Zetwerk, Ayr Energy Settle Legal Dispute

IPO-bound Zetwerk and US-based transformer startup Ayr Energy have reached a settlement by agreeing to dismiss all claims in lawsuits pending before the Texas Business Court and a separate case involving Zetwerk Manufacturing Businesses and Ayr Energy’s founder Anirudh Reddy before a Bengaluru court.

“The companies have dismissed all claims asserted in the lawsuits pending in the Texas Business Court and those asserted in the case involving Zetwerk Manufacturing Businesses Limited and Anirudh Reddy in XXXV Additional City Civil and Sessions Judge in Bengaluru, India, and they have jointly sought termination of the related US International Trade Commission investigation,” the statement read.

The settlement comes more than a year after the dispute began. At the heart of the dispute is Zetwerk’s allegation that Reddy incorporated Ayr Energy while still serving as a senior executive at Zetwerk. Reddy resigned from Zetwerk in January 2025, months after incorporating Ayr, the manufacturing company had alleged. 

The company claimed Reddy had downloaded hundreds of internal documents before leaving, including customer lists, pricing information and strategic plans. Zetwerk also alleged that Ayr used the information and relationships to secure contracts from customers in its sales pipeline. 

In May 2025, Zetwerk initiated a discovery proceeding against Ayr Energy in Delaware, which was denied in August 2025. The dispute escalated in October 2025 when Zetwerk and its US subsidiary filed a lawsuit in Texas against Ayr Energy and Reddy, alleging misuse of confidential information and trade secrets.

Ayr Energy filed counterclaims against Zetwerk, accusing the company of trade secret theft, trademark infringement, false advertising, fraud and unfair competition. It sought at least $1 Bn in damages and approached the USITC over alleged trade-secret and other violations. Zetwerk disputed the allegations.

In May 2026, the Texas Business Court allowed Zetwerk’s claims to proceed after declining Ayr Energy’s motion to dismiss.

For context, Ayr Energy builds high-voltage and medium-voltage equipment, including transformers and switchgear, for data centre developers, utilities and power producers. The California-based startup was founded by Reddy after his stint at Zetwerk and has raised $3.5 Mn in a seed round led by General Catalyst.

Meanwhile, Zetwerk was founded in 2018. It operates a manufacturing and supply chain platform serving sectors including energy, renewables, aerospace, defence, automotive and electronics. The company has raised funding from investors including Peak XV Partners and Lightspeed and is preparing for a public-market debut.

Zetwerk is currently in the run up to making its public markets debut. After receiving the regulator’s approval for its confidential filing, Zetwerk filed its updated IPO papers in August. Its public issue is expected to comprise a fresh issue of shares worth ₹2,600 Cr and an offer-for-sale (OFS) component of up to 9.6 Cr equity shares.

On the financial front, its net loss climbed 333% to ₹1,606.1 Cr during the fiscal under review from ₹370.7 Cr in FY25. The surging loss came at the behest of a ₹450 Cr provision related to the discontinued civil infrastructure business and around ₹800 Cr accounting charge related to the founders increasing their ownership from 15% to about 20%. 

The manufacturing company’s operating revenue jumped over 40% to ₹15,913.3 Cr in FY26 from ₹11,300 Cr in the previous fiscal year. Of this, approximately ₹9,300 Cr came from manufacturing, while the remainder from its ecosystem/raw-material business.

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