Co-founder thrown out, Usha Martin family feud reaches breaking point

Basant Kumar Jhawar, co-founder and chairman emeritus of Usha Martin, has been ousted from the board of the leading wire rope and speciality steel maker at an extraordinary general meeting (EGM), the Telegraph reported.Jhawar was shown the door by the shareholders of India's leading speciality steel producer, in a vote held last Saturday. Jhawar needed 75% votes in favour to continue on the board, but failed to garner the required numbers.Saturday's vote was the culmination of an old, raging family feud at the company that counts itself among the world's biggest wire rope manufacturers. The voting pattern at the EGM was a clear indication of the company's changed dynamics; the faction headed by Basant's estranged brother Brij Kishore voted no to his continuation.Subsequent to the special resolution, Jhawar will cease to be a director and will no longer be bound by board members’ guidelines, sources have confirmed.The tale of two factionsThe two factions are Basant-Prashant Jhawar & Brij-Rajeev Jhawar, each with a shareholding of 25.5% in the company. They had been locked in an eyeball-to-eyeball confrontation for quite some time. The extraordinary GM was called to decide on the continuation of Basant Jhawar (83), formerly chairman of the company, and the reappointment of Brij Kishore Jhawar (81) to the board.Sebi regulations stipulate that a non-executive director who is above 75 can continue his term beyond March 31, 2019 only if shareholders backed his/her continuation. As a rule, 75% of the votes must be in favour for such a special resolution to pass.At the resolution, 67.3% of the votes went against Basant Jhawar with only 32.7% votes in his favour. In marked contrast, Brij Kishore secured his reappointment with an overwhelming 99.8% votes in his favour.To the dismay of the former chairman, the vote clearly showed that financial institutions and other backers with over 40% stake in Usha Martin unequivocally stayed on the side of the Brij-Rajeev faction, the Telegraph story revealed.According to a Business Standard story, inside sources revealed that the Brij-Rajeev faction and its entire group of shareholders voted against Basant Jhawar at the resolution. However, the Basant-Prashant faction and its shareholder group chose not to oppose Brij Kishore's re-induction into the board of directors."Rajeev Jhawar and his group of shareholders voted against the continuation of founder Basant Jhawar in the UML board. Basant Jhawar and his group of shareholders did not oppose the continuation of Brij Jhawar in the board," The Telegraph quoted inside sources as saying.A history of feudThe row, continuing for a while, reached a a high point when the board ousted Prashant Jhawar as non-executive chairman in 2017. The move followed a Rs 4,500-cr steel deal with the Tatas which Basant-Prashant had voted for. At the centre of the feud was how to use the proceeds of the deal.According to various unsubstantiated reports, the Prashant-Basant group tried to quietly sell its stake to Tata Steel.A day before the EGM, Basant Jhawar wrote a letter objecting to the proposed utilisation of the deal proceeds, sources revealed. The board, chaired by GN Bajpai, voted against this objection.Usha Martin board had made Bajpai, who is now 76, chairman after Prashant Jhawar’s 2017 ouster. Former LIC and Sebi chief Bajpai, the company's chairman till the end of FY 19, did not seek reappointment after his term got over. The company had informed stock exchanges of the same on March 31.After Jhawar's ouster there could now be a fresh challenge to the deal with Tata Steel, the Telegraph story said.

from Economic Times https://ift.tt/2V7SSmE