US lawsuit against M&M 'groundless': Anand

Anand Mahindra, whose auto firm Mahindra & Mahindra (M&M) is seeking to break ground in the US, today termed as "groundless" the lawsuit filed by its American dealer over delay in launch of the much-touted pick-up truck.

"Yes, an unfortunate development. Groundless charges; Can't comment since now legal," Mahindra, Vice-Chairman of M&M, tweeted when asked about the suit filed by US dealer, Global Vehicles (GV).

With M&M missing two deadlines since 2009 to launch its pick-up truck in the US, the automaker's exclusive American distributor slapped a lawsuit against the company.

The company has set a revised target of entering the US market by end of 2010.

The Atlanta-based distributor, in the lawsuit filed before an Atlanta District Court, alleged that there has been inordinate delay in the launch of the truck, based on M&M's Sports Utility Vehicle Scorpio platform.

An M&M spokesperson had said the company firmly believed these legal actions to be without merit and will vigorously contest these actions.

M&M and GV entered into a pact in September 2006 and Mahindra proposed to launch the pick-up truck in 2009. However, this got delayed over regulatory clearances and it revised the entry deadline to beginning of this fiscal year, which too was missed.

In its lawsuit filed on June 14, GV said that it spent close to $35 million in preparation for the launch of the Mahindra vehicles in the US and had signed with as many as 360 dealers nationwide.

This also includes an initial distribution appointment fee of $8.5 million.

GV also said that the US dealers have spent more than $60 million in franchisee fees for the right to sell Mahindra vehicles. It has also initiated arbitration proceedings against M&M.

On whether the lawsuit will further delay launch of its vehicle in the US, the M&M spokesperson said: "Mahindra remains committed to launching its products in the US market."

She, however, did not elaborate stating "this matter is now under litigation, Mahindra would not like to comment further at this stage on these unfortunate developments".