CPRL's Bakshi offers to buy out McDonald's stake in JV
31 January 2014
In an unexpected twist to developments at McDonald's India, Vikram Bakshi, the ousted former managing director of Connaught Plaza Restaurants (CPRL), on Thursday offered to buy out McDonald's India's 50-per cent stake in the joint venture.
Bakshi's counsel made an offer before the Company Law Board (CLB) seeking to buy out McDonald's stake in CPRL at a valuation based on the ''net asset value'' of the company, excluding the value of the McDonald's brand. Responding to the proposal, McDonald's immediately made a counter-offer to buy out Bakshi's stake at the valuation offered in 2008.
McDonald's had on 30 August announced that Bakshi's term as managing director had ended on 17 July. McDonald's had claimed that Bakshi's other business interests were benefiting from his role as MD of Connaught Plaza, and had alleged that funds from the joint venture were being diverted to Bakshi's hospitality business.
In September, Bakshi moved the CLB to clear himself of allegations made by the world's biggest fast-food chain. According to the petition filed by Bakshi, McDonald's Corp senior official Peter Rodwell had in August 2008 offered to buy out his stake for $5 million. Subsequently, in November 2008, the offer was upped to $7 million.
The CLB has directed the lawyers of both sides to seek clear instructions from their clients on whether they want to proceed with a stake sale either way. Their stands are to be made known on 11 March.
While CPRL's net revenues in FY12 were Rs490.37 crore, up 27.3 per cent over the previous year, profits after tax fell to Rs6.4 crore, down 68 per cent over the Rs20.4 crore reported in FY11.
Westlife, MacDonald's other Indian partner which operates in the western and southern parts of India, saw revenues rise 25 per cent in FY13 to Rs674.8 crore, but again its net was lower at Rs33.2 crore from Rs42.2 crore in FY12.
CPRL runs 154 outlets in northern and eastern India, while Westlife, owned by the Jatia family, runs 166 restaurants.