Ex-chairman of Usha Martin Prashant Jhawar has supported the takeover of the company’s steel business by Tata SteelNSE -0.82 %, Jhawar said in a statement on Monday adding that he will be voting in favour of the resolution at the upcoming shareholders’ meeting.
However, Jhawar is concerned about the specific utilisation of sales proceeds towards repayment of loans, especially the contingent liabilities in the residual business. He also said that he has supported the move despite his earlier concerns of fund diversion also remaining unaddressed.
“We are confident that TSIL will run the assets in the way they deserve to be administered and enhance the legacy,” Jhawar said in a statement.
“We had earlier welcomed the possible involvement of the Tatas in the management of Usha Martin’s Steel Division resulting in value for all stakeholders. In order to facilitate this, we have instructed our lawyers to support the resolution for the sale of the steel division of Usha Martin to the Tata Sponge Iron LtdNSE 0.77 % (TSIL), at the forthcoming Shareholders meeting,” Jhawar said. His decision has also been conveyed to the lead banker of the company, State Bank of India (SBI).
Jhawar was ousted as the non-executive chairman of the company last year after eight directors of the company observed that his interests were not aligned with the interests of the company. He along with father and founder of Usha Martin Basant Jhawar (also ousted as chairman emeritus) still sit on the board and hold 25.5% stake in the company’s shareholding.
Jhawar is concerned that contingent liabilities amounting to around Rs 860 crore that include claims from the state government of Jharkhand pertain to irregularities in the mining operations allegedly carried out by the present management led by MD and cousin Rajeev Jhawar. “We believe, should such claims require settlement it may result in additional debt being loaded on to the residual business. It would be in the best interest of all stakeholders, if the management and the board come out with specific plans to find a resolution,” Jhawar said.
Source: Economic Times