Facing allegations of land-grabbing, financial mismanagement and lack of commitment to promoting the joint venture, Vikram Bakshi, former Managing Director of McDonald’s India, has moved the Company Law Board (CLB) seeking his reinstatement.
In his petition to the CLB, Bakshi accused the American fast-food chain “of implementing a pre-determined scheme of attempt to take over the company, Connaught Plaza Restaurants (CPR), in a coercive, oppressive and illegal manner, contrary to law”.
Sources close to the development said Bakshi accused Amit Jatia of Hardcastle Restaurants (which operates McDonald’s India in the West and South) and McDonald’s of “colluding in easing him out of the position” and also following discriminatory practices.
On August 30, McDonald’s, in a public notice, said Bakshi ceased to be the Managing Director of the 50:50 joint venture and also announced that the company would be run by the board. Bakshi had been holding the post for 17 years through his joint venture company, CPR.
McDonald’s entered India in 1996 and forged two separate joint ventures — CRP and Hardcastle — to expand its presence. However, it allowed Jatia to buy out its stake from Hardcastle in 2011 and converted the operations into a franchise business for South and West India.
Sources said Bakshi was keen to buy out the balance stake in his venture and expand the business. But the burger chain did not allow this. Bakshi was also asked to keep CPR’s debt at a certain level, while Hardcastle was allowed to increase its. McDonald’s said it found that Bakshi’s other business interests, such as hospitality (Ascot Hotels and Resorts) and real estate, were in direct conflict with the joint venture.
There were also allegations of illegal fund transfers. Bakshi was alleged to have transferred Rs 7 crore from the joint venture account to one of his group firms that has an interest in real estate. Earlier, allegations had been made against him of land-grabbing .
In his CLB petition, Bakshi claimed that since 2008, when the joint venture started making profits, McDonald’s had been trying to buy him out. The first offer was made in August 2008 for $5 million, which he claimed was “categorically rejected”.
He further said his proposal for the appointment of a third party evaluation of his interest was rejected by McDonald’s and instead the offer to buy his entire shareholding in CPR was increased from $5 million to $7 million.
A McDonald’s spokesperson said: “This is now a matter before the courts. We will, therefore, address this in the appropriate forum. There is no further comment.”