Nokia will shut down operations at its Sriperumbudur plant near Chennai from November 1 after Microsoft terminated its purchase agreement with the facility. In a statement, Nokia had this to say:
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.
The facility was not included in the sale of Nokia's handset unit to Microsoft due to tax litigation from the Indian government. The Tamil Nadu government initially levied a Rs. 2,400 crore fine on Nokia for selling products destined for international markets in India, and then the Supreme Court decreed that Nokia could continue operations if it deposited Rs 3,500 ($571 million) crores in escrow before the transfer to Microsoft. As a consequence, Nokia entered into a transitional services agreement with Microsoft to address immediate production needs.
The factory was one of the largest facilities for Nokia, and accounted for the production of over 800 million handsets and employed a staff of 8,000 full-time workers and 25,000 ancillary workers.
Source: Times of India
