Vikram Bak­shi to Stay in Restau­rant Busi­ness even with­out McDon­ald’s

Says he doesn’t in­tend to throw away 18 years of ‘learn­ings’ in the biz

The Economic Times - - Business Of Brands - RATNA BHUSHAN

Vikram Bak­shi, es­tranged part­ner of McDon­ald's In­dia, says he in­tends to stay in the restau­rant busi­ness even with­out the US burger-and-fries chain. “I am stay­ing in the busi­ness. I don’t in­tend to throw away 18 years of my learn­ings in this busi­ness,” said Bak­shi, who formed an equal joint ven­ture with McDon­ald's in 1995 to op­er­ate its out­lets in north and east In­dia. The two part­ners fell out re­cently and have been en­tan­gled in a le­gal row since Au­gust last year. There is spec­u­la­tion in the in­dus­try that Bak­shi might take up the fran­chisee of US fast-food chain Burger King that is in the process of set­ting up op­er­a­tions in the coun­try. Asked to com­ment on that, Bak­shi told ET, “That is a hy­po­thet­i­cal ques­tion. When the time comes, I shall look at all op­tions.” In Novem­ber last year, Burger King, the world’s third-largest burger chain, and pri­vate eq­uity firm Ever­stone had an­nounced a joint ven­ture to de­velop the restau­rant brand in In­dia. The ven­ture headed by Ra­jeev Var­man, who was head­ing the burger chain’s UK op­er­a­tions ear­lier, is now look­ing for fran­chisees to set up out­lets. Con­naught Plaza Restaurants (CPRL), the joint ven­ture be­tween Bak­shi and McDon­ald’s, op­er­ates 154 McDon­ald's out­lets in north and east In­dia. Bak­shi has pro­posed to buy the US firm’s stake in the ven­ture with­out the brand name, and has made a set­tle­ment of­fer based on net as­set value. On spec­u­la­tion that McDon­ald’s may take over leases of out­lets run by CPRL, Bak­shi said: “The leases are with the com­pany and on­go­ing. With the mat­ter in In­dian courts, I do not be­lieve McDon­ald’s shall make any such un­wise at­tempt. This can only hap­pen if the lease terms ex­pire. None of our leases are ex­pir­ing in the near fu­ture.” Bak­shi said he al­ways had longterm plans with McDon­ald’s, at the least till the 25-year term of their joint ven­ture, al­though the US chain had been putting pres­sure for a buy­out since 2008. At that time, McDon­ald’s had of­fered to buy Bak­shi’s stake for $5 mil­lion and sub­se­quently raised it to $7 mil­lion. In an­other val­u­a­tion done by Grant Thorn­ton the fol­low­ing year, the value of Bak­shi’s stake in the JV was val­ued at $331 mil­lion. Say­ing that the busi­ness is run­ning largely through in­ter­nal ac­cru­als, Bak­shi said the con­flict has ad­versely im­pacted growth and de­ci­sion mak­ing has con­sid­er­ably slowed down. In Au­gust last year, the US firm de­cided not to reap­point Bak­shi as MD of the joint ven­ture firm. Bak­shi had moved the Com­pany Law Board (CLB) in Septem­ber, seek­ing to be re­in­stated as the firm’s man­ag­ing di­rec­tor. McDon­alds had claimed that Bak­shi’s busi­ness in­ter­ests out­side of the JV were prof­it­ing from the JV, and had al­leged that funds had been di­verted to Bak­shi's other hos­pi­tal­ity busi­ness. The claims were con­tested in de­tail by Bak­shi’s lawyers. In De­cem­ber, Bob Lar­son, se­nior VP & in­ter­na­tional re­la­tion­ship part­ner at McDon­ald’s APMEA — Greater Asia, in­formed CPRL em­ploy­ees through an email that the 1995in­cor­po­rated JV was ter­mi­nated, which Bak­shi said vi­o­lated the CLB or­der. Around the same time, McDon­ald’s ap­proached the Lon­don Court of In­ter­na­tional Ar­bi­tra­tion for ar­bi­tra­tion even though the mat­ter was be­ing heard at CLB. McDon­ald’s in­vest­ments in CPRL are es­ti­mated at about .` 193 crore. The ven­ture, on its part, has paid a royalty of .` 200 crore to the US firm.

EX­PE­RI­ENCE COUNTS: Vikram Bak­shi

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