Unable to solve a dispute with Indian tax authorities, Nokia Corp on Thursday said that due to an ongoing tax dispute, its Indian mobile phone handset plant was unlikely to be included in a deal due to be concluded on Friday for the sale of its global handset business to Microsoft.
Nokia will instead operate the factory as a contract manufacturing unit for Microsoft after the deal, a spokeswoman for the Finnish company's Indian unit said on Thursday.
"It's highly unlikely that the plant will transfer, given that the (deal) closing with Microsoft is tomorrow," the spokeswoman said. " If the asset doesn't get transferred, we are entering into a service agreement with Microsoft." Nokia has yet to agree to conditions set by guarantee for potential tax dues in a dispute with Indian authorities, before it transfers the plant to Microsoft. The plant, which Nokia says employs about 6,600 employees, is one of its biggest factories globally. Nokia this month offered a voluntary retirement scheme to factory employees.
Nokia lawyers have previously told the Delhi High Court that the company can run the plant as a contract manufacturer in case it is not allowed to be transferred to Microsoft, but not beyond 12 months after closing their 5.4 billion euros ($ 7.5 billion) announced that it would sell its devices and services ( D& S) business, including assets in India, to Microsoft for $ 7.2 billion by March 2014. The deadline was subsequently extended to April 25. The handset and other asset components under the deal are to be handed over to Microsoft's Finnish entity Microsoft Mobile Oy.
In March, the Tamil Nadu government served a Rs 2,400- crore notice on Nokia, saying the company sold products from the Chennai plant in the domestic market instead of shipping them overseas.
In a separate tax case, the Supreme Court ordered Nokia India on March 14 to give a Rs 3,500 crore guarantee before it transfers the plant to Microsoft. The company has often indicated that the transfer of the plant could be adversely impacted if the dispute remains unresolved.
Courtesy: Mail Today