The Usha Martin board, in its meeting on Saturday, decided not to opt for fresh capital infusion in the company following the directives of the National Company Law Tribunal (NCLT).
The board had earlier decided that the company’s promoters, Prashant Jhawar and Rajeev Jhawar would infuse Rs 45 crore each to help the company pay off debts and for other purposes.
However, on Thursday, the company’s ousted chairman Prashant Jhawar, who is also a promoter, board member Basant K Jhawar and other promoter shareholders had appealed to NCLT to stay the board meeting scheduled on Saturday.
Although the NCLT declined to stay the meeting, it directed the parties to maintain status quo on the shareholding pattern in the company.
A company source said the decision taken on Saturday is in accordance to the Bench’s directives.
“The fresh infusion would result in changing the shareholding pattern of the company. Although the promoters would have infused the same amount, the public shareholding would have remained untouched. Thus, overall the shareholding (pattern) would have changed, which would have been a violation of the Bench’s directive,” the source said.
The Basant-Prashant Jhawar faction, together with Usha Martin Ventures Ltd and Peterhouse Investments India Ltd, all of whom are promoter shareholders, had moved the Kolkata Bench of the NCLT seeking appointment of a special officer or administrator to supersede the current board and to prevent the company from infusing fresh equity.
The resolution proposed at the board meeting on Saturday was over infusion of Rs 90 crore in the company by issuance of convertible equity warrants.
“The infusion of fresh capital is per a prior agreement reached between the lenders and the promoters. The infusion will help in repayment of loans among other things,” Rajeev Jhawar had earlier said.
In the petition before the NCLT, the Basant-Prashant Jhawar faction had alleged mismanagement of the company by Rajeev Jhawar, and oppression of shareholders. The faction also sought to restrain the current management from selling or disposing of any immovable asset or property of the company.
It also alleged that the board meeting convened on April 25 this year at the behest of the State Bank of India, when Prashant Jhawar was removed as the chairman and Basant Jhawar stripped off his powers on the board, was illegal. The same day, in the board meeting, former Sebi chairman G M Bajpai was appointed as the company’s chairman.
The Bench has directed the concerned parties to file their replies and fixed the petition for hearing on September 14.
The source said the shareholding pattern of the company cannot be modified before the NCLT comes up with its decision. However, the company can borrow capital from lenders or other sources if needed.