Prashant Jhawar has resigned as a non-executive director from the board of Usha Martin.
His resignation letter addressed to the board of directors alleged several illegalities and non-compliance of the provisions of law by the directors and management in running the company.
Jhawar said in the letter, "The extent of mismanagement of the company and the apparent apathy of the board of directors of the company is alarming including shielding the illegal acts of the company. I have been raising red flags for a while now and all of my warnings have fallen on deaf ears."
Jhawar's resignation came days before the company's annual general meeting (AGM) where a resolution pertaining to his reappointment was to be placed before shareholders for approval. The AGM is scheduled for September 21.
Earlier in March this year, Basant Kumar Jhawar, chairman emeritus and a co-founder at Usha Martin, was voted out from the board of directors by shareholders at an extraordinary general meeting (EGM).
It was a special resolution which required 75 per cent of the votes. The rival promoter group and the entire block of public institutions had voted against Basant Jhawar.
The two promoter factions of Basant-Prashant Jhawar and Brij-Rajeev Jhawar have been at odds with each other for a while now. Each has a shareholding of 25.5 per cent.
The family row peaked when Prashant Jhawar was removed as non-executive chairman in 2017 by the board. Rajeev Jhawar is the managing director. Prashant Jhawar, subsequently, had filed a petition at the high court here and before the National Company Law Tribunal.
In a statement regarding the resignation of Prashant Jhawar, Usha Martin said the resignation comes in even as Usha Martin Limited led by its current managing director and board has managed to complete the transaction of sale of its steel business, which has ensured that no lenders were required to take a haircut and the finances of the residual wire rope business of the company are back in the black.
Usha Martin sold its steel business to Tata Steel earlier this year. "It is a real value deal despite the prevailing business environment." The Tata Steel deal was approximately Rs 4,300 crore and helped pare Usha Martin's debt from a peak level of Rs 4,500 crore to Rs 500 crore.
"In his resignation, Prashant Jhawar has once again cited the various allegations and criticism that he has continued to allege about the company which had caused quite a heartburn and jeopardised the prospects of the company to achieve a turnaround," the company said.
Prashant Jhawar mentioned in his letter that attempts at seeking a board meeting to discuss the Provisional Attachment Order of the Enforcement Directorate were frustrated on the pretext of a lack of quorum. In August, the ED had provisionally attached immovable properties of Usha Martin valued at around Rs 190 crore.
Usha Martin also said in its statement that Prashant Jhawar's reappointment was to be taken up at the AGM slated for September 21. "His father, Basant Jhawar, was removed from his directorship earlier this year by the shareholders of Usha Martin at the shareholders' meeting dated March 30, 2019."