2020-04-27

A tale of McDonaldês two franchise partners in India

News

McDonaldês entered India in 1995 via two partners. It played ball with Amit Jatia, but is playing hardball with Vikram Bakshi. The way the two partnerships have unravelledãfinancially, structurally, behaviourallyãare as different as chalk and cheese. Vikram Bakshi is not lovinê it. For 18 years, he has been the corporate face of McDonaldês in India, and now his American partner, claims Bakshi, wants to shame him and then swallow him, that too without giving him his due. In contrast, Amit Jatia is lovinê it. On a video conference call from his office in Mumbai, Jatia, McDonaldês other partner in India for the same duration, leans back into his chair, and chimes that his relations with McDonaldês are steadfast, the business is growing well and the stock market is noticing. For the $27.5 billion company that prides itself on churning out burgers and fries with immaculate consistency, the contrast in the current state of being of the two men who have built its business in India is noticeable. If Bakshi is all outrage, Jatia is all poise. If Bakshi speaks of McDonaldês with acrimony, Jatia speaks of amiability. If Bakshi accuses Jatia of instigating McDonaldês, Jatia politely declines comment. If Bakshi is counting the wealth he could lose because of the hostilities with McDonaldês, Jatia is basking in the glow of new wealth. Those feelings of contrast are not new, though. They have been simmering in the cauldron of corporate actionsãon the part of all three sidesãover the last five years. –Itês clear that they (McDonaldês) donêt see a future with Bakshi,” says a former McDonaldês India official, on the condition of anonymity. A restaurant industry veteran, also speaking on the condition of anonymity, adds: –They (McDonaldês) would rather have a subservient Indian partner like Jatia for one half and manage the other half on its own,” he says. The current state of flux traces back to 1995, when McDonaldês entered India through an arrangement that was not its preferred way of installing its golden arches here, there and everywhere. Difference in Structure McDonaldês, globally, does not like to own its ventures or operate them. Its preferred model is a low-risk, low-hassle one: licence out its good name for a fee to a local player; on top of that, charge a royalty linked to sales. So, the more the outlets sell, the more money McDonaldês makes. Of its 34,000 outlets in 118 countries, 80% are through this franchise route. But when it entered developing countries, McDonaldês often did so via the ownership model. A case in point was India, where it entered in 1995, with two 50:50 joint ventures, one with Bakshi and the other with Jatia. –India then was not a hot market that it has become in the last few years,” says Harminder Sahni, managing director, Wazir Advisors, a retail consultancy. Yet, even in India, McDonaldês hedged its bets. Rather than have only one partner for all of India, it opted for two partners and carved out the country among them. Bakshi was given north and east, Jatia west and south. This geographical responsibility was largely synonymous with where their other business interests were located. Both Bakshi and Jatia had a footprint in real estate. –A strong brand and leader like McDonaldês, generally, wonêt like to have a partner from the foods or the QSR (quick service restaurant) business wherein they discuss and debate every issue,” says Sahni. –The partner may believe that it too knows the business while they donêt. So, itês better to have non-industry partners.” Although Bakshi is widely known as the corporate face of McDonaldês in India, he is a player in real estate in the National Capital Region, and beyond. Says a real estate consultant, on the condition of anonymity: –He is overtly aggressive, obsessed with nitty-gritty. He lacks vision as a business leader and is hard to do business with because he cites outrageous terms.” Bakshi has a scattered portfolio of properties that pivot around the hospitality business: for example, the Savoy Outlet Mall in Manesar, the Savoy Greens in KarnalÄIn Delhi, he owns, among many properties, the Mohan Dev Building on Tolstoy Marg, the building in Connaught Plaza that houses Wimpyãthe fast-food joint that was, in some ways, a precursor to McDonaldês in the city. –Amit is a shrewd businessman and Vikram an emotional businessman,” says the restaurant industry veteran quoted earlier. With both, McDonaldês signed a 25-year joint venture agreement, which would run till 2020. Apart from sourcing from the same suppliers and coordinating for marketing spends, the two JVs did not interact much. Structurally, there was no difference between the Bakshi and Jatia ventures in the first 15 years. This changed in May 2010, when McDonaldês decided to sell off its shares in the Jatia venture in favour of its Indian partner. This was the exact opposite of what, says Bakshi, McDonaldês was asking of him around the same time. A petition filed on September 9 by Bakshi with the Company Law Board (CLB), the first port of call for corporate disputes, says that twice in 2008 McDonaldês offered to buy him out, but he refused. According to Bakshi, McDonaldês is trying to buy him out again, this time at the behest of Jatia. That is the reason why, he adds, his tenure as managing director has not been renewed (announced via a public notice on August 30), why McDonaldês is citing irregularities and is objecting to certain transactions done with Bakshiês other businesses. To a detailed questionnaire, Danya Proud, director of corporate relations at McDonaldês Asia Pacific Middle East & Africa, replied: –Thank you for your inquiry. However, as we have stated previously, this is an internal matter, and we have no further comment beyond what is outlined in the public notice (stating that Bakshi was no longer MD).” In a letter dated September 3 to McDonaldês, Bakshi has accused the company of –discriminatory and oppressive behaviour” to –fiscally disable us by hook or by crook, eventually forcibly causing us to sell out” and that it has –entered into a conspiracy” with Jatia. Difference In Strategy In May 2010, in the 15th year of its 25-year pact, McDonaldês entered into a new arrangement with Jatia. It sold its 50% stake back to Jatia, and that JV moved to the American companyês preferred mode of franchise fee and royaltyãa transition McDonaldês has been making the world over, with India (the Bakshi venture) and China being the exceptions in the developing world today. Filings with the Ministry of Company Affairs show that McDonaldês received next to nothing for that stake sale. It invested Rs 108 crore (Rs 15.5 crore as equity and Rs 92.5 crore as preference shares) in the Jatia venture, Hardcastle Restaurants. It realised just Rs 10.8 lakh and booked a loss of Rs 107.9 crore. When asked why McDonaldês sold cheap, Amit Jatia, vicechairman of Westlife Development, the company that now controls Hardcastle, told ET: –It is not completely correct.” He declined to elaborate, only adding: –We would not like to revisit this. Itês a private deal between us and McDonaldês.” On August 16, 2013, Jatia effectively merged the McDonaldês business into a listed shell company of the promoters, Westlife Development. The Westlife stock has shot up from Re 1 in June 2009 to hit an all-time high of Rs 416 on August 21, 2013, amid thin public shareholding and trading among the promoter family, raising concerns of insider trading and price rigging. –Many penny stocks exhibit these characteristics and are kept listed as shell companies for the purpose of reverse listing other companies,” says Shriram Subramanian, founder of InGovern Research Services, a proxy advisory firm. –I doubt Sebi and the stock exchanges scrutinise penny stocks rigorously.” Subramanian points out that there were inter-se promoter transfers at around Rs 40 per share in March 2012 and Rs 150 in December 2012, against the traded price of between Rs 10 and Rs 40. –The inter-se transfer at such a high price may have resulted in capital gains tax to the individual, had the trades not been executed on the stock exchange,” he says. According to Jatia, the transfers were part of the promoter group restructuring as a part of the overall consolidation process. –I donêt see any big deal with it,” he says. –I donêt need to explain to the public.” Asked whether it was done to bypass Sebiês threshold norms for illiquid stocks, he says: –110%, itês not done to bypass Sebi.” On September 28, Westlife, in which the promoter group currently owned 62% as of June 30, had a market capitalisation of Rs 5,448 crore ($872 million), largely derived by unlocking value.

1970-01-01

A tale of McDonald�s two franchise partners in India

News

McDonald�s entered India in 1995 via two partners. It played ball with Amit Jatia, but is playing hardball with Vikram Bakshi. The way the two partnerships have unravelled�financially, structurally, behaviourally�are as different as chalk and cheese. Vikram Bakshi is not lovin� it. For 18 years, he has been the corporate face of McDonald�s in India, and now his American partner, claims Bakshi, wants to shame him and then swallow him, that too without giving him his due. In contrast, Amit Jatia is lovin� it. On a video conference call from his office in Mumbai, Jatia, McDonald�s other partner in India for the same duration, leans back into his chair, and chimes that his relations with McDonald�s are steadfast, the business is growing well and the stock market is noticing. For the $27.5 billion company that prides itself on churning out burgers and fries with immaculate consistency, the contrast in the current state of being of the two men who have built its business in India is noticeable. If Bakshi is all outrage, Jatia is all poise. If Bakshi speaks of McDonald�s with acrimony, Jatia speaks of amiability. If Bakshi accuses Jatia of instigating McDonald�s, Jatia politely declines comment. If Bakshi is counting the wealth he could lose because of the hostilities with McDonald�s, Jatia is basking in the glow of new wealth. Those feelings of contrast are not new, though. They have been simmering in the cauldron of corporate actions�on the part of all three sides�over the last five years. �It�s clear that they (McDonald�s) don�t see a future with Bakshi,� says a former McDonald�s India official, on the condition of anonymity. A restaurant industry veteran, also speaking on the condition of anonymity, adds: �They (McDonald�s) would rather have a subservient Indian partner like Jatia for one half and manage the other half on its own,� he says. The current state of flux traces back to 1995, when McDonald�s entered India through an arrangement that was not its preferred way of installing its golden arches here, there and everywhere. Difference in Structure McDonald�s, globally, does not like to own its ventures or operate them. Its preferred model is a low-risk, low-hassle one: licence out its good name for a fee to a local player; on top of that, charge a royalty linked to sales. So, the more the outlets sell, the more money McDonald�s makes. Of its 34,000 outlets in 118 countries, 80% are through this franchise route. But when it entered developing countries, McDonald�s often did so via the ownership model. A case in point was India, where it entered in 1995, with two 50:50 joint ventures, one with Bakshi and the other with Jatia. �India then was not a hot market that it has become in the last few years,� says Harminder Sahni, managing director, Wazir Advisors, a retail consultancy. Yet, even in India, McDonald�s hedged its bets. Rather than have only one partner for all of India, it opted for two partners and carved out the country among them. Bakshi was given north and east, Jatia west and south. This geographical responsibility was largely synonymous with where their other business interests were located. Both Bakshi and Jatia had a footprint in real estate. �A strong brand and leader like McDonald�s, generally, won�t like to have a partner from the foods or the QSR (quick service restaurant) business wherein they discuss and debate every issue,� says Sahni. �The partner may believe that it too knows the business while they don�t. So, it�s better to have non-industry partners.� Although Bakshi is widely known as the corporate face of McDonald�s in India, he is a player in real estate in the National Capital Region, and beyond. Says a real estate consultant, on the condition of anonymity: �He is overtly aggressive, obsessed with nitty-gritty. He lacks vision as a business leader and is hard to do business with because he cites outrageous terms.� Bakshi has a scattered portfolio of properties that pivot around the hospitality business: for example, the Savoy Outlet Mall in Manesar, the Savoy Greens in Karnal�In Delhi, he owns, among many properties, the Mohan Dev Building on Tolstoy Marg, the building in Connaught Plaza that houses Wimpy�the fast-food joint that was, in some ways, a precursor to McDonald�s in the city. �Amit is a shrewd businessman and Vikram an emotional businessman,� says the restaurant industry veteran quoted earlier. With both, McDonald�s signed a 25-year joint venture agreement, which would run till 2020. Apart from sourcing from the same suppliers and coordinating for marketing spends, the two JVs did not interact much. Structurally, there was no difference between the Bakshi and Jatia ventures in the first 15 years. This changed in May 2010, when McDonald�s decided to sell off its shares in the Jatia venture in favour of its Indian partner. This was the exact opposite of what, says Bakshi, McDonald�s was asking of him around the same time. A petition filed on September 9 by Bakshi with the Company Law Board (CLB), the first port of call for corporate disputes, says that twice in 2008 McDonald�s offered to buy him out, but he refused. According to Bakshi, McDonald�s is trying to buy him out again, this time at the behest of Jatia. That is the reason why, he adds, his tenure as managing director has not been renewed (announced via a public notice on August 30), why McDonald�s is citing irregularities and is objecting to certain transactions done with Bakshi�s other businesses. To a detailed questionnaire, Danya Proud, director of corporate relations at McDonald�s Asia Pacific Middle East & Africa, replied: �Thank you for your inquiry. However, as we have stated previously, this is an internal matter, and we have no further comment beyond what is outlined in the public notice (stating that Bakshi was no longer MD).� In a letter dated September 3 to McDonald�s, Bakshi has accused the company of �discriminatory and oppressive behaviour� to �fiscally disable us by hook or by crook, eventually forcibly causing us to sell out� and that it has �entered into a conspiracy� with Jatia. Difference In Strategy In May 2010, in the 15th year of its 25-year pact, McDonald�s entered into a new arrangement with Jatia. It sold its 50% stake back to Jatia, and that JV moved to the American company�s preferred mode of franchise fee and royalty�a transition McDonald�s has been making the world over, with India (the Bakshi venture) and China being the exceptions in the developing world today. Filings with the Ministry of Company Affairs show that McDonald�s received next to nothing for that stake sale. It invested Rs 108 crore (Rs 15.5 crore as equity and Rs 92.5 crore as preference shares) in the Jatia venture, Hardcastle Restaurants. It realised just Rs 10.8 lakh and booked a loss of Rs 107.9 crore. When asked why McDonald�s sold cheap, Amit Jatia, vicechairman of Westlife Development, the company that now controls Hardcastle, told ET: �It is not completely correct.� He declined to elaborate, only adding: �We would not like to revisit this. It�s a private deal between us and McDonald�s.� On August 16, 2013, Jatia effectively merged the McDonald�s business into a listed shell company of the promoters, Westlife Development. The Westlife stock has shot up from Re 1 in June 2009 to hit an all-time high of Rs 416 on August 21, 2013, amid thin public shareholding and trading among the promoter family, raising concerns of insider trading and price rigging. �Many penny stocks exhibit these characteristics and are kept listed as shell companies for the purpose of reverse listing other companies,� says Shriram Subramanian, founder of InGovern Research Services, a proxy advisory firm. �I doubt Sebi and the stock exchanges scrutinise penny stocks rigorously.� Subramanian points out that there were inter-se promoter transfers at around Rs 40 per share in March 2012 and Rs 150 in December 2012, against the traded price of between Rs 10 and Rs 40. �The inter-se transfer at such a high price may have resulted in capital gains tax to the individual, had the trades not been executed on the stock exchange,� he says. According to Jatia, the transfers were part of the promoter group restructuring as a part of the overall consolidation process. �I don�t see any big deal with it,� he says. �I don�t need to explain to the public.� Asked whether it was done to bypass Sebi�s threshold norms for illiquid stocks, he says: �110%, it�s not done to bypass Sebi.� On September 28, Westlife, in which the promoter group currently owned 62% as of June 30, had a market capitalisation of Rs 5,448 crore ($872 million), largely derived by unlocking value.

2020-04-27

A tale of McDonaldês two franchise partners in India

News

McDonaldês entered India in 1995 via two partners. It played ball with Amit Jatia, but is playing hardball with Vikram Bakshi. The way the two partnerships have unravelledãfinancially, structurally, behaviourallyãare as different as chalk and cheese. Vikram Bakshi is not lovinê it. For 18 years, he has been the corporate face of McDonaldês in India, and now his American partner, claims Bakshi, wants to shame him and then swallow him, that too without giving him his due. In contrast, Amit Jatia is lovinê it. On a video conference call from his office in Mumbai, Jatia, McDonaldês other partner in India for the same duration, leans back into his chair, and chimes that his relations with McDonaldês are steadfast, the business is growing well and the stock market is noticing. For the $27.5 billion company that prides itself on churning out burgers and fries with immaculate consistency, the contrast in the current state of being of the two men who have built its business in India is noticeable. If Bakshi is all outrage, Jatia is all poise. If Bakshi speaks of McDonaldês with acrimony, Jatia speaks of amiability. If Bakshi accuses Jatia of instigating McDonaldês, Jatia politely declines comment. If Bakshi is counting the wealth he could lose because of the hostilities with McDonaldês, Jatia is basking in the glow of new wealth. Those feelings of contrast are not new, though. They have been simmering in the cauldron of corporate actionsãon the part of all three sidesãover the last five years. –Itês clear that they (McDonaldês) donêt see a future with Bakshi,” says a former McDonaldês India official, on the condition of anonymity. A restaurant industry veteran, also speaking on the condition of anonymity, adds: –They (McDonaldês) would rather have a subservient Indian partner like Jatia for one half and manage the other half on its own,” he says. The current state of flux traces back to 1995, when McDonaldês entered India through an arrangement that was not its preferred way of installing its golden arches here, there and everywhere. Difference in Structure McDonaldês, globally, does not like to own its ventures or operate them. Its preferred model is a low-risk, low-hassle one: licence out its good name for a fee to a local player; on top of that, charge a royalty linked to sales. So, the more the outlets sell, the more money McDonaldês makes. Of its 34,000 outlets in 118 countries, 80% are through this franchise route. But when it entered developing countries, McDonaldês often did so via the ownership model. A case in point was India, where it entered in 1995, with two 50:50 joint ventures, one with Bakshi and the other with Jatia. –India then was not a hot market that it has become in the last few years,” says Harminder Sahni, managing director, Wazir Advisors, a retail consultancy. Yet, even in India, McDonaldês hedged its bets. Rather than have only one partner for all of India, it opted for two partners and carved out the country among them. Bakshi was given north and east, Jatia west and south. This geographical responsibility was largely synonymous with where their other business interests were located. Both Bakshi and Jatia had a footprint in real estate. –A strong brand and leader like McDonaldês, generally, wonêt like to have a partner from the foods or the QSR (quick service restaurant) business wherein they discuss and debate every issue,” says Sahni. –The partner may believe that it too knows the business while they donêt. So, itês better to have non-industry partners.” Although Bakshi is widely known as the corporate face of McDonaldês in India, he is a player in real estate in the National Capital Region, and beyond. Says a real estate consultant, on the condition of anonymity: –He is overtly aggressive, obsessed with nitty-gritty. He lacks vision as a business leader and is hard to do business with because he cites outrageous terms.” Bakshi has a scattered portfolio of properties that pivot around the hospitality business: for example, the Savoy Outlet Mall in Manesar, the Savoy Greens in KarnalÄIn Delhi, he owns, among many properties, the Mohan Dev Building on Tolstoy Marg, the building in Connaught Plaza that houses Wimpyãthe fast-food joint that was, in some ways, a precursor to McDonaldês in the city. –Amit is a shrewd businessman and Vikram an emotional businessman,” says the restaurant industry veteran quoted earlier. With both, McDonaldês signed a 25-year joint venture agreement, which would run till 2020. Apart from sourcing from the same suppliers and coordinating for marketing spends, the two JVs did not interact much. Structurally, there was no difference between the Bakshi and Jatia ventures in the first 15 years. This changed in May 2010, when McDonaldês decided to sell off its shares in the Jatia venture in favour of its Indian partner. This was the exact opposite of what, says Bakshi, McDonaldês was asking of him around the same time. A petition filed on September 9 by Bakshi with the Company Law Board (CLB), the first port of call for corporate disputes, says that twice in 2008 McDonaldês offered to buy him out, but he refused. According to Bakshi, McDonaldês is trying to buy him out again, this time at the behest of Jatia. That is the reason why, he adds, his tenure as managing director has not been renewed (announced via a public notice on August 30), why McDonaldês is citing irregularities and is objecting to certain transactions done with Bakshiês other businesses. To a detailed questionnaire, Danya Proud, director of corporate relations at McDonaldês Asia Pacific Middle East & Africa, replied: –Thank you for your inquiry. However, as we have stated previously, this is an internal matter, and we have no further comment beyond what is outlined in the public notice (stating that Bakshi was no longer MD).” In a letter dated September 3 to McDonaldês, Bakshi has accused the company of –discriminatory and oppressive behaviour” to –fiscally disable us by hook or by crook, eventually forcibly causing us to sell out” and that it has –entered into a conspiracy” with Jatia. Difference In Strategy In May 2010, in the 15th year of its 25-year pact, McDonaldês entered into a new arrangement with Jatia. It sold its 50% stake back to Jatia, and that JV moved to the American companyês preferred mode of franchise fee and royaltyãa transition McDonaldês has been making the world over, with India (the Bakshi venture) and China being the exceptions in the developing world today. Filings with the Ministry of Company Affairs show that McDonaldês received next to nothing for that stake sale. It invested Rs 108 crore (Rs 15.5 crore as equity and Rs 92.5 crore as preference shares) in the Jatia venture, Hardcastle Restaurants. It realised just Rs 10.8 lakh and booked a loss of Rs 107.9 crore. When asked why McDonaldês sold cheap, Amit Jatia, vicechairman of Westlife Development, the company that now controls Hardcastle, told ET: –It is not completely correct.” He declined to elaborate, only adding: –We would not like to revisit this. Itês a private deal between us and McDonaldês.” On August 16, 2013, Jatia effectively merged the McDonaldês business into a listed shell company of the promoters, Westlife Development. The Westlife stock has shot up from Re 1 in June 2009 to hit an all-time high of Rs 416 on August 21, 2013, amid thin public shareholding and trading among the promoter family, raising concerns of insider trading and price rigging. –Many penny stocks exhibit these characteristics and are kept listed as shell companies for the purpose of reverse listing other companies,” says Shriram Subramanian, founder of InGovern Research Services, a proxy advisory firm. –I doubt Sebi and the stock exchanges scrutinise penny stocks rigorously.” Subramanian points out that there were inter-se promoter transfers at around Rs 40 per share in March 2012 and Rs 150 in December 2012, against the traded price of between Rs 10 and Rs 40. –The inter-se transfer at such a high price may have resulted in capital gains tax to the individual, had the trades not been executed on the stock exchange,” he says. According to Jatia, the transfers were part of the promoter group restructuring as a part of the overall consolidation process. –I donêt see any big deal with it,” he says. –I donêt need to explain to the public.” Asked whether it was done to bypass Sebiês threshold norms for illiquid stocks, he says: –110%, itês not done to bypass Sebi.” On September 28, Westlife, in which the promoter group currently owned 62% as of June 30, had a market capitalisation of Rs 5,448 crore ($872 million), largely derived by unlocking value.

1970-01-01

A tale of McDonald�s two franchise partners in India

News

McDonald�s entered India in 1995 via two partners. It played ball with Amit Jatia, but is playing hardball with Vikram Bakshi. The way the two partnerships have unravelled�financially, structurally, behaviourally�are as different as chalk and cheese. Vikram Bakshi is not lovin� it. For 18 years, he has been the corporate face of McDonald�s in India, and now his American partner, claims Bakshi, wants to shame him and then swallow him, that too without giving him his due. In contrast, Amit Jatia is lovin� it. On a video conference call from his office in Mumbai, Jatia, McDonald�s other partner in India for the same duration, leans back into his chair, and chimes that his relations with McDonald�s are steadfast, the business is growing well and the stock market is noticing. For the $27.5 billion company that prides itself on churning out burgers and fries with immaculate consistency, the contrast in the current state of being of the two men who have built its business in India is noticeable. If Bakshi is all outrage, Jatia is all poise. If Bakshi speaks of McDonald�s with acrimony, Jatia speaks of amiability. If Bakshi accuses Jatia of instigating McDonald�s, Jatia politely declines comment. If Bakshi is counting the wealth he could lose because of the hostilities with McDonald�s, Jatia is basking in the glow of new wealth. Those feelings of contrast are not new, though. They have been simmering in the cauldron of corporate actions�on the part of all three sides�over the last five years. �It�s clear that they (McDonald�s) don�t see a future with Bakshi,� says a former McDonald�s India official, on the condition of anonymity. A restaurant industry veteran, also speaking on the condition of anonymity, adds: �They (McDonald�s) would rather have a subservient Indian partner like Jatia for one half and manage the other half on its own,� he says. The current state of flux traces back to 1995, when McDonald�s entered India through an arrangement that was not its preferred way of installing its golden arches here, there and everywhere. Difference in Structure McDonald�s, globally, does not like to own its ventures or operate them. Its preferred model is a low-risk, low-hassle one: licence out its good name for a fee to a local player; on top of that, charge a royalty linked to sales. So, the more the outlets sell, the more money McDonald�s makes. Of its 34,000 outlets in 118 countries, 80% are through this franchise route. But when it entered developing countries, McDonald�s often did so via the ownership model. A case in point was India, where it entered in 1995, with two 50:50 joint ventures, one with Bakshi and the other with Jatia. �India then was not a hot market that it has become in the last few years,� says Harminder Sahni, managing director, Wazir Advisors, a retail consultancy. Yet, even in India, McDonald�s hedged its bets. Rather than have only one partner for all of India, it opted for two partners and carved out the country among them. Bakshi was given north and east, Jatia west and south. This geographical responsibility was largely synonymous with where their other business interests were located. Both Bakshi and Jatia had a footprint in real estate. �A strong brand and leader like McDonald�s, generally, won�t like to have a partner from the foods or the QSR (quick service restaurant) business wherein they discuss and debate every issue,� says Sahni. �The partner may believe that it too knows the business while they don�t. So, it�s better to have non-industry partners.� Although Bakshi is widely known as the corporate face of McDonald�s in India, he is a player in real estate in the National Capital Region, and beyond. Says a real estate consultant, on the condition of anonymity: �He is overtly aggressive, obsessed with nitty-gritty. He lacks vision as a business leader and is hard to do business with because he cites outrageous terms.� Bakshi has a scattered portfolio of properties that pivot around the hospitality business: for example, the Savoy Outlet Mall in Manesar, the Savoy Greens in Karnal�In Delhi, he owns, among many properties, the Mohan Dev Building on Tolstoy Marg, the building in Connaught Plaza that houses Wimpy�the fast-food joint that was, in some ways, a precursor to McDonald�s in the city. �Amit is a shrewd businessman and Vikram an emotional businessman,� says the restaurant industry veteran quoted earlier. With both, McDonald�s signed a 25-year joint venture agreement, which would run till 2020. Apart from sourcing from the same suppliers and coordinating for marketing spends, the two JVs did not interact much. Structurally, there was no difference between the Bakshi and Jatia ventures in the first 15 years. This changed in May 2010, when McDonald�s decided to sell off its shares in the Jatia venture in favour of its Indian partner. This was the exact opposite of what, says Bakshi, McDonald�s was asking of him around the same time. A petition filed on September 9 by Bakshi with the Company Law Board (CLB), the first port of call for corporate disputes, says that twice in 2008 McDonald�s offered to buy him out, but he refused. According to Bakshi, McDonald�s is trying to buy him out again, this time at the behest of Jatia. That is the reason why, he adds, his tenure as managing director has not been renewed (announced via a public notice on August 30), why McDonald�s is citing irregularities and is objecting to certain transactions done with Bakshi�s other businesses. To a detailed questionnaire, Danya Proud, director of corporate relations at McDonald�s Asia Pacific Middle East & Africa, replied: �Thank you for your inquiry. However, as we have stated previously, this is an internal matter, and we have no further comment beyond what is outlined in the public notice (stating that Bakshi was no longer MD).� In a letter dated September 3 to McDonald�s, Bakshi has accused the company of �discriminatory and oppressive behaviour� to �fiscally disable us by hook or by crook, eventually forcibly causing us to sell out� and that it has �entered into a conspiracy� with Jatia. Difference In Strategy In May 2010, in the 15th year of its 25-year pact, McDonald�s entered into a new arrangement with Jatia. It sold its 50% stake back to Jatia, and that JV moved to the American company�s preferred mode of franchise fee and royalty�a transition McDonald�s has been making the world over, with India (the Bakshi venture) and China being the exceptions in the developing world today. Filings with the Ministry of Company Affairs show that McDonald�s received next to nothing for that stake sale. It invested Rs 108 crore (Rs 15.5 crore as equity and Rs 92.5 crore as preference shares) in the Jatia venture, Hardcastle Restaurants. It realised just Rs 10.8 lakh and booked a loss of Rs 107.9 crore. When asked why McDonald�s sold cheap, Amit Jatia, vicechairman of Westlife Development, the company that now controls Hardcastle, told ET: �It is not completely correct.� He declined to elaborate, only adding: �We would not like to revisit this. It�s a private deal between us and McDonald�s.� On August 16, 2013, Jatia effectively merged the McDonald�s business into a listed shell company of the promoters, Westlife Development. The Westlife stock has shot up from Re 1 in June 2009 to hit an all-time high of Rs 416 on August 21, 2013, amid thin public shareholding and trading among the promoter family, raising concerns of insider trading and price rigging. �Many penny stocks exhibit these characteristics and are kept listed as shell companies for the purpose of reverse listing other companies,� says Shriram Subramanian, founder of InGovern Research Services, a proxy advisory firm. �I doubt Sebi and the stock exchanges scrutinise penny stocks rigorously.� Subramanian points out that there were inter-se promoter transfers at around Rs 40 per share in March 2012 and Rs 150 in December 2012, against the traded price of between Rs 10 and Rs 40. �The inter-se transfer at such a high price may have resulted in capital gains tax to the individual, had the trades not been executed on the stock exchange,� he says. According to Jatia, the transfers were part of the promoter group restructuring as a part of the overall consolidation process. �I don�t see any big deal with it,� he says. �I don�t need to explain to the public.� Asked whether it was done to bypass Sebi�s threshold norms for illiquid stocks, he says: �110%, it�s not done to bypass Sebi.� On September 28, Westlife, in which the promoter group currently owned 62% as of June 30, had a market capitalisation of Rs 5,448 crore ($872 million), largely derived by unlocking value.