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BW Businessworld

Nokia Stops Production At Chennai Plant, Reaches Deal With Staff

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Nokia has suspended mobile handset production at its troubled Chennai facility from Saturday (1 November) and laid off hundreds of workers as it could not resolve a tax dispute with the Indian government.
The Finnish company said it has reached an agreement with the last 900 employees at its Sriperumbudur facility on a severance package.
Nokia sold its mobile phone business to Microsoft in April, but it was forced to leave the Indian factory out of the $7.5 billion deal due to the tax dispute with Indian authorities. It continued to operate the factory as a contract manufacturing unit for Microsoft.
Nokia started manufacturing at the plant in January 2006 and exported products to overseas markets, including the Middle East and Africa, Asia, Australia and New Zealand, besides supplying the local market.
Following the Nokia-Microsoft deal, a voluntary retirement scheme was offered to employees and 5,700 of them opted for it.
In a statement in October, Nokia said Microsoft had informed the company it would be terminating manufacturing services defined in the deal, effective from November 1, 2014.
An asset freeze imposed by the tax department stopped 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 company said.
A settlement was agreed after several rounds of talks between the management, employees and the labour department. Nokia said on Friday the tripartite meeting resulted in a "financial package" for the employees.
"We can confirm that constructive discussions with union representatives and labour commissioner have resulted in agreement on a financial package for Chennai factory personnel," a company statement said.
Though the statement did not give the details about the "financial package", sources in the Nokia India Employees Union said it was between Rs 7.50 lakh and Rs 9 lakh for each employee and included the salaries for November and December.
The plant directly employed 8,000 people of which 60 per cent were women, and another 25,000 people were associated indirectly with the firm when the facility was operating at its peak capacity.