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McDonald's India says Vikram Bakshi no longer managing director of JV

McDonald's India today said Vikram Bakshi, MD of its JV - Connaught Plaza Restaurants - responsible for operations in the north and east region of the country, has ceased to occupy the position

NEW DELHI: McDonald's, the world's leading burger and fries chain, has ousted its near-two-decade partner, Vikram Bakshi, from the post of managing director of their equal joint venture company, signalling adramatic souring of relations between the fastfood company and its most visible face in India. In a tersely worded public notice that was published in select newspapers on August 30, McDonald's India said Bakshi had ceased to be the managing director ofConnaught Plaza Restaurants (CPRL) 'pursuant to the expiration of his term on July 17, 2013'. The notice added that Connaught Plaza Restaurants was now being managed by its board of directors. The joint venture company runs 154 McDonald's outlets in northern and eastern parts of India. "The nominees of McDonald's at the board meeting on August 6 did not support my re-nomination as MD. It would be best to pose this question to McDonald's," said Bakshi, in an emailed response to ET's query about the reason for his removal. "The matter is in legal domain and I continue being a Director & JV partner with control of 50% equity in the joint venture company," he said. Bakshi and McDonald's have two nominees each on the four-member board of the company. For any board resolution to be passed, a majority of the directors must vote in favour of the proposal. A McDonald's spokesperson declined to divulge further details about Bakshi's abrupt exit. "The public notice gives all the correct details, including how the company is being managed. We have no further comment," said Liam Jeory, vice-president, corporate relations, McDonald's Asia/Pacific/Middle-East/Africa. A senior industry executive said differences had arisen between McDonald's and Bakshi over control and ownership of the joint venture company.

Bakshi denies governance issues While Bakshi was keen to buy out McDonald's, convert his company into a master franchisee, and raise funds through an IPO, the US company wanted its Indian partner to sell out and take full control of the company. Bakshi said he was not in a position to talk about confidential discussions with McDonald's. "I must point out that all initiatives were aimed at optimising opportunities and value for the McDonald's brand and business in our market in the north and east of India," he said, in response to the specific question on his desire to buy out his American partner and do an IPO. He denied rumours about governance issues in the running of CPRL and said no funds had been diverted to his personal real estate business. "There are no funds diverted for personal business. On the contrary, our joint venture has benefitted by subsidised leasing of several properties that are profitable and beneficial to the overall business. At each instance of our operations, our joint venture has followed a well-laid process of approval by the McDonald's development team. Further, these transactions have been duly approved by the board of directors," Bakshi said. For the year ended March 31, 2012, CRPL had clocked revenues of Rs 490 crore, and a net profit of Rs 6.4 crore. The total debt of the company stood at Rs 127 crore. In addition to Bakshi, his wife Madhurima, and two McDonald's representatives Obert Larson and Aysel Melbye serve on the board. McDonald's, which set up its first store in India in 1996, had entered the country through two joint ventures. While the joint venture with Bakshi ran outlets in the northern and eastern parts of India, the second joint venture with Mumbai-based businessman Amit Jatia operated stores in south and west India. In 2011, McDonald's sold its stake in the second joint venture company HardcastleBSE -2.46 % Restaurants converting it into a master franchisee operation. It is understood that Bakshi was pressing for a similar arrangement for some time, as he wanted to raise funds through an IPO.

For the last 17 years that McDonald's has been in India, Bakshi has been the face of the company. While Jatia has kept a relatively low profile, and no senior McDonald's functionary has given a media interview in India in the past decade or so, Bakshi has been both vocal and visible. Just a few months ago, he was quoted in the media as saying CPRL will invest Rs 500 crore to double its total number of outlets to 300.

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