| Vikram Bakshi takes fight to Big Mac, says he's the boss |
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New Delhi, 5 December The battle between Vikram Bakshi and McDonald's, his joint venture (JV) partner, has now spilled over to the operations of the fast- food chain in India, with Bakshi writing to his top managers alleging McDonald's is doing everything to bring the JV to a " grinding halt" by its stalling and " invasive" tactics. In a letter to the senior management of Connaught Plaza Restaurants Pvt Ltd (CPRL), the JV, Bakshi made it clear on Thursday that he was still the boss. Bakshi said the attempt by McDonald's to terminate its agreement with him was illegal and not binding and would have no bearing on the shareholding pattern ( the partners hold 50 per cent each), board composition ( both sides have two nominees) or the working of the company. He requested his managers not to be distracted by such notices of termination and strive to do their best and protect the company's interest and people. Bakshi was unavailable for comment. A spokesperson for McDonald's did not respond to an email from Business Standard. Bakshi's letter, the latest salvo between the two estranged parties, which takes hostilities to a new level, has come days after the US fast food chain sent a notice to Bakshi seeking to terminate the JV agreement under which they run retail operations in North and East India. It also sent a notice to Bakshi requesting the settlement of their dispute in a court of arbitration in London, even while a petition in the Company Law Board ( CLB) was being heard. Bakshi had gone to CLB in September petitioning for his reinstatement after McDonald's ousted him as managing director of the joint venture on August 30 and appointed a three- member board to run the business. CLB had asked both sides to maintain the status quo as it heard the plea. McDonald's also went to the Delhi High Court a few days ago to restrain Bakshi from selling his shares, directly or indirectly, or creating third- party interest in CRPL till the dispute was resolved. Bakshi's letter follows a communication sent by Bob Larsen, senior vice- president &international relationship partner of McDonald's in Asia, on December 3 to McDonald's Delhi employees, saying the company had terminated its joint venture agreement relating to CPRL with Vikram Bakshi. He had said until the legal formalities were completed, CPRL would continue to be managed by a board. Larsen had said McDonald's ensured the job security of CPRL employees in North and East India and continued to build the brand in the country. Turn to Page 18 > Writes to managers days after US firm sent notice to terminate JV agreement ANOTHER SALVO |THE LETTER: Bakshi says McDonald's is using stalling and invasive tactics to bring the JV to a grinding halt; the managers should not get distracted by the notices terminating his JV agreement |REBUTTAL: Bakshi also says the termination agreement is illegal and does not have any bearing on shareholding, board composition or running of CPRL |LIKELY TRIGGER: McDonald's' Bob Larsen, in his letter to Delhi McDonald's employees on December 3, had talked about termination of the JV agreement and said CPRL would be managed by a board till legal formalities were completed |
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Vikram Bakshi takes fight to...
In his strongly- worded rebuttal, Bakshi has said he is astounded by Larsen's claim that McDonald's' intention is to put " CPRL's business on a strong growth path". Bakshi says the way McDonald's has behaved since August 2013 is completely the opposite. He argues its act of not allowing funds, either through sale of the Basant Lok property ( an upscale commercial centre) or through further borrowings has reduced store openings target for year 2013 to less than half.
Bakshi has told his managers that the termination notice is a blatantly malafide attempt on the part of McDonald's India to oust those that have been the caretakers of McDonald's brand for the past 18 years. He says this is part of the company's oppressive acts since 2008. It has been hounding its CPRL partner to sell its equity in the JV, he says.
Apart from its JV with Bakshi, McDonald's also has another partner in the Jatias of Hardcastle Restaurant, with which it has a franchise agreement to run operations in West and South India.
| Nokia unit staff to add itself in I- T case |
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Chennai, 5 December Employees of the Nokia facility in Sriperumbudur, Tamil Nadu, have decided to add themselves as party to a case between the company and the Income Tax Department continuing at the Delhi High Court. This follows the company's and its origin country Finland's foreign minister's recent statements that the plant would not be included in a deal with Microsoft unless unfrozen by the department before December 12. Saravanakumar, president of the plant union, Nokia India Thozhilar Sangam, that claims to have the support of 4,800 employees, confirmed the impleading and said they were planning to move to the high court on Thursday, three days before the next hearing. While refusing to give any details, he said, " We will decided to take legal steps and will move the high court on Thursday to implead us in the case and consider the life of over 30,000 people who depend on this factory." EU approves deal The European Union antitrust regulators have approved Microsoft's $ 7.3- billion acquisition of Nokia's mobile devices business without conditions. The European Commission on Wednesday said, " The Commission concluded the transaction would not raise any competition concerns." 'Nokia must clear tax liability A senior finance ministry official on Thursday said Nokia, which is selling its mobile devices business to Microsoft, would have to clear a tax liability of around ₹ 6,500 crore. " Nokia will have to pay the total tax liability," the senior official said. PTI |
| No- confidence motion passed against Amul co- op chief |
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Ahmedabad, 5 December Aday after a division Bench of the Gujarat High Court allowed Gujarat Cooperative Milk Marketing Federation (GCMMF) to hold a requisition meeting, members of GCMMF, owner of the Amul brand, have passed a no- confidence motion against the federation's chairman, Vipul Chaudhary, to safeguard the interests of the ₹ 13,700- crore entity. The decision taken by the GCMMF board members is, however, subject to the high court's approval. On Thursday, at a requisition meeting of GCMMF board members at the federation's headquarters in Anand, 13 of the 16 voting members supported the no- confidence motion, said sources close to the development. Chaudhary, also a representative of the Mehsana District Milk Producers' Union Ltd, and Ramsinh Parmar of the Kheda District Milk Producers' Union, walked out of the meeting while the motion was being passed; the Junagadh union representative was absent from the meeting, sources said. Those supporting the noconfidence motion against Chaudhary included the member unions of Ahmedabad, Banaskantha, Valsad, Surat, Vadodara, Panchmahal, Sabarkantha, Amreli, Bhavnagar, Gandhinagar, Surendranagar, Rajkot and Kutch. According to these members, the no- confidence motion was passed because the board members felt Chaudhary's manner of administration was not in the federation's interests. They said the motion was needed to safeguard the interests of the state's three million milk producers. Earlier, the federation's board of directors had secured the approval of a division Bench of the Gujarat High Court to discuss ano- confidence motion against Chaudhary. The court had said any decision on a noconfidence motion should not be implemented without its consent. The division Bench ruled the federation could convene a meeting to discuss a no- trust motion against Chaudhary, following an appeal by GCMMF and four other member unions. Now, the board members will place the resolution before the Gujarat High Court. For full reports, visit www. business- standard. com Boardroom drama On Thursday, the GCMMF boardroom drama continued, with Chairman Vipul Chaudhary seeking postponement of the board's requisition meeting. In aletter to the commissioner (cooperatives), Chaudhary claimed the agenda of Thursday's meeting was not disseminated and, therefore, the meeting be postponed till the agenda was circulated in |
| FinMin presents road map for regulators to follow best global practices |
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Mumbai, 5 December The finance ministry has prepared broad guidelines for all regulators to modify their operations in line with best global practices, according to the recommendation of the Financial Sector Legislative Reforms Commission ( FSLRC). Officials said the proposals have been sent to the Reserve Bank of India ( RBI), Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority, Pension Fund Regulatory and Development Authority and the Forward Markets Commission. The ministry has urged these proposals to be vetted by the individual board of the respective regulators and be implemented at the earliest, said official sources. One of the major recommendations is to bring in transparency in regulatory meetings. Contrary to the current practice of just floating a draft after the policy decision is through, the current mechanism envisaged will float a paper even before the decision is made. This is to elicit public response across stakeholders before the policy is made in principle. Explaining it, official sources said it would be like floating the idea at the beginning. Thereafter, at each stage, public opinion will be taken in any matter meant to become a mandatory provision for the public — be it guidelines, order, circulars, etc. The idea is not to catch the public off guard on any policy decision unless it is sensitive for the market, they added. This proposal is even made for the monetary policy meetings of the RBI which have been kept completely out of the public domain. However, this may take time, said sources. Secondly, such disclosures have been also suggested for customers of a financial service so that their views are taken prior to a decision on a policy being made. According to officials, such recommendations have been made in areas of regulatory governance, transparency and improving operational efficiency aimed at customer satisfaction. To this effect, based on the broad guidelines of the ministry, all financial regulators including the Forward Markets Commission have been asked to finalise an action plan. Such directions have been given to impose accountability on the regulators. According to FSLRC recommendation, the Commission has adopted five pathways to accountability. First, the processes that the regulator must adhere to have been written in considerable detail in the draft code. Second, the regulationmaking process ( where Parliament has delegated lawmaking power to regulators) has been established in the draft code with elaborate checks and balances. Third, systems of supervision have been established in the draft code with emphasis on the rule of law. Fourth, strong reporting mechanisms have been established in the draft code so as to achieve accountability. Finally, a mechanism for judicial review has been established for all actions of regulators through specialised tribunals. GUIDELINES FOR GUARDIANS |Proposal sent to RBI, Sebi, Irda, PFRDA and FMC by the finance ministry to modify their operations in sync with FSLRC recommendations |Ministry has urged proposals to be vetted by the individual board of the respective regulators and implement them at the earliest |Recommends floating of paper before decision is made to elicit public response across stakeholders |At each stage, public opinion to be taken into account in any matter meant to become a mandatory provision for the public |Recommendations made in areas of regulatory governance, transparency and improvement of operational efficiency aiming at customer satisfaction |
| SKS Microfinance dismisses claims of irregularities at its AGM |
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Kolkata, 5 December SKS Microfinance, the only listed microlender in India, on Thursday dismissed claims of anomalies in its 10th annual shareholders meeting. The microfinance company said the allegations made by SKS Trust Advisors, one of its largest shareholders, were factually incorrect and legally untenable. The proxies issued and the votes cast by some of the shareholders at the companys annual general meeting ( AGM) on Tuesday in Mumbai had raised the eyebrows of the trustees of SKS Trust Advisors, who in turn wrote to the Securities and Exchange Board of India (Sebi) questioning it. "Even though I have given your allegations anxious consideration, I regret to conclude that this entire sequence of events clearly suggests your letter is merely an afterthought. In summary, none of the points raised in your letter is factually correct or legally tenable," P H Ravikumar, nonexecutive chairman ( interim) of SKS Microfinance, said in a letter to Biksham Gujja, chairman and managing director of SKS Trust Advisors. A copy of this letter was also sent to Sebi, National Stock Exchange, BSE and the Registrar of Companies, Mumbai. SKS Trust Advisors, currently holding a12.6 per cent stake in the microfinance firm, had said the proxies were incomplete, the proxy closure time was not mentioned, and the register of proxies was not produced for inspection despite a request from the shareholders. SKS Trust Advisors also alleged the authorisation letters or proxies submitted by five entities — Crown Capital, Kismet SKS, Kumaon, Westbridge and Sandstone — were not authenticated by respective authorities. It questioned the validity of the resolution that was passed re- appointing M R Rao as managing director of SKS Microfinance and requested Sebi to direct the microlender to hold back the poll results till an independent enquiry is conducted. SKS Trust Advisors also demanded a recount of the valid votes cast by proxies. "The entire ballot process was supervised by an independent and professional scrutiniser along with two public shareholders. There is no basis to reverify the resolutions duly passed at the AGM or to suspend the decisions that were correctly taken at the meeting," Ravikumar wrote in his letter to Gujja. SKS Microfinance also issued a statement clarifying it maintains a proxy register, but no shareholder ever asked for it either at or before the AGM. It also dismissed claims that proxy forms were not proper saying that the forms in question comply with all requirements of law. It may be noted that only a few months ago SKS Trust Advisors had requested the microfinance company to induct Vikram Akula as its nominee on the board. Gujja is known in the industry as a close friend of Akula. In 2011, Akula had to step down as the chairperson of the micro- lender following alleged conflict between him and other board members over the running of the company. |
| 'Didn't get proposal for board slot from SKS Trust at AGM' |
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SKS Trust Advisors claims the proxies at the microfinance firm's annual general meeting (AGM) were improper. Why? The MBT ( mutual benefit trusts whose sole trustee is SKS Trust Advisors) had four representatives at the AGM. But none of them had sought a review of the register of proxies. We had received only one notice for an inspection of the proxy forms, and we made these available for inspection at the AGM. Since they did not review the register, I don't know how they can claim the proxies were improper. Though it is not obligatory, we are offering to make these documents available for inspection at our registered office. SKS Trust Advisors or any other shareholder can come and review the register if they want, with due notice. SKS Trust Advisors also alleges the proxies submitted by five entities were not authenticated by the authorities concerned. Is that true? The names mentioned by SKS Trust Advisors ( in its letter to the Securities and Exchange Board of India) were different from the names of shareholders whose proxies were contested. The proxies of only four entities, not five, were contested at the AGM. I can confirm the proxies submitted by these entities were properly authenticated, according to law. One shareholder, P Prasanna Lakshmi, had submitted a handwritten note, stating the proxy forms of these shareholders weren't proper. But she did not explain why she thought so. We are ready to show the proxies and supporting documents, if required. At the AGM, did SKS Trust Advisors request the nomination of one of their representatives on the SKS Microfinance board? According to the Companies Act, any shareholder holding more than 10 per cent in the firm could have written to us 14 days before the AGM and asked for a resolution in favour of their nominee as a director. However, we did not receive any such proposal invoking this provision from any shareholder. SKS Trust Advisors claims the resolution seeking reappointment of M R Rao as managing director " barely scraped through" and the results would have been different if incomplete proxies were precluded from the valid votes. Please share the details on the voting results on this resolution. Shareholders holding 54.9 million shares voted in favour of the resolution, while shareholders holding 16.8 million shares voted against it. The votes in favour represented 50.74 per cent of the paid- up capital, while those against stood at only 15.59 per cent of the paid- up capital. Also, not all shareholders voted. Of the votes polled, 76.5 per cent were in favour of the resolution, vice- president ( AVP), including employees in the field. It included field assistants, assistant branch managers, associates, executives and helpers— anyone below the rank of AVP. It was a special resolution. For special resolutions to be approved, votes in favour must be three times the votes against the resolution. Unfortunately, at the AGM, the votes in favour of this special resolution weren't three times the votes against it. SKS Trust Advisors, one of the largest shareholders in SKS Microfinance, has questioned the proxies issued and the votes cast by some promoters and public shareholders of the company at its annual shareholders' meet on Tuesday. The micro- lender, however, has dismissed the allegations, saying the claims are factually incorrect and legally not tenable. SKS Microfinance's chief financial officer ( CFO) S DILLI RAJ, in an interview with Somasroy Chakraborty, throws light on the controversy. Edited excerpts: SDILLI RAJ CFO, SKS Microfinance |
| apex court against order in Sinha appointment case |
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New Delhi, 5 December Former Securities and Exchange Board of India ( Sebi) whole- time member K M Abraham ( pictured) has moved an application of impleadment in the Supreme Court seeking to become a party in the writ petition challenging the appointment of U K Sinha as chairman. Abraham has also applied for the expunction of the courts remarks about him in a recent order disposing the writ petition last month. Bangalore- based lawyer Arun Kumar Agrawal had filed a writ petition challenging the Sebi chiefs appointment. Though Abraham was not a party, Agrawal had cited a letter written by him to the prime minister in 2011. In November, the court had dismissed the petition making severe remarks against the petitioner and Abraham. Abraham is additional chief secretary of the Kerala government in Thiruvananthapuram. He said in the petition the " disparaging remarks" would cause " grave prejudice" and affect " his career prospects." " We will know the tentative date of listing in a day or two," Abrahams lawyer told Business Standard. "It is filed that the court, while disposing the petition, makes specific remarks against the applicant, not a party to the petition but whose private correspondence was relied on by the petitioner to make his case," Abrahams application said. The court had observed in the November judgment the allegations by Abraham during his tenure as a wholetime member against the chairman were done with an ulterior motive and were not supported by any material. It was observed the allegations by the applicant were motivated and did not espouse any public interest. Citing the principle of law that no one be condemned unheard, the petition said, " The presence of the applicant is necessary to enable the court to effectually and completely adjudicate and make appropriate directions." The court had come down heavily on Agrawal referring to him as a " stool pigeon" respresenting " phantom corporate lobbies". Agrawal has filed a separate application seeking expunction of these remarks. Sinha was appointed chairman in February 2011. Three months later, Abraham had written to the prime minister, making certain allegations against Sinha. |
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