Usha Martin Ltd’s founder Basant Jhawar and his son, Prashant Jhawar, who together own 25 per cent stake in the company, on Monday expressed concern on the ‘end use of funds’ likely from the sale of its integrated steel-making facility.

Tata Steel had, on Saturday, entered into an agreement to acquire the 1 million-tonne steel business of debt-ridden Usha Martin Ltd (UML) for a cash consideration of ₹4,300-4,700 crore.

“Tatas are an excellent business house and their involvement in the steel business of Usha Martin will add value to the stakeholders. But the end use of the funds is opaque. As 25 per cent shareholders, we are concerned about the liabilities which will fall on the residual business and its capacity to service the same,” said an official statement from the Jhawars.

The promoter-directors also sought to know how much of the term loans, working capital, liabilities to unsecured creditors and other liabilities will be cleared and the quantum that would be carried forward and the burden it will put on the residual business – which is that of wire rope. Accordingly, they have sought requisite details from the board of directors.

“No details are available, creating doubt over transparency and management accountability. Since no details are on the table our concern over diversion of funds continues,” the statement said.

It is to be noted that a consortium of lenders led by State Bank of India had, in April 2017, removed Prashant from the post of Chairman following his refusal to pledge shares as a part of a loan covenant with the lenders.

Prashant subsequently moved the National Company Law Tribunal (NCLT). The company’s attempt to raise capital through a warrant issue, to be converted into shares on a preferential basis at a later date, was also stalled following an order from the NCLT.

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