The lenders had an earlier agreement with the promoters to infuse equity of Rs 900 million, Rs 450 million by Rajeev Jhawar and Rs 450 million by Prashant Jhawar. But with the NCLT order in place, this was not possible.
"We will fight hard to vacate the NCLT order," said Rajeev Jhawar, but at the same time, he was open to a family a settlement. "I am always open for a settlement," but he added that there would have to be willingness on the other side as well.
"If a settlement happens, it would include all the companies," said Rajeev Jhawar. In Usha Breco, Prashant Jhawar has a majority, in Prabhat Khabar, Rajeev Jhawar has a majority, in Usha Martin, the two sides have an equal majority.
"The entire management team and the board have worked together to see that the company doesn't default. We have worked hard to see that the company doesn't get into the same situation as some of the other players. Even at the cost of squeezing the working capital, we have kept the business free of default and if the market improves, things can definitely improve from here and we can find a solution," said Rajeev Jhawar, the managing director of the company.
Usha Martin has long-term debt of Rs 32 billion and working capital debt of Rs 5 billion.
In a communication dated December 15, Basant Jhawar had made allegations against Rajeev Jhawar to the Prime Minister's Office and the finance ministry over fund diversion.
In the letter, Basant Jhawar said he found that the company had set up spurious companies
in different countries for syphoning of funds, sale of raw material as scrap to the tune of millions.
"This caused such a liquidity problem in the company that its share price crashed from Rs 101 a share in 2010 to even less than Rs 10 a share in 2016."
Asking for a detailed investigation against the company, Jhawar said an independent audit of the company was a must and money diverted to offshore accounts should be brought back to repay bank debt worth Rs 54 billion.
The letter also said that the company's financial performance declined due to deliberate mismanagement and rampant diversion and syphoning of funds. "Projects at the cost of Rs 26 billion was commissioned in 2014 but the company shows no increase in output and on the contrary shows a decline in its gross EBIDTA. The letter has been sent to the PMO with copies to the income tax department and enforcement directorate."
Rajeev Jhawar countered the allegations by saying that Basant Jhawar was the chairman of Usha Martin till 2010 and Prashant Jhawar the chairman till April 2017. "Why are these issues being raised now. Today, they are making these allegations, but they were very much part of board decisions," he asked. He also said that his father was a non-resident Indian for the last 20 years and they were compliant with all regulations.
Rajeev Jhawar said the allegations were being used to divert attention and that bringing in equity into Usha Martin was a priority for the company. "If he (Prashant Jhawar) doesn't bring in equity, I am ready to bring in the equity from my side, and if required, we can bring in equity from outside also. End of the day, we must look at the institutions' interest. If the equity market is good, we can get investors. All options are available. I am open to diluting my own stake if that helps," said Rajeev Jhawar.
Usha Martin is also in the process of finding buyers for its wire ropes division. It has got offers from three international companies.