Further Turmoil For Nokia India, Head Of Chennai Factory Prakash Katama Quits

CHENNAI: Nokia India, which is fighting several tax demands, fell into further turmoil after the head of its Chennai factory quit and workers alleged that they were being forced to take up an early retirement scheme.

The mobile device maker, which is in trouble with taxmen over dues for royalty payments made to its parent company in Finland and allegations that it classified domestically sold units as exports, had offered a voluntary retirement scheme to its nearly 7,000 employees.

“We can confirm that Prakash Katama (the factory head) is leaving the company, but will stay with us in a consultancy role for a fixed period of time,” a company spokeswoman told ET. Katama will be replaced by V Sembian, the head of product and process engineering at the unit, effective immediately, she said.

Katama was appointed as the director of Nokia's Chennai facility in 2010.

The company’s case against the Tamil Nadu government, which claimed that Nokia India owes it Rs 2,400 crore in taxes, came up for hearing in the Madras High Court on Tuesday. While Nokia’s counsel Arvind P Datar presented his arguments, the government counsel is likely to present his on Wednesday.

Nokia, whose devices and services unit is being bought by Microsoft, is already fighting a Rs 21,000-crore claim by the income tax department over royalty payments.

On Tuesday, employees at Nokia India’s facility near Chennai alleged company officials were forcing them to opt for the early retirement scheme offered last week. Nokia India’s VRS scheme comes into effect from Tuesday and is open till May 14.

“They (the management) urged the employees to take up the VRS saying they would cut down transportation facilities to 40 km from 80 km,” said an employee, who did not wish to be identified. “They said they have received instructions from Finland (the parent company) to cut down the overall costs.”

Nokia India provides transportation facilities to its nearly 7,000 workers, most of who are from small towns and villages near Chennai.

The company denied forcing its employees. “We would like to clarify that we haven’t stopped bus or canteen facilities for our employees at Chennai factory,” the spokeswoman said. “Also, the voluntary retirement scheme is ‘voluntary’ for all factory employees.”

Sources said the company has made two offers: one for permanent employees and the other for its nearly 700 trainees. Over 200 trainees have opted for the offer which will give them Rs 2 lakh as well as double the salary for the number of earned leaves, they added.

“I think all the trainees will opt for this offer as they have no other choice,” said a source close to the developments at Nokia India’s factory who did not want to be identified.