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Vikram Bakshi set for battle against McDonald's
On August 30, McDonald's had announced in a public notice that Bakshi would no longer be the India MD and the JV would be run by the board.
The battle between McDonald's and its former India managing director Vikram Bakshi seems to have escalated, with Bakshi challenging the questions raised on his functioning by the US fast-food giant at its board meeting on August 6.
According to sources close to the promoters, McDonald's told Bakshi he was giving little attention to Connaught Plaza Restaurants Pvt Ltd, the 50-50 joint venture (JV) that runs the franchise in the North and East India, even as his other businesses like hospitality and real estate were growing rapidly. The chain also said these businesses were in conflict with the JV, which was in a related area.
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Vikram Bakshi set for battle against McDonald's
Besides pulling up Bakshi for his apparent failure in developing and maintaining internal controls, McDonald's also questioned him for financial mismanagement, claiming he transferred Rs 7 crore from the JV's account to one of his own group firms.
Bakshi declined to comment on these issues, while Heidi Barker Sa Shekhem, an executive of McDonald's global external communications team, said: "The public notice gives all the correct details, including how the company is being managed. As this is an internal matter, it is inappropriate to comment further."
Sources close to Bakshi said his reply to all the questions would be in his petition to the Company Law Board in which he will also seek his reinstatement as India managing director.
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Vikram Bakshi set for battle against McDonald's
On August 30, McDonald's had announced in a public notice that Bakshi would no longer be the India MD and the JV would be run by the board. It had also said Bakshi's term had ended on July 11 and the four-member board was divided on whether or not to allow his continuance as the JV's MD.
Bakshi, sources informed, would clearly say he devoted enough time to the JV and that his other businesses, which were well-established, were run by his family members, including his daughters and wife. He would also make it clear that McDonald's, which had undertaken a detailed due-diligence before forming the JV, was aware of all his various businesses and had never objected to those.
In fact, in many cases, the JV had benefited from his real estate business, as he had made space available at discounted or even no rental.
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Vikram Bakshi set for battle against McDonald's
He would also clarify that the Rs 7 crore transferred to his group company was for making advance payment for a premium location to open a McDonald's outlet. That company, part of his own business, was negotiating this deal. Besides the JV board's approval, the proposal had also been cleared by audit firm Grant Thornton, which felt the deal was both commercially viable and financially favourable.
Bakshi, sources said, would argue that the JV's royalty payment to McDonald's so far had been over Rs 193 crore - an amount even higher than the US company's share capital in the joint venture. And, under the articles of association of the JV, McDonald's was obligated to appoint him as managing director.
In India, McDonald's operates through two franchises. Its outlets in the western and southern parts of the country are run by the BL Jatia Group-promoted Hardcastle Restaurants, which had bought the US company's 50 per cent stake a few years ago.
