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Vikram Bakshi removed from post of MD, may appeal
Posted On: 02-09-2013 00:00:00 13

Connaught Plaza Restaurants and Hardcastle Restaurants started off as equal joint ventures between McDonald's and their Indian partners when the fast-food chain entered India in 1995-96. Connaught Plaza Restaurants got the franchise for the North and East while Hardcastle got it for the West and South.

In 2011, the US Company allowed Amit Jatia, the Indian partner in Hardcastle, to buy its 50% stake at an attractive price and convert the company into a franchisee operation in the south and west. Vikram Bakshi of Connaught Plaza Restaurants too wanted to convert his joint venture into a similar franchise arrangement, but it seems that McDonald's did not agree.

In addition, between 2008 and 2012, Connaught Plaza Restaurants' debt was frozen at the insistence of McDonald's, which reduced the JV's ability to invest and grow. The joint venture company had to keep its debt at less than Rs 134 crore until 2012. After much discussion on growth, the debt level was raised to Rs 161 crore.

Bakshi's 17 year tenure as managing director expired on July 17. At the company's board meeting on August 6, the two McDonald's nominees on the four-member board rejected the proposal to re-nominate him as MD. On August 30, McDonald's India issued a public notice saying Bakshi had ceased to be the managing director of the joint venture. Now, McDonald's is asking Bakshi to exit, and the deadlock is over valuation. The American company is unwilling to pay the price Bakshi wants.

As per an article in Economic Times, Vikram Bakshi, will soon move the Company Law Board seeking his reinstatement as the managing director of their equal joint venture. He is also likely to ask the Company Law Board to stop the US Company from hampering the operations of the JV, Connaught Plaza Restaurants Ltd. At present, there are two nominees of Bakshi and McDonald's on the board, and his re-nomination has to be ratified by the majority of the board.


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