We all know the very well known fact that Nokia shut down its Chennai plant due to a tax dispute with Indian Tax authorities. It was told that several companies like Celkon, Lava and Vivid were trying to buy the factory. Has the tax issue been sorted out? Is Nokia’s Chennai Plant bought by Lava, the smartphone vendor?
Nokia said on Tuesday, October 7, 2014 that it will shut down the Chennai plant beginning November 1. This is because Microsoft has ceased the mobile purchase agreement from the factory and the plant is left with no business. According to Nokia, Microsoft has notified them that they will be terminating the manufacturing services described in the agreement that will take effect beginning November 1, 2014.
Because of the lack of additional instructions from Microsoft, Nokia will postpone the handset production at the Sriperumbudur plant. Though Nokia announced on September 2013 that it will sell its devices and services business [D&S] to Microsoft including the assets in India for $7.2 billion by March 2014, the Chennai facility could not be transferred to Microsoft even if the deal was already completed on April 25 and this is because of legal issues connected to tax demand by the government.
The Tamil Nadu government in March, served a Rs 2,400 crore notice on Nokia because according to the government, Nokia had sold products from the Chennai factory in the local market instead of shipping the products overseas. It is obvious that the tax issue on the factory has not been settled even if Microsoft already paid them.
