Who is Vikram Bakshi?
Vikram Bakshi is the former Managing Director of Connaught Plaza Restaurants Ltd (CPRL) - the joint venture (JV) company that manages US fast food major McDonald's operations in North and East India. Vikram Bakshi has been fighting with McDonald's since August 2013 when he was ousted as the CPRL managing director. He owns 50 per cent in the JV that dates back to 1995.
What's his fight with McDonald's?
The battle lines were drawn at a meeting of the CPRL board in August 2013. Bakshi was unaware that his days as managing director were numbered. Stung at not being re-elected the managing director for the 10th time - the election took place every alternate year - Bakshi dragged McDonald's to the Company Law Board (CLB) seeking reinstatement. The CLB ordered status quo on equity, removing any possibility of change in shareholding or either partner taking full control. McDonald's terminated the JV agreement and moved the London Court of International Arbitration.
Why did McDonald's remove Vikram Bakshi?
The main cause of mistrust was Bakshi's real estate business. McDonald's alleged he had leased out property to a rival company. He was also accused of financial discrepancies/bungling in CPRL. Among the allegations the US firm levelled was that Bakshi had pledged 51,300 of his CPRL shares to get a Rs 20 crore loan for development of Savoy Outlet Mall and service apartments in Manesar by his company, Ascot Estate (Manesar) Pvt Ltd. McDonald's said he did not take approval from the company before pledging the shares. It also pointed at a 2007 transfer of Rs 7 lakh from the company's account to his group company, Vikram Bakshi and Company Pvt Ltd. It also "highlighted glaring inadequacies with respect to internal control systems", Bakshi's focus on his other businesses and directorship of 25 other companies - it said he was not devoting enough time to CPRL.
What did Vikram Bakshi have to say about McDonald's allegations?
Bakshi refuted the allegations and says the board, which had representatives from McDonald's too, was aware of all the actions. "McDonald's has used everything to project me as the culprit. It had full knowledge of what was happening. It makes it look as if I did something entirely on my own. How can I, when all the agreements are signed with the approval of the board?" Bakshi in an interview to Business Today last year. "In their own brand health evaluation, in the Asia-Pacific region, McDonald's Delhi came in third after Australia and New Zealand, in 2010. Their Mumbai JV with Amit Jatia (which took care of western and southern markets) was 16th. They could get nothing credible against me and so raked up a 2007 issue that had been resolved," he said.
What happened next?
In early 2014, Bakshi offered to buy McDonald's stake at a net asset value of Rs 150 crore. The US company made a Rs 48-50 crore offer for Bakshi's stake. The latter insisted on fair market value and offered to sell initially for Rs 2,500 crore and later for Rs 1,800 crore. McDonald's did not respond. As this went on, the Delhi High Court stayed the arbitration proceedings in December 2014.
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