The Ministry of Corporate Affairs and the Office of Registrar of Companies (West Bengal) have summoned as many as 14 directors and officers of Usha Martin Ltd (UML) on January 11. The summon has been issued based on complaints raised by Basant Kumar Jhawar against the company.

The directors and officers will be required to provide clarifications and submit relevant documents.

It is to be noted that Tata Steel had late last year entered into an agreement to acquire the 1-million-tonne steel business of debt-ridden UML for a cash consideration of ₹4,300-4,700 crore.

While Usha Martin had indicated that the proceeds from the sale would be used for clearing debts, its founder Basant Jhawar and his son Prashant Jhawar, who together own 25 per cent stake in the company, had expressed concern on the end use of funds.

However, according to sources, the developments will not have any material impact on the deal, which is likely to go through in the next couple of months.

The Ministry had asked for all the minute books of board meeting and annual general meetings relating to the issues mentioned in the complaints for the last five years. Facing huge losses, the management of Usha Martin under Rajeev Jhawar decided to sell the steel business to Tata Steel and said the proceeds would be used to retire debt.

Usha Martin would stick to its wire rope business after exiting from steel.

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