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NOKIA CHENNAI PLANT

ASSINGMENT
NOKIA CHENNAI PLANT
SUB: INTERNATIONAL BUSINESS



Submitted To:
Dr.Venkatesh Ganapathy
Associate Professor
Presidency Business School


Submitted By:
Wasim Nasir Kidiya
Reg no- 12yacma231
Section- D





NOKIA CHENNAI PLANT

Nokia completes transfer of Devices & Services business to Microsoft,
Chennai out from the Deal.

Brief History of NOKIA s Chennai Plant:
Located at Sriperembudur , Chennai. Established in the year 2005. Chennai factory is the
largest cell phone manufacturing facility in the world for Nokia. Employing about 8000
persons directly and employing about 12,000 indirectly. Globally, Nokia has eight factories,
two in China, one each in Brazil, Hungary, India, Mexico, Vietnam and South Korea.

What Exactly Happened?







NOKIA CHENNAI PLANT

Income Tax department finds 'prima facie' defaults by Nokia in TDS deductions(10-1-
2013).
According to an I-T official, it was alleged that the Nokia had made tax defaults of
about Rs. 2,500 to Rs. 3,000 crore.
Income tax department slashed a Rs 21,000 crore tax notice on Nokia.
Nokia has offered to pay about Rs. 3,000 crore to government to resolve a tax row.
Government denies the offer.
September(2013), Nokia announced it would sell its devices and services (D&S)
business, including assets in India, to Microsoft for $7.2 billion by March 2014.
Following the tax dispute between Nokia & IT department, Chennai Plant was left
out.
Current Scenario:
Nokia is also facing a similar dispute with Tamil Nadu Government's sales tax
department, which issued a Rs 2,400 crore tax notice. The matter was argued at the
Madras High Court last week and the Court has reserved its orders.
Chennai facility has around 8,000 direct and another 20,000-25,000 employees. Over
5,000 of the total direct employees are women and their fate remains uncertain.
Nokia India has turned into a contract manufacturer for Nokia-Microsoft, the contract
is reportedly valid only for a year, with an option to renew. However, Chennai plant
workers are quite uncertain of what will happen next.
Employees not opted for VRC, are shown door by the management.
Allegations by the TN Government, the company has been selling products Chennai
plants into domestic market instead of shipping overseas.

As a Management (MBA) Students point of view Company should have done the
following:
Discipline followed in paying the tax. Not following the guidelines of tax authority,
and showing the false statement invited trouble and resulting Chennai plant not
getting included in the deal with MICROSOFT.
Company should have followed ethnocentric approach, as around 25,000 employees
are on the verge of losing their jobs .




NOKIA CHENNAI PLANT


Nokia offer VRS to employees. Forcing the employees to take the scheme not by
choice but by force.
Company should have follow the norms of trading and manufacturing , which Nokia
failed to follow and attracted notice of Rs 2400 Crs from TN government.
A Firm should have proper channel of communication across all the level, which
Nokia did not have. Which was very evident from the series of events took placed in
the Plant Viz Union Strike, Hunger strike etc.
Financial assistance provided by the Firm which was necessary came very late.
Regulatory Committee was missing.
To conclude no proper care was taken in assigning Authorities, policies, rules. Microsoft did
was not willing to take a huge risk by including Chennai Nokia Plant , as it was already into
legal complications and no Acquiring firm would want to have it. As lots of legal formalities
are involved with it.

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