to exit the sector, the factory will be left with no technology support.
Nokia Chairman and Interim CEO Risto Siilasmaa earlier said if the company is not allowed to transfer the Sriperumbudur factory to Microsoft it will not have a business and if it doesn’t have a business, it can’t manufacture anything in the factory.
With China's nod on April 8, 2014, the Nokia-Microsoft deal got all the major regulators approval including the European Commission, the US Department of Justice and numerous other jurisdictions. The Euro 5.44 billion deal was expected to close during April 2014, said the company earlier.
