Vikram Bakshi row: No happy meal at McDonalds as board stays divided

Written by Kirtika Suneja | New Delhi | Updated: Feb 14 2014, 13:48pm hrs
McDonaldA tug of war is also on between Bakshi and CPRL?s company secretary. Reuters
AS Vikram Bakshi and McDonalds battle it out in the Company Law Board over control of restaurants in the north and eastern part of the country, the day-to-day management of their 50:50 joint venture Connaught Plaza Restaurants is creaking.

Since Bakshis removal as the managing director last August a decision he has challenged in the CLB the board of directors is directly running the company. Since the joint venture is an equal partnership, both Bakshi and McDonalds have equal board representation with two members each.

The most critical aspects which have suffered relate to the opening of new outlets, sale of certain properties to raise funds and human resource-related matters. According to company insiders, certain employees are playing one side against the other as the tussle drags on.

The restaurant at Paharganj in New Delhi has been ready since October 2013. However, for that, nominee directors of both sides must sign. The nominee director of McDonalds has not been able to sign because she does not have a local address, which is required under the rules, a company insider said. As a result, the company is paying lease rentals of R2-3 lakh every month for the unopened restaurant and is not sure when it would be able to open it.

Another decision which has got stuck is regarding the sale of two properties in Sector 18 market, Noida, and Basant Lok market in New Delhis Vasant Vihar. These were bought by CPRL around 1995. The board had decided these should be sold, since they command prices of R20 crore each now. However, the matter is stuck because whenever a buyer is zeroed in on, the McDonalds representative on the board vetoes it on some pretext, said a company official close to Bakshi.

In one case, the buyers were rejected because they happened to be related to a Congress party member, said the official.

The third major problem in the running of CPRL relates to policy decisions and removal of executives who are not seen to be performing well. The two sides have opposite views on every matter; so, practically, all major decisions hit a wall, said an executive. One decision by Bakshi to control costs was to freeze all foreign trips. However, executives keen on such trips forwarded their proposal to the McDonalds representative on the board, who approved the proposals.

FE reviewed the exchange of mails between the two sides in some such cases. Similarly, if any executive is seen to be performing below expectations by Bakshi, the McDonalds representative has a completely opposite view, sources said.

A tug of war is also on between Bakshi and CPRLs company secretary, whom Bakshi has dragged to the CLB for overstepping his jurisdiction and acting in favour of the overseas directors.

An exchange of mails between the two continues with Bakshi questioning his source of funds to fight the case and the latter responding that hes just doing his job.

When contacted, Liam Jeory VP, corporate relations, McDonalds Asia/Pacific/Middle East/Africa said in an e-mail reply: Decision-making rests with the Board of CPRL. We have no further comment to make as this is a matter before the courts.

Bakshi was ousted by McDonalds after his term as managing director ended on July 17, 2013. The two are fighting it out in the Company Law Board. McDonalds has also moved the International Court of Arbitration in London after terminating the JV agreement with Bakshi.