BackNokia to suspend handset production at Chennai plant
The plant in Chennai, to suspend production from 1 November, has suffered as the firm got caught in a tax dispute with the Indian government
Premium
Chennai: Microsoft Corp., which acquired Nokia in September 2013, on Tuesday announced that it will suspend handset production from its Sriperumbudur facility near Chennai from 1 November.
The factory, opened in 2006, was once Nokia’s largest in the world—at a time when the company was the world’s top mobile phone maker and sold almost 7 of every 10 phones sold in India.
Since Nokia was embroiled in a tax dispute related to the factory, it was left out of the deal with Microsoft.
Subsequently, Nokia entered into a transitional services agreement (TSA) with Microsoft to address immediate production needs and keep the factory operational, said a press release.
Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from 1 November. In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from 1 November, the statement added. “The continuing asset freeze imposed by the tax department prevents Nokia from exploring potential opportunities for the transfer of the factory to a successor to support the long term viability of the established, fully functional electronics manufacturing ecosystem," the statement said.
The factory employs around 1,500 people. Around 5,000 accepted a voluntary retirement plan offered by Nokia earlier this year.
Microsoft bought Nokia’s phone business and patents for €5.44 billion.
Bloomberg contributed to this story.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
