Essar shows interest in Nokia's Chennai plant

Factory frozen by income-tax department over Rs 21,000-cr tax claim

 

The Essar group has shown interest in taking over Nokia’s mobile handset manufacturing plant near Chennai, which has been frozen over tax claims.

According to sources close to the discussions, it is not clear what Essar’s plan is because the group does not manufacture mobile devices. Its only interest in telecom is through The Mobile Store, a cellphone retail chain.

A query to the Essar group spokesperson went unanswered and Tamil Nadu government officials were not available for comment.

In an email response, a Nokia spokesperson said, its “main focus is with production at the Chennai factory. We call on the government to lift the asset freeze imposed by the tax authorities so we can explore opportunities for a sale to a suitable buyer”.

The spokesperson added Nokia had been approached by parties interested in buying the Chennai plant but he declined to elaborate.

Essar’s interest comes at a time when the Prime Minister’s Office has written to the Department of Industrial Policy and Promotion (DIPP) and the Department of Electronics and Information Technology (DeitY) asking them to take steps to revive the Nokia plant. The Tamil Nadu government earlier this month had asked for lifting the freeze to facilitate the sale of the plant.

The income tax department is claiming Rs 21,000 crore in taxes and Tamil Nadu’s commercial tax department Rs 1,500 crore from Nokia for selling in India handsets made at the Chennai factory while enjoying tax breaks meant for exports.

Nokia disputes the claims and it suspended operations at the plant on November 1, 2014, after Microsoft set the facility aside during its global acquisition of Nokia's device and service business. This resulted in 30,000 people, employed directly and indirectly by the plant, losing their jobs.

Essar has interests in Tamil Nadu and in 2009 set up a 250,000 tonne steel processing facility close to its one of its biggest customers, automobile maker Hyundai.

The Rs 75-crore Essar Steel plant was built on 22 acres of land at Oragadam, near Chennai.

The Nokia plant is located near the automobile hub of Sriperumbudur-Oragadam. Aegis, the business process outsourcing arm of the Essar group, also has a presence in Tamil Nadu.