Nokia will operate the Chennai plant, which is being excluded from the deal due to a tax dispute, as a contract manufacturing unit for Microsoft after the deal. "Nokia is ensuring all it can to see the transfer of the plant and other assets to Microsoft by tomorrow," a Nokia spokesperson said. However, the task at hand is complicated, the spokesperson added.

"With the situation at the moment, it seems highly unlikely that the transfer will happen in the time frame," she said. People following the developments at Nokia said the firm is also exploring the option of operating the plant by entering into a service agreement, which would allow it to continue as a contract manufacturer.

Last September, Nokia announced it would sell its devices and services (D&S) business, including assets in India, to Microsoft for USD 7.2 billion by March 2014. The deadline was subsequently extended to April 25. The handset and other asset components under the deal are to be handed over to Microsoft's Finnish entity Microsoft Mobile Oy.

In March, the Tamil Nadu government served a Rs 2,400-crore notice on Nokia, saying the company sold products from the Chennai plant in the domestic market instead of shipping them overseas. In a separate tax case, the Supreme Court ordered Nokia India on March 14 to give a Rs 3,500 crore guarantee before it transfers the plant to Microsoft.

The company has often indicated that the transfer of the plant could be adversely impacted if the dispute remains unresolved. Recently, the company offered a voluntary retirement scheme to its employees in Chennai.

PTI