Chennai Nokia factory saved temporarily from crisis
The Nokia factory in Chennai will become a contract manufacturing unit for Microsoft, the management of the handset maker told employee representatives on Wednesday. The development provides temporary relief to the thousands of workers whose futures have been in a limbo because of the tax troubles of Nokia India and the acquisition of the Finnish company’s devices and services unit by Microsoft.
A Nokia India representative confirmed the arrangement with Microsoft but declined to provide details. In November the company had indicated that it would be a contract manufacturer for the US company for a year.
Nokia, which has offered a voluntary retirement plan to employees, has not said how many staff will be required to meet the needs of Microsoft, a union worker said.
The Chennai factory has 5,200 permanent employees and is not a part of the global deal with Microsoft. Nokia is fighting a Rs 21,000-crore claim by the income tax department over royalty payments. It is also facing a Rs 2,400 crore sales tax claim by the Tamil Nadu government.
At its peak, the Chennai unit produced about 13 million handsets a month.
The company has made two sets of VRS offers–one for permanent employees and the other for its nearly 700 trainees who each receive Rs 2 lakh as well as double the wage for the number of days of earned leave.
The head of the factory recently resigned and some workers have alleged that they were being forced to take up the early retirement scheme.