Basant Kumar Jhawar, the former chairman of Usha Martin and one of the founder promoters of the steel and wire rope maker, has been ousted from the company’s board of directors.

A special resolution failed to secure the necessary approval of 75 per cent of the shareholders who voted on Saturday. The voting pattern has reopened wounds from a raging family feud after the faction led by estranged younger brother Brij Kishore voted against the resolution.

What the former Usha Martin chairman will find even more galling is the fact that the special resolution seeking the reappointment of Brij Kishore (81) sailed through after securing over 99 per cent of the votes polled.

It indicated that financial institutions and others — who together hold over 40 per cent of the shareholding in the company — chose to firmly back the Brij Kishore faction while voting against Basant Jhawar.

The resolution on 83-year-old Basant Jhawar received only 32.7 per cent of the votes in support, while 67.3 per cent of the votes went against it.

The divergence in the polling result brings to the fore the ongoing feud between the two founding promoters of Usha Martin Ltd (UML), which has been reeling under a burden of debt and heavy losses.

Last September, Tata Steel had agreed to buy the steel business and coal and iron ore mine from UML for about Rs 4,300 crore to trim its debt. Basant and Prashant Jhawar had voted in favour of the sale after raising objections to the manner in which the sale proceeds would be used.

The two factions of the Jhawar family have been at loggerheads ever since Prashant Jhawar, son of Basant, was removed as the chairman of the company at the insistence of principal lender, the State Bank of India, in April 2017 for non-cooperation. The two groups have been locked in several legal disputes before various fora.

Brij’s son, Rajeev Jhawar, is the managing director of Usha Martin and firmly in control of the affairs of Usha Martin.

A deal gone sour?

One of the interesting highlights of the voting on the two resolutions is that the Basant Jhawar faction did not object to the re-appointment of Brij Kishore.

The Basant Jhawar faction chose to abstain from voting. The results show that Brij Kishore would not have returned to the board if the Basant-Prashant faction had voted against the resolution. It is not immediately known why Prashant Jhawar, who spends his time in London, and his father, who was chairman emeritus, did not vote against Brij Kishore.

The Brij Kishore faction did not extend the same courtesy. But even if they had, Basant Jhawar would have still been voted out because of the overwhelming vote against him by the institutional shareholders.

The Basant-Prashant faction did, however, vote against the appointment of Pravin Jain who is the joint MD of the wire and wire rope business. However, since this was an ordinary resolution, only a simple majority was required. The resolution on Jain polled 66.28 per cent of the votes in favour and 33.71 per cent against. Rajeev Jhawar could not be reached for comment. In the recent past, the Basant Jhawar-led faction had voted against his reappointment as the managing director. Since it was also an ordinary resolution, he managed to scrape through.

What next

Sources close to the Basant-Prashant faction have hinted that there could be a fresh challenge to the Tata deal after the ouster of the former Usha Martin chairman.

“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,” said a source close to the Prashant camp.

He drew attention to a letter written by Basant Jhawar on March 29, a day before the extraordinary general meeting, in which the former chairman had objected to the proposed utilisation of the proceeds from the sale of the steel business to the Tatas.

The source added: “This issue was raised by Basant Jhawar and the board, chaired by G.N. Bajpai, voted against this objection. Basant Jhawar will cease to be a director from tomorrow and will no longer be bound by board members’ guidelines.”

Bajpai, a former chairman of Sebi and the LIC, was the chairman of Usha Martin till March 31. He did not seek re-appointment through a special resolution. The board had made Bajpai, who is now 76, chairman after Prashant’s ouster.

There has been some talk that the Basant faction has quietly entered into an understanding for the sale of its stake in UML to the Tatas. This could not, however, be confirmed from either side.

The promoters together hold a 50.66 per cent stake in UML and the two camps appear to control an equal number of shares.