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
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