Nokia made an official announcement yesterday, saying that about 5000 employees, who work in its Indian factory located in Chennai accepted a voluntary retirement plan when offered. The workers who are to be retired represent about three-quarters of the overall 6600 people working in the companys factory, which is one of the largest ones that Nokia owns.
According to the companys statement, the voluntary retirement plan offers “employees the chance to seek new opportunities outside the company based on a firm financial footing”. The plan was presented to its workers in order to provide them support for the hard time theyre facing due to the tax case in India.
This announcement comes at a time when it became clear that the company was unsuccessful when trying to resolve a tax dispute in India. Nokia has just started international arbitration proceeding against the country. It made a statement, which was cited by the Wall Street Journal, saying: “Nokia has sent a letter under Finland-India Bilateral Investment Treaty” to the Indias prime minister. “The letter seeks for amicable resolution of the current tax disputes. (…) Nokia is keen to work with authorities in India to resolve the tax disputes”
The tax dispute became the reason why the transfer of the main Indian factory of Nokia to Microsoft Corp. failed in April 2014, and the company followed the example of other global companies such as Vodafone Group Plc and BP Plc, which have also started arbitration proceedings in the country.
One of the analysts, who work at Pohjola Bank Plc – Hannu Rauhala commented the announcement of the retirements for Bloomberg: “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. There will be some writedowns for Nokia, but they won’t be important compared to their balance sheet.”
The Chennai factory of Nokia has become the apple of discord between the company and the Indian country, whose authorities claim that there were taxes avoided by Nokia. The company, on the other hand, denies that any taxes are owed.
Nokia lost 0.74% to trade at 5.35 euros per share by 11:11 GMT, marking a one year change of +83.05%. According to the information published on the Financial Times, the 34 analysts offering 12-month price targets for Nokia have a median target of 5.45, with a high estimate of 8.40 and a low estimate of 4.00. The median estimate represents a 1.11% increase from the last price of 5.39.