US-based AGCO ends pacts with TAFE; Indian firm invokes court order, files contempt petition

Srinivasan said TAFE has filed a contempt of court petition in Chennai, while in a separate suit asserting its rightful ownership of the Massey Ferguson brand in India.

A corporate battle has intensified as US-based AGCO Corporation's move to terminate multiple agreements with Tractors and Farm Equipment Ltd (TAFE), including the Massey Ferguson brand licence, was countered by the Chennai-based firm by citing a court order to maintain the status quo.

AGCO, in a statement on Monday, said it has terminated multiple agreements with TAFE with immediate effect, including the Massey Ferguson brand licence and distributor agreements for India, Nepal, and Bhutan, along with an intellectual property licence agreement covering India, Nepal, Sri Lanka, Bangladesh, and Bhutan.

However, TAFE said it has secured a court order to maintain the status quo on the use of the Massey Ferguson brand in India and filed a contempt petition against AGCO Corporation.

''The Commercial Court in Chennai has ruled in favour of TAFE with an interim status quo order with respect to the Massey Ferguson brand as hitherto, it is therefore impermissible for either party to disturb the position as on 29th April 2024, and any attempt to do so will be violation of the court orders,'' TAFE said in a statement. TAFE Managing Director Mallika Srinivasan said the company has a status quo order in its favour on the use of the Massey Ferguson brand. Srinivasan said TAFE has ''filed a contempt of court petition in Chennai, while in a separate suit asserting its rightful ownership of the Massey Ferguson brand in India''. She added that with the growing Indian influence at AGCO, CEO Eric Hansotia is trying to push back the Indian investor and protect himself, the management and the board. Tafe, in its filings in the US, has already sought changes in the board and split in the positions of Chairman and CEO. ''The current CEO, in reaction to TAFE's growing influence, is using commercial contracts to push back Indian ownership interest,'' she told PTI. In a statement, AGCO cited ''inappropriate and unauthorised actions'' by TAFE that allegedly breached various agreements as the reason for the terminations.

This move is separate from the at-will termination notices AGCO served on TAFE in April 2024 for certain commercial agreements, it added. TAFE, the second largest tractor manufacturer in India and the third largest in the world, said it has been producing Massey Ferguson tractors since 1960 with an annual production of over 1,00,000 units.

The Indian company, which exports tractors to more than 80 countries, became AGCO's largest shareholder in 2012. TAFE claimed that AGCO's global brand website has historically made no mention of Massey Ferguson in the context of India, Nepal and Bhutan, having ceded the entire territory to TAFE since the takeover of Massey Ferguson India in 1960. Since its inception in 1960, TAFE said it has produced, built and nurtured the Massey Ferguson brand, offering a wide product portfolio of over 500 models in India on the back of strong indigenous R&D and quality control. ''TAFE and Massey Ferguson are synonymous in India,'' the company said, adding that its products are India-centric in design, distinctly different from AGCO's products and ideally suited for small and medium farmers of India and across the world. The dispute highlights growing tensions between the two companies, with TAFE seeking changes in AGCO's corporate governance and operational performance. ''As TAFE's strategic influence increased, rather than address issues plaguing AGCO that have repeatedly called attention to, including flaws with AGCO's corporate governance, wholly inadequate engagement with shareholder and financial and operational performance in key areas, AGCO has sought to stifle TAFE's ability to seek changes through contentious and ill-advised moves with respect to brand usage that has for over six decades been an uncontested area,'' the domestic firm noted.

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