CHENNAI: A corporate war is brewing between the Chennai-based TAFE, the second largest producer of tractors in India and the third largest in the world, and the US-based agricultural equipment maker AGCO Corporation.
TAFE has filed a contempt case against AGCO in Chennai for trying to wrest the Indian company’s rights to use the Massey Ferguson brand in India. TAFE is a strategic investor and the largest single shareholder in AGCO, holding 16.3% stake.
In response to AGCO’s termination of agreements with TAFE on Monday, the Indian company moved Madras High Court and petitioned that AGCO has acted in contempt of an earlier court order which had directed both parties to keep status quo as on April 29.
The latest developments follow TAFE’s filings in the US where it sought Board changes and a split in positions of Chairman and CEO. The Indian company believes that the CEO of AGCO is using commercial contracts to push back its ownership interest.
TAFE had also repeatedly flagged concerns over issues plaguing the US company, including flaws with its corporate governance, inadequate engagement with shareholder and financial and operational performance in key areas. It claimed that AGCO sought to stifle TAFE’s ability to seek changes through contentious moves with respect to the brand usage.
When TAFE asserted its claims over the ownership of the Massey Ferguson brand in a case filed before the Madras High Court, the court ruled in its favour with an interim status quo order. TAFE claims that any attempt to disturb the position as on April 29 will mean violation of the court order.
The partnership between the two companies grew bigger after TAFE collaborated with Massey Ferguson to produce tractors locally, allowing them to tap into the growing Indian agricultural market. Over the years, TAFE has expanded its manufacturing capabilities and continues to be the largest producer of Massey Ferguson-branded tractors.
TAFE has an annual production capacity exceeding 180,000 tractors, with over 100,000 Massey Ferguson tractors manufactured in India, and it has served more than three million customers.
Beyond tractors, TAFE and its subsidiaries have diversified business interests in areas such as farm machinery, diesel engines and gensets, agro-industrial engines, engineering plastics, gears and transmission components, hydraulic pumps and cylinders, vehicle franchises, and plantations.