Indian Android One maker Lava may buy Nokia's Chennai plant

India's smartphone up-and-comer is in the frame to take over Nokia's old Chennai facility.

Nokia's former handset manufacturing plant in Chennai may be given a new lease of life if reports that device maker Lava is interested in acquiring the facility are true.

According to the Economic Times, Lava is considering using the Chennai plant for the production of its own handsets, which are sold under the Lava and Xolo brands. Currently Lava produces its phones in China, but is reportedly looking to invest locally and bring its manufacturing to India.

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Lava is one of a number of large handset makers to have emerged in India in recent years, and is one of the key partners in Google's Android One platform push for emerging markets , alongside Indian rivals Karbonn and Micromax.

Nokia wound down operations at the factory in November after a temporary deal with Microsoft to produce handsets came to an end . The factory wasn't included in Microsoft's acquisition of Nokia's handset business in April for €5.4bn . At the time of the sale, the facility employed around 6,000 staff, many of whom accepted Nokia's redundancy offer, although hundreds remained employed when the factory's operations were suspended.

Nokia was unable sell the Chennai facility due to a previous asset freeze imposed by the Indian tax authority ahead of any settlement of an ongoing tax dispute . Nokia has said the freeze prevented the company from selling the site, adding a "fully functional electronics manufacturing ecosystem" was at stake for India.

According to the Economic Times, Nokia recently renewed the factory's licence in order to keep machinery there in working order and maintain its value ahead of a possible future sale.

As for Lava, the rising star of India's smartphone market is looking to bring manufacturing back to India from China.

According to analyst firm IDC, Lava is currently the third largest and fastest growing smartphone maker in India, with an eight percent share of shipments in the third quarter, up from six percent in the previous quarter.

"Being one of the fastest growing handset vendors, Lava has witnessed growth in both their brands, i.e. Lava and Xolo. Both the brands are currently treated as independent line of business in the marketplace," IDC noted.

The company surpassed Karbonn, the former third-place device company, with help from its strong feature phone sales.

In a statement to ZDNet, Nokia said there had been interest in its facility from prosepctive buyers that it could not name.  

"Nokia can confirm that it has been approached by parties interested in buying the Chennai facility, but due to confidentiality reasons we will not comment further on this topic," a spokesman said. 

The Finnish company is also pressing the point that it's in India's interest to lift the asset freeze.

"Nokia's main focus at the moment is what we have consistently said since October: with production at Chennai suspended, we call on the government to lift the asset freeze imposed by the tax authorities so we can explore potential opportunities for a sale to a suitable buyer," the Nokia spokesman said. 

"This is an urgent prerogative not only for Nokia, who is no longer in the business of making mobile phones, but also for the country to move towards its goal of supporting local manufacturing and reducing electronic imports. We believe that an eventual sale would offer a far brighter option for employment in the region and support the government's 'Make in India' initiative."

 

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