Nokia Oyj said about 5,000 workers at its factory in the southern Indian city of Chennai accepted a voluntary retirement plan after the company failed to resolve a tax dispute in the country.
The retirements, accounting for about three-quarters of the facility’s 6,600 employees, were announced in a statement issued by an external public-relations company yesterday.
The factory makes handsets for exports and is among the largest at Nokia, which has sold its mobile-phone unit to Microsoft Corp.
Nokia, based in Espoo, Finland, joins several foreign companies, including Vodafone Group PLC, International Business Machines Corp and Royal Dutch Shell PLC, in disputing tax claims in India.
Nokia abandoned plans to include the Chennai plant in the sale of the handset business to Microsoft, completed last month, because of the tax spat with India’s government.
“I think they want to find a solution where they can get rid of the factory, since it’s not a business anymore for Nokia,” Hannu Rauhala, an analyst at Pohjola Bank PLC in Helsinki, said by telephone.
“There will be some writedowns for Nokia, but they won’t be important compared to their balance sheet,” Rauhala said.
Nokia introduced the program to support workers faced with uncertainties arising from the tax case and the non-transfer of the plant to Microsoft, it said in the statement.
The plan gives “employees the chance to seek new opportunities outside the company based on a firm financial footing,” Nokia said.
In March, India’s top court ordered Nokia to deposit 22.5 billion rupees (US$379 million) into an escrow account and agree to pay any taxes due by the Indian unit, before the company can transfer the Chennai factory to Microsoft.
“Nokia is keen to work with authorities in India to resolve the tax disputes,” Mark Durrant, a company spokesman, said in a statement on Wednesday.
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