BackIndian or foreign brand, I’ll work with 100% control: Vikram Bakshi
Bakshi, whose firm operates McDonald's outlets in north and east India, speaks about the uncertain future of the joint venture
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New Delhi: Vikram Bakshi, the ousted managing director of Connaught Plaza Restaurants Pvt. Ltd that operates McDonald’s outlets in north and east India, is fighting the American fast food company in the Company Law Board (CLB) over the valuation of his stake in the 50:50 joint venture (JV). After an ongoing court proceeding was stalled on Thursday as the judge heading the bench recused himself from the case, Bakshi spoke about the state of the JV and the uncertain future facing its 7,000 employees. Edited excerpts from an interview:
Who is running the joint venture?
It’s board-run company now. The two Indian directors —my wife, a wholetime director, and I—have to make it work. I did not get re-elected as MD, but am still a director. If you have 50% equity in a company like this, what do you do? You continue to do your best as you do not want the company to go down.
What about expansion?
We added nine restaurants this year. Now we have 165 restaurants.
But wasn’t there status quo to be maintained?
The status quo is only in the shareholding and call option. The firm continues to run. The nominee directors remain exactly the same. There were two nominees from their side and two from here. One of their directors comes; we take whatever decisions we can take.
Are people quitting the company?
We had put together a very nice team. The sad part is most of the team is going now. We lost nine senior people in the last two months. That includes the director, operations. Why would talent stay in an organisation which is in suspended animation?
We have over 7,000 employees. It is my duty to watch out for their welfare, to get them paid on time. No doubt we are running a very tight ship. Decision making is very slow and is harming the company. It is not a good situation. In the last year and a half, we have lost our prominent position in the market. We were by far the strongest player. We have lost that position. Domino’s is making noise publicly that they are number one. Even Yum! Brands (India) that is KFC and Pizza Hut put together, have caught up very well.
Isn’t McDonald’s worried?
I have not understood what is holding them (McDonald’s) from taking a decision because this (situation) is not of my making. They are ones who, in what I call an under-hand operation, did not re-elect me as the MD. It means that if the partner in a 50:50 JV does not accept your valuation, you create unfair means to achieve your end. In 2008, they offered me $5 million. But that was the investment I made 13 years ago! They don’t agree even to a third-party valuation. Now, they say take a 17% return. Did I get into this business as a banker or as an investor? I was meant to built the brand in India and I did. Of course the brand was very good. But we were also very creative with the way we did the leases for the restaurants. They were from 15 years to 40 years. I created this wealth way beyond my term in the company. I was supposed to exit in 2020. I had planned ahead. Those (leases) stay with the company.
What is the status on the arbitration in London?
It’s in initial stages, it’s reached a stage of what’s called, disclosure of documents, other things will flow. Real arbitration is expected to start middle or late next year.
Where do things stand today?
The figure (McDonald’s offers) is ₹ 120 crore on the basis of 17% return. It is not ₹ 40-50 crore as mentioned in some reports. All this was said in the court. We rejected it.
You asked for ₹ 1,800 crore and they were supposed to come back.
In the last hearing, the CLB member asked me what my expectations were, which I expressed. They rejected it and never came back.
The case, it seems, will go on. What are your future plans?
I intend to stay in this (restaurant) business. As we get over this situation, I will surely be looking at the possibilities. I cannot right now till this case gets sorted out. I am legally bound at this stage to continue to do what I am doing... as long as the JV continues. But whenever I work, I will work with 100% control whether it is an Indian or foreign brand. The truth is that market is so large and we are still at the early stages of what is called the retail revolution. There are a lot of good domestic brands that can be scaled.
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