Lava International to acquire Nokia’s Chennai mobile Phone Plant: Sources

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Indian smartphone vendor Lava International is in talks to acquire Nokia’s Chennai handset factory. Lava and Nokia have signed a nondisclosure agreement, people familiar with the talks told The ET. “Lava’s manufacturing team has already visited the plant and has done the assessment. It will make a proposal to Nokia mid-December after taking all aspects into consideration,” one of the people said.

According to the same source, “the tax issue needs to be sorted out before a final deal is sealed though”. The “tax dispute” between Nokia and the government impeded the handset manufacturer to transfer the factory to Microsoft as part of a global USD 7.2 billion deal to sell its devices business to the US company. The dispute is now in court, and Nokia hopes to see the asset freeze imposed by the tax authorities lifted soon. Starting 1 November, Microsoft stopped using Nokia’s Chennai plant to manufacture its devices, which left thousands of workers out of work.

According to another unnamed source, a top executive of Nokia Finland’s M&A team has recently visited India to discuss the sale with Lava. “Nokia has already communicated to Lava that the ongoing tax and lease-related issues are being discussed with the authorities concerned,” the person said. “It has asked Lava to continue with the assessment since there are high chances that these issues would get resolved soon”, he added.

“With production at Chennai suspended, we would like to see the asset freeze imposed by the tax authorities lifted. This will allow us to explore potential opportunities for sale to a suitable buyer”, a Nokia spokesperson said.

A third source said Nokia is also considering leasing out the plant to contract manufacturers. “The plant’s machinery can also be used for making other electronic equipment such as tablets or personal computers after some tweaking”. Nokia had approached Celkon Mobiles for a possible lease arrangement, said Celkon executive director Murali Retineni. “We’ve not given it serious thought”, he said.

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