The ouster of Basant Kumar Jhawar, former Chairman and a co-founder of Usha Martin Ltd (UML), is unlikely have any significant impact on the sale of the company’s steel business to Tata Steel, sources said. It might, however, lead to delays, they added.

In September 2018, Tata Steel had announced acquisition of 1-million-tonne steel business of debt-ridden Usha Martin for a cash consideration of ₹4,300-4,700 crore. The acquisition process is to be completed in 6-9 months, that is by June 2019.

The Kolkata-based UML management on Monday reiterated that the decisions of the board and shareholders to sell the steel business to Tatas are on track. “The company is unable to comment on any aspects, especially related to matters which are sub-judice,” it said in a press statement. The two promoter factions — Basant-Prashant Jhawar and Brij-Rajeev Jhawar — are locked in a bitter fight which had marred the previous restructuring attempts in the debt-ridden company. Each of the promoter group hold 25.50 per cent stakeand the remaining 49 per cent is held by banks, financial institutions and public shareholders.

As on March 31, 2018, UML had ₹4,600-crore debt against a consolidated turnover of ₹4,767 crore, of which ₹3,441 crore was contributed by the steel business, the remaining came from its wire-rope business. The company had planned to utilise the entire sale proceeds to repay the debt.

Delay in sale completion?

Sources said the removal (of Basant Jhawar) from the board will not have in itself any effect on the deal with Tatas. However, due to complaints levelled by him, as reported in the press recently, there could be a delay in completion of the sale

In the extraordinary general meeting held on March 30, Basant (83) was ousted from board, with only 32.7 per cent of votes in his favour. Nearly 67.3 per cent of votes went against the resolution seeking his continuation as non-executive director . On the other hand, a special resolution seeking reappointment of Brij Kishore Jhawar (81) received over 99 per cent votes in its favour.

“Though the management headed by Rajeev Jhawar had sent a resolution for my continuation to the board for consideration and approval, the shareholder meeting voted against my continuation. By voting against, they have flouted the shareholders’ agreement between the two families,” Basant Jhawar said in a statement.

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