Active Stocks
Thu Sep 21 2023 15:54:10
  1. Tata Steel share price
  2. 127.8 -0.39%
  1. HDFC Bank share price
  2. 1,553.6 -0.66%
  1. NTPC share price
  2. 238.95 -1.1%
  1. Power Grid Corporation Of India share price
  2. 201.8 -1.42%
  1. ITC share price
  2. 447.4 -1.24%
Business News/ Industry / Retail/  Vikram Bakshi moves CLB against McDonald’s

New Delhi: Vikram Bakshi, who was ousted as managing director of Connaught Plaza Restaurants Pvt. Ltd that runs McDonald’s outlets in North and East India, moved the Company Law Board (CLB) on Monday to clear allegations made against him by the Indian arm of American fast-food chain, said a person familiar with the development who asked not to be identified.

Bakshi is an equal joint venture partner along with McDonald’s in Connaught Plaza Restaurants. He is likely to seek reinstatement as managing director, a plea the company’s board rejected in a meeting on 6 August, said the person mentioned above.

McDonald’s India had on 30 August announced that Bakshi’s term as managing director had ended on 17 July.

Bakshi has claimed that McDonald’s actions were largely directed at buying him out at lower valuations, and asserted that he is committed to the business.

McDonald’s has claimed that Bakshi’s other business interests were benefiting from his role at managing the fast food chain in India.

It also alleged that funds from Connaught Plaza Restaurants were being diverted to Bakshi’s hospitality business, which Bakshi has refuted.

A representative of McDonald’s said the company had not received a copy of the document Bakshi filed with the Company Law Board.

Bakshi could not be reached for comment on Monday. Mint has reviewed a copy of the document Bakshi filed with the Company Law Board.

Bakshi has various real estate businesses including Ascot Hotels Pvt. Ltd, a company that runs hotels and motels in India, and is on the boards of a clutch of companies including media company Jagran Prakashan Ltd, the publishers of Dainik Jagran newspaper (as an independent director), and Cinemax India (as additional independent director).

Bakshi in his appeal to the Company Law Board also comments on McDonald’s supposed bias towards Hardcastle Restaurants Pvt. Ltd, part of the listed Westlife Development Ltd and owned by the Jatia family, that runs the restaurant franchise in West and South India. Connaught Plaza runs the franchise in North and East India.

“There is an apparent tilt towards Hardcastle consistently aimed at devaluing CPRL’s JV", said the person familiar with the development mentioned earlier.

This person added that between 2008-end and 2012-end, debt provided to Connaught Plaza Restaurants was allegedly frozen at the insistence of McDonald’s, which impacted the joint venture’s ability to expand. In contrast, during this period Hardcastle was allowed to increase its debt to over 184 crore, he said.

Subsequently, in 2010, McDonald’s turned Hardcastle into a development licence, eventually buying out its stake from the joint venture partner for an undisclosed amount. Bakshi had asked for similar treatment where he could turn the joint venture into a development licence, but this was left pending, the person said.

McDonald’s has claimed that audits carried out at Connaught Plaza Restaurants highlighted highly inadequate “internal control systems". It also raised questions on a lack of due diligence by Bakshi in carrying out third party lease transactions.

In an earlier response to Mint’s query, an international spokesperson at McDonald’s Asia Pacific, Middle East and Africa, said the public notice McDonald’s India issued on 30 August gave the correct details, including how the joint venture company was being managed.

Industry experts say the fall-out between the joint venture partners was inevitable.

Bakshi, for now, continues to be a director on the board of Connaught Plaza Restaurants and a joint venture partner with control of 50% equity in it.

McDonald’s entered India in 1996 and operates 319 stores in the country.

Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Updated: 09 Sep 2013, 11:13 PM IST
Next Story
Recommended For You
Switch to the Mint app for fast and personalized news - Get App