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Lite-On Mobile suspends Chennai operation; talks on with Tamil Nadu government for revival.

Date: 17-10-2015
Subject: Lite-On Mobile suspends Chennai operation; talks on with Tamil Nadu government for revival
CHENNAI: Just as a concerted effort to revive the Nokia plant inside the 212-acre SEZ near Chennai gets rolling, Lite-On Mobile, which had once supplied front and back covers for Nokia's features phones, has pulled the plug at its unit due to sustained operational losses.

Taiwan-headquartered LiteOn Mobile is a global manufacturer. Its Chinese plants in Beijing, Guangzhou and Zhuhai are expanding aggressively into new segments in automotive components and large-size smartphone manufacture. The Chennai plant kept producing after Nokia officially silenced after Nokia officially silenced its India plant in October last year by finding a new client in Samsung, which manufactures its phones at a factory in Noida, Uttar Pradesh. Even as orders from Samsung gradually dwindled, Lite-On evolved a strategy to diversify into manufacturing parts for the automotive industry, following the path of its factories in China. In July last year, it received an approval from the Indian government for automotive manufacturing at its 3.76 lakh sq ft facility.

The company had targeted German carmakers for sustained business to level off fluctuations in the consumer electronics markets, according to a company release in September last year.

"The orders just stopped coming.There was labour trouble at the factory around the time we stopped production a few weeks back. Now, tripartite negotiations about the 215 permanent employees are going on.

"The Tamil Nadu government's labour department is conducting conciliations," a Lite-On Mobile official with the Chennai plant told ET on condition of anonymity.

The official clarified it has "suspended operations" and has not shut its plant down.

Tamil Nadu's deputy labour Commissioner M Shanthi con firmed that efforts to bring together the management and workers are ongoing but refused to elaborate. An email sent to Lite-On Mobile over the future plans went unanswered.

Lite-On is one of the dominos to fall after Nokia quit making mobile phones at its Chennai plant.

The unit was caught up in a tax dispute with the Indian government that ended up freezing Nokia's factory assets and even its bank accounts.

Its suppliers fell one by one. Companies such as Liard, Wintek, BYD Electronic and its largest India supplier Foxconn had to cease manufacturing operations in the country as a result. The lone survivor is Finnish charger manufacturer Salcomp, now running lower volumes of exports to Southeast Asian factories.

India reversed the inverted duty structure for electronics manufacture to the extent that piecing together a smartphone in the country is cheaper than importing the whole set.

It raised excise duty for mobile handsets from 6% to 12.5% that created an incentive to assemble phones in India but component import barriers are still low or non-existent, said a senior industry official, part of a national task force to revive electronics manufacture in India.

"Indian phone-makers go to China for components because the economies of scale offered by that country is huge. The margins in electronics manufacturing services are sometimes as low as 2%," he said.

Lite-On had shut a factory in Reynosa, Mexico, four years back and moved its machinery to Asian factories after orders from one major customer fizzled out.

Source : economictimes.indiatimes.com

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