Nokia on Tuesday said that it has withdrawn its appeal in the Delhi High Court seeking revocation of the freeze on its mobile phone manufacturing unit in Chennai.
The move comes after Essar Group said last week that it was no longer interested in buying the factory.
Nokia had earlier requested the court to advance the hearing against the tax authorities’ decision to freeze the factory. Nokia had shown urgency because it believed Essar was interested in buying the factory.
“In light of recent developments around our efforts to find a buyer for our mobile phone manufacturing facility in Sriperumbudur, Nokia today withdrew its request to the Delhi High Court to have the asset freeze lifted,” Nokia said in a statement.
At least three companies were interested in buying the factory.
EY (Ernst & Young) was appointed by the court to independently value the plant. As per the report submitted by EY, the asset has been valued between ₹360 crore and ₹415 crore. This is close to the value Nokia was being offered by the prospective buyers.
The Income Tax authorities told the court that the value arrived at for the plant was too small compared to the tax demand made on Nokia. The delay in settling the dispute has driven away all potential buyers.
“Clearly the freeze has hindered our efforts to find a buyer, but Nokia has worked in good faith throughout and followed all procedures mandated by the courts including the independent valuation of factory assets. Nokia no longer makes mobile phones, and thus the sooner a buyer can be found, the better the prospects for the technology ecosystem in Sriperumbudur,” Nokia said in a statement.
Nokia could not include the Chennai factory in its sale deal with Microsoft after the tax authorities slapped a notice on it for alleged violation of withholding tax norms since 2006.
While Nokia has challenged the tax order in court, it has also been urging the government to de-link the tax issue from the manufacturing plant.