The Prashant Jhawar family, the aggrieved promoter group of steel wire rope maker Usha Martin Ltd, has offloaded a fresh lot of shares in the open market, widening the gap with the other faction of the family.
The company informed the bourses last week that Peterhouse Investments Ltd, based in Guernsey, UK, sold 750,000 shares, paring the family faction’s stake by 0.25 per cent.
Peterhouse is a promoter group company linked to Prashant Jhawar.
After the latest share sale, the Prashant Jhawar-Basant Jhawar camp’s holding has dipped to around 22 per cent.
Sources said this meant that the promoter group headed by Rajiv Jhawar-Brij Jhawar now has a clear margin of around 9 per cent.
Prashant Jhawar could not be reached for comment on the latest development.
The father-son duo has been paring their stake in UML shortly after the company sold the steel plant to Tata Steel and Basant Jhawar was ousted from the board in March-April 2019.
Basant Jhawar, who is credited with setting up the enterprise, was the chairman emeritus of UML. His son Prashant Jhawar, who lives in London, was a director before stepping down in September last year, shortly before the annual general meeting when his reappointment was due to come up.
Rajeev Jhawar is the managing director of the company and is firmly in control of the affairs of UML. His father Brij Jhawar, brother of Basant, also stepped down from the board later, leaving only Rajeev as the promoter family representative on the board.
Before two sides of the family became embroiled in a very public spat, Prasant-Basant had an edge over the other side, owning about 25.5 per cent of the company with Rajeev-Brij holding around 24.5 per cent.
Prashant blamed his cousin’s poor management for UML’s troubles that were exacerbated by a ballooning debt which eventually led to the sale of the steel unit to Tata Steel.
While Prashant-Basant periodically sold shares, Rajeev bought from the market to shore up his holding in the company. He is understood to have scooped up 4.8 per cent in UML in the last financial year alone. Entities controlled by him bought shares this fiscal too.
The promoter holding in UML stood at 50.66 per cent as on March 31, 2019. Despite one section of the family diluting its position, promoter holding went up to 53.52 per cent as on June 30, 2020. It came down marginally to 52.83 per cent as on September 30, 2020.
The widening gap between the two sections of the family, who have fallen out of each other, will shift the balance of power in favour of Rajeev Jhawar further and may come in handy to pass special resolutions at the shareholders’ meeting.
Even as the company has turned profitable post debt reduction — billed as one of the successful turnarounds of stressed assets — there are challenges galore before the MD and the company.
The Central Bureau of Investigation has filed a First Information Report (FIR) against Rajeev Jhawar, the company and certain other individuals for alleged offences under the Prevention of Corruption Act.
Prior to that the Enforcement Directorate attached land parcels under the Prevention of Money Laundering Act in connection with export and domestic sale of iron ore worth Rs 190 crore in contravention of the mining lease.
