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Salcomp to invest Rs 1,300 cr in Nokia's defunct Chennai unit post purchase

Tamil Nadu govt officials say the plant will start operations in March and create nearly 10,000 jobs

T E Narasimhan  |  Chennai 

Nokia plant in Chennai
Nokia’s deal with the tax authorities paved the way for clearing the sale of its factory to Finland-based Salcomp

Finland-based Salcomp, one of Apple’s major suppliers, which acquired Nokia’s defunct Chennai unit, is planning to invest Rs 1,300 crore.

Salcomp has agreed to buy the facility for $30 million (around Rs 215 crore) in a move that will restart what used to be one of the largest mobile phone manufacturing plants in the world.

Around 15,000 people lost their jobs after the factory was shut down 2014, following a dispute between the Finnish company and tax authorities. Earlier, HTC, Foxconn and Essar had evinced interest in the unit but did not pursue the matter.

Government officials said the plant will commence operations in March and create nearly 10,000 jobs. The company is expected to invest around Rs 1,300 crore, they said.

The manufacturing facility, which employed over 30,000 employees directly and indirectly, was closed by the income tax department following a Rs 21,000 crore income tax dispute.

Following this, the Finnish company, which sold the mobile handset business to Microsoft, suspended operations at the unit in November 2014. After the unit was shut, most ancilliary companies, including Foxconn, stopped operations in the SEZ.

Microsoft had acquired Nokia’s global devices and services business, including assets in India, for $7.2 billion in April 2015. However, due to the tax dispute, it had to take the facility off its plans.

Last April, resolved the tax dispute with the central government by settling $241.4 million towards the I-T department's claim.

Nokia’s deal with the tax authorities paved the way for clearing the sale of its factory to Finland-based Salcomp.

Salcomp has, in fact, been present in India with a facility in Chennai for several years now. The company was supplying to Nokia phones when its manufacturing facility in Sriperumbudur was up and running. But when the Nokia facility shut down a few years ago, Salcomp maintained production at its own unit and also started manufacturing at two more plants in India.

During his last visit, Salcomp’s president and chief executive officer Markku Hangasjärvi told Business Standard that India accounts for 15-20 per cent of the company’s total sales, and he certainly expected to raise that to about 20-25 per cent by 2020.

The company invested over Rs 200 crore in India during the past few years and plans are to at least double that amount by 2020.

First Published: Tue, November 26 2019. 16:46 IST
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