City firm wins legal battle against German company August 02 2008

Two city-based entrepreneurs - M.S. Bhadbhade and A.V. Dikshit - have won a legal battle against a major German company which first joined hands with them to enter India to manufacture construction equipment, but tried to sideline them once their product and brand name were established in the market.

The Delhi high court judgment, which vindicated the duo’s claim, may, in fact, become a guiding light for Indian investors who fall prey to similar games played by international players.

While the story of Bhadbhade and Dikshit has all the trappings of the David versus Goliath kind, it also brings out the lax scrutiny procedure followed by the Reserve Bank of India (RBI), which has the power to allow foreign companies to bring in investments through the automatic approval route, without approaching the foreign investment promotion board (FIPB).

Bhadbhade and Dikshit had formed a 76:24 joint venture with the German firm Putzmeister AG to manufacture in India a range of high technology construction equipment and machinery, principally concrete pumps, in 1997.

The joint venture - Putzmeister India Pvt Ltd - set up its manufacturing facility in Goa and the responsibilities of sales and service of the products was entrusted to Aquarious Engineers Pvt Ltd, a firm in which Bhadbhade is the managing director and Dikshit a director. Aquarious is also engaged in the manufacture of high-tech construction machinery.

The Indian promoters made great efforts to make Putzmeister’s technology relevant to India and established a nation-wide network of dealers and vendors.

While the JV was running smoothly, Putzmeister formed a wholly owned India subsidiary - Dynajet Machinery India Pvt Ltd in 2005, and eventually named it Putzmeister Concrete Machines Ltd. This company, too, addresses the same set of customers as that of the JV.