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The ongoing dispute between McDonald’s and its joint venture partner, Vikram Bakshi, is taking a toll on the operations in the North and the East. The joint venture company, Connaught Plaza Restaurants Private Ltd (CPRL), is facing a severe cash crunch and a number of contractors, who have been working on separate projects for CPRL, told Business Line that their payments have been overdue for months.
While Bakshi declined to comment, an email questionnaire to Aysel Melbye, Regional Senior Finance Director at McDonald's Corporation, remained unanswered.
However, a company insider said the dispute has left CPRL in a situation where it can neither take debt nor sell any of its property to raise the required funds. A source, on conditions of anonymity, said Bakshi had made a request for taking on temporary debt as far back as May 2013. “This debt that was to be taken against the planned sale of property at Basant Lok and Noida has been kept in abeyance. Contractors, who are generally patient while constructing our stores, have, of late, turned abusive. We are getting a bad name in the market,” the source said.
The dispute is also affecting the company’s ability to roll out new stores and take operational decisions such as on advertising spends. “The situation has got worse after McDonald's India Private Ltd (MIPL) last week announced that it has terminated its joint venture agreement relating to CPRL, forcing Vikram Bakshi out of the decision-making process.
While Bakshi has moved the Company Law Board against McDonald’s, the US company has initiated arbitration proceedings against Bakshi in London. In an email to employees, Bob Larson, Senior Vice-President & International Relationship Partner, McDonald's APMEA - Greater Asia, had said that MIPL's intention was to put CPRL's business in North and East India onto a strong growth path and ensure the job security of the employees of CPRL.
Meanwhile, Bakshi faces another battle with at least one of CPRL’s board members going against him. According to sources, the company secretary wrote to senior executives saying CPRL had become a wholly-owned subsidiary of MIPL. Bakshi has filed a complaint against him (the company secretary) alleging that he had flouted the norms by sending emails on the company’s status without the approval of the board.
The dispute between Bakshi and McDonald’s became public in August after the former was removed as the Managing Director of the joint venture that runs McDonald’s outlets in North and East India.
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