BackNokia India withdraws plea to sell Chennai plant
The company tells Delhi HC that the buyer has now refused to purchase the plant, rendering its request infructuous
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Nokia India on Tuesday told the Delhi high court that it wants to withdraw its request to lift the freeze on its shuttered Chennai plant and sell it after a potential buyer has backed out.
The mobile phone factory shut operations on 1 November after a ₹ 10,000 crore tax dispute with the income-tax department. Microsoft Corp., which acquired the mobile phone assets of Nokia worldwide for $7.2 billion in 2014, kept the Chennai plant out of the deal.
A bench of justices B.D. Ahmed and Sanjeev Sachdeva allowed the company to withdraw the plea to sell. The court also asked Nokia India to place the valuation of the plant by consulting firm EY on its record. EY said in court on Tuesday that the plant’s valuation assuming that the company can stay afloat is ₹ 361 crore and ₹ 417 crore if it goes bankrupt. Nokia India said the buyer had offered ₹ 400 crore for the plant.
Previously, the Indian arm of the Finland-based firm asked the court to lift the freeze on the assets after finding a potential buyer. To be sure, the company will be free to approach the court again asking it to lift the freeze on assets and sell the plant.
Ahmed said the valuation was in the same range as the one provided by EY.
On 21 May, Essar Group had said that it was “no longer pursuing the deal" to buy the plant, according to news agency Press Trust of India.
In April, Nokia India had submitted a list of potential buyers to the court. The court had then asked the income tax department to consider auctioning the plant or appoint an independent valuer.
A Nokia India statement said the company has withdrawn the request to lift the freeze and sell the plant.
Nokia’s Chennai factory was kept out of the Microsoft deal as Nokia has been fighting a tax case with the Indian government since 2013. In January of that year, the tax officials had asked Nokia to clarify on non-payment of tax deducted at source on software supplies and change in its accounting model.
In March 2013, the tax authorities had served a notice on Nokia India for alleged wrong claims for exemption on royalty payments made against supply of software by the Finnish parent since 2006-07. The notice was of for more than ₹ 2,000 crore. Following this, Nokia moved Delhi high court.
Last year, the income-tax authorities had seized the factory, claiming ₹ 21,000 crore in tax from the Finnish handset maker over software downloaded on mobile handsets assembled at the factory since 2006.
The Finnish firm started manufacturing low-cost mobile phones at the Sriperumbudur factory in 1995-96 at an initial investment of ₹ 35.6 crore. Till March 2014, Nokia had produced about 800 million units at the factory, of which more than 40% was exported.
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