Microsoft could lose key Nokia manufacturing plant in India
Nokia, BMW, IBM, Vodafone, and Royal Dutch Shell are just a few of the multinational companies caught up in tax battles with the Indian government. A few days ago we learned that an Indian Supreme Court ruled that Nokia must deposit $571 million into an escrow account before it can transfer a key manufacturing plant to Microsoft.
As you know, Microsoft is trying to finalize its deal to acquire Nokia’s phone unit for $7.3 billion. Microsoft and Nokia hope to finish the deal before the month ends. However, the Indian government is making things a little tricky for the two companies.
The Chennai factory is a key manufacturing asset for Nokia and would become Microsoft’s property under the current deal. However, according to a senior Indian tax official, that Nokia factory may not got to Microsoft after all.
Nokia and Microsoft may need to renegotiate the $7.3 billion acquisition deal because of the Chennai factory. Sources in the Indian courts tell local newspapers that the plant can’t become part of the Microsoft deal because of the ruling from the Supreme Court. Nokia Finland, parent company to Nokia India, doesn’t want to get involved. A quote from an Indian tax official:
Nokia is left with a few options. It could run the factory as a contractor on behalf of Microsoft or it could shut the plant down. Which would leave over 8,000 locals out of work. A blow not only to Microsoft, which wouldn’t get a key manufacturing plant, but to those who rely on the factory for their livelihood.
Nokia has maintained that any developments in India over ongoing tax proceedings won’t affect the timing or the material deal between itself and Microsoft. One way or the other, Nokia and Microsoft are planning on closing the deal in the coming weeks.
Source: The Financial Express
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If they close it down the Indian government loses because they won't get any money and 8000 Indians will be out of a job but Microsoft loses too because they lost an important factory. I think Microsoft should just play the good guy in this one. It will be good karma for them. The Indian government will get what they deserve soon enough.
P.S Karma ain't real...it's kind of superstitious...
I wish good luck to those 8000 employees!
All i say is a prayer for those ppl who's livelihood is dependent on the device we play flappy bird on.
Its surely not a time to play blame game....deal shud be closed....the plant shud be contracted so those 8k workers can survive.
Your comment is worth less than "first!"
The taxes aren't owed. This is extortion.
Let the 8000 starve before negotiating with 'terrorists' even when they're just lame, backwards governments.
There is plenty of manufacturing capability elsewhere.
To reflect any changing of price in the deal would require a new deal and a new round of approvals from the authorities, which would delay the deal another few months.
While I would personally love that to happen, it just won't. And, in the end, it's just one factory. Seeing as these factories are less and less OEM owned and more subcontracted (a la Foxconn) it's more likely that Microsoft, if indeed needs the power of that factory, will just increase the contract with Foxconn or the likes of it. In the end, the only ones really losing from all of this will be the Indian employees. In which case they can go blame their government for it.
(The closeness to the beach here isn't relevant as the country is almost entirely build on the shoreline and we don have tons of beaches, warm weather and sun during 2/3 of the year.)
No one can tax you after the fact this way, no amount of Indians declaring Nokia owes money means anything.