Two former chairmen of beleaguered firm Usha Martin, which has signed a definitive agreement with Tata Steel to sell its steel business, has sought transparency about the end-use of funds that it would get from the buying company.
In a release issued on Monday, Basant and son Prashant Jhawar, said, "Tatas are an excellent business house and will create value to the shareholders of and sale of the steel business is a positive development."
"But the end-use of funds is opaque. For holding 25 percent of shareholding in Usha Martin, we are concerned about the capacity of the wire rope business and its capacity to service the same," said Basant. Prashant was removed from the chairman's post by an SBI-led lenders' consortium on allegations of mismanagement. How much are the liabilities and how it will be cleared? No details are made available creating doubt over transparency and management accountability, they said in the release.
"Since no details are available, our concern is about the diversion of funds. We seek transparency in the end use of funds from the board of Usha Martin," it added.
Rajeev Jhawar, Managing Director of Usha Martin and the estranged cousin of Prashant, could not be contacted for comments. On Saturday, Usha Martin signed an agreement with Tata Steel for selling its steel business for cash consideration between Rs 4,300 crore-Rs 4,700 crores.