Nokia offers government about Rs 3K cr to save Microsoft deal

Finnish handset maker Nokia on Tuesday said it has offered to pay about Rs 3,000 crore to government to resolve the tax row so that its Chennai manufacturing plant can be de-frozen for sale to Microsoft Corporation.

US-based software giant Microsoft had in September agreed to acquire Nokia's devices and services business for USD 7.2 billion. The Chennai unit, which employs about 8,000 persons, is part of the deal.

However, the unit may have to be segregated if the tax row is not settled before December 12 and Nokia may then look at providing contract manufacturing services to the US-based company for about a year, a senior Nokia official said.

Since the facility will have no use for Nokia post the Microsoft deal, they will try to find another buyer for it, the official told.

Nokia also offered the government that it will deposit Rs 700 crore so that it can continue to fight the case, besides its offer that if authorities allow sale of Chennai unit the firm will deposit the cash generated out of it with them, which will be a minimum of Rs 2,250 crore.

"It will be in the best interests of the employees and tax officials because what we are offering them is that we will be replace the Chennai factory with cash proceeds that we will receive by selling it to Microsoft.

"We have committed that cash amount will be a minimum of Rs 2,250 crore and if you look at this from a numbers point of view, the case and the claim, is for approximately Rs 2,080 crore," the official claimed.

Presently, Nokia is trying to enable the de-freezing of the factory assets for its sale to Microsoft.

"We have already today agreed to deposit Rs 700 crore to be able to take this claim and go through court proceedings over the next few years, taking the total amount to almost Rs 3,000 crore. This is higher than the original tax claim," the official said.

The official further said: "We have made a reasonable offer to the tax authorities to exchange the factory with cash and put it in an escrow account. It is a better form of security. But, if transaction value is higher than that, we will put in that amount in the account.

Established in 2006, Nokia's Chennai-plant employs about 8,000 people with 20 per cent of them women and about 30,000 sub-contractors. It includes productions lines, maintenance & assembly and testing operations.

The company added that it will ensure the best for its employees at the Chennai manufacturing factory.

"Nokia is a responsible employer and in any scenario we will do our best to find a good outcome for our employees in India and the good outcome will be to transfer the asset to Microsoft.

"We have made a reasonable offer to the tax authorities to exchange the factory with cash and put it in an escrow account. It is a better form of security. But if transaction value is higher than that, we will put in that amount in the account," the official said.

Established in 2006, Nokia's Chennai-plant employs about 8,000 people with 20 per cent of them women and about 30,000 sub-contractors. It includes productions lines, maintenance & assembly and testing operations.