Nokia to suspend handset production at Chennai plant from November 1

Nokia to suspend handset production at Chennai plant from November 1

After long suffering, Nokia has finally announced that it will suspending handset production at its Chennai plant from November 1. The handset maker is seeking further orders from Microsoft, which completed the acquisition of Nokia’s handset business earlier this year.

Nokia said in a press statement on Tuesday that Microsoft is terminating the manufacturing services that was defined in the transitional services agreement (TSA) signed last year. This makes no reason for the company continue handset production at its Chennai plant, located in Sriperumbudur, India.

“Microsoft has informed Nokia that it will be terminating the manufacturing services defined in the agreement with effect from 1 November 2014. In absence of further orders from Microsoft, Nokia will suspend handset production at the Sriperumbudur facility from 1st November,” Nokia said.

Microsoft announced the acquisition of Nokia Devices and Services business for a transaction of $7.2 billion in September last year which closed in April. The software giant included all the assets of the handset company but left its manufacturing unit in Chennai due to tax disputes with Indian government.

“Unfortunately, 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 company said.

There is no certain details available on the total number of employees currently working at the Chennai plant but it was earlier reported to have about 6,000 permanent employees for which Nokia is currently evaluating options to minimise the impact of the sudden suspension.

“As a responsible employer, Nokia is currently evaluating options to minimize the impact on existing employees at the manufacturing facility. It will share further information once details have been finalized,” the company added.

Nokia said that it will additionally inform all its stakeholders including the Labour Commissioner about the suspension of its facility in the state.

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