The battle for control of the Usha Martin group has taken a new turn with Prashant Jhawar saying his cousin Rajeev has refused to implement the shareholders’ agreement signed between the two in 2009, under which he could demand executive powers in running the company and not remain just a non- executive chairman.
Also, responding to Rajeev Jhawar’s offer that he was open for a settlement, Prashant said no such offer had been made.
In the shareholders’ agreement, both Rajeev and Prashant Jhawar have the right to nominate each other as chairman or managing director with executive powers in flagship Usha Martin. In case both want to be chairman, one will have to take the job of co-chairman.
“As there was no time limit on the agreement, I asked for an executive role in accordance with the agreement in 2014 when certain serious issues with the running of the company were discovered. However, this was rejected by Rajeev and I was not given executive powers,” Prashant Jhawar said. Instead, he alleged he was ousted as non-executive chairman of the board last year. Subsequently, he filed a petition in the Calcutta High Court and also moved the National Company Law Tribunal (NCLT) against his ouster, demanding executive powers as well as ouster of Rajeev from the company.
He, however, countered his cousin’s argument, saying the understanding was that professionals would run the steel business after the managing director left in 2014. “We were exploring various ideas, including looking for a CEO or a COO for the steel business. It may be noted that both sides of the family had recruited a COO with experience and since the issue revolved around running the steel plant, the appointment of the COO addressed that, and the idea of hiring a separate CEO was dropped.”
Prashant Jhawar, however, said he had no executive oversight over the COOs and they would report to Rajeev. He added that despite pushing for the appointment of a CEO, and going to New York together with Rajeev Jhawar to meet the prospective candidate, Rajeev decided to let it pass. On Rajeev Jhawar’s claim that he was open to a family settlement, Prashant said no such settlement was offered. "There has been no offer of a settlement from Rajeev. Also, he is trying to make it look like a family dispute, which it is not. It is about questioning the running of the company as well as executing the shareholders agreement,” Prashant Jhawar said.
Prashant Jhawar has also alleged that he was ousted by the board in which his cousin's nominees voted against him, a claim to which Rajeev said he (Prashant) was removed by a resolution proposed by the nominee director of the lenders, which resorted to this extreme step because they felt that his interests were not aligned to that of the company. "The entire board had unanimously decided in favour of the resolution to remove him with me being the lone abstaining member, He has alleged that SBI officials colluded with me to ouster him. The question is, why should an institution like SBI do something like this? Rajeev Jhawar asked.
In a meeting held on Monday, the board of Usha Martin approved the re-appointment of Rajeev Jhawar as managing director for a term of five years, from May 19, 2018 to May 18, 2023. This is, however, subject to shareholders' approval. Prashant and Rajeev Jhawar hold 25.5 per cent each in Usha Martin.