Calcutta: The board of the beleaguered wire-rope and steel maker Usha Martin has reappointed Rajeev Jhawar as the managing director of the company despite opposition from co-promoter Prashant Jhawar and his father Basant K. Jhawar.

All the other members on the board of the company, including the six independent directors and one nominee director of the State Bank of India, voted in favour of granting a five-year term to Rajeev , who will complete a similar term on May 18, 2018.

The appointment will be subject to shareholders' approval, which will include half of the promoters' 50.85 per cent block belonging to Prashant and Basant K. Jhawar.

Both of them have been demanding the removal of Rajeev from the post of managing director and want a professional manager instead. Moreover, they have filed a case before the National Company Law Tribunal for alleged mismanagement and fraudulent activities.

Rajeev will require the support of the public shareholders to pass the resolution when it is put to vote as Prashant and Basant Jhawar will oppose it unless there is a resolution between the warring promoters.

Some of the prominent shareholders in Usha Martin are domestic insurance companies, the Life Insurance Corporation of India and the General Insurance Corporation who together hold a 2.8 per cent stake, foreign portfolio investors who had 8.46 per cent stake and corporate bodies 14.18 per cent at the end of December 31, 2017.

Asked to comment on the board's backing of Rajeev Jhawar despite his opposition, Prashant Jhawar said: "One should check if the resolution was passed unanimously in the board meeting held on February 5, 2018. The case is already before the NCLT. It being sub-judice we cannot comment further on this.''

Rajeev Jhawar could not be reached for comment.

Third-quarter loss

The fight between the two promoter groups continues to take a toll on the performance of the company which is now finding it hard to generate enough internal resources to run the plant at full throttle and is crippling it to take advantage of the steel upcycle.

It suffered a Rs 110.6 crore loss in the third quarter compared with Rs 108.2 crore loss a year ago. This is despite the fact that consolidated turnover went up 21 per cent in the quarter to Rs 1,126.8 crore and EBIDTA going up to Rs 119.4 crore compared to Rs 112.3 crore.

Usha Martin, which spent Rs 154.7 crore on interest last quarter, has been asked to cut debt either by sell-off profitable wire rope business or bring in fresh equity. While there has been no progress on the asset sale, infusion of equity has been stuck due to the order of NCLT which has asked to maintain status quo on promoters' shareholding till March 14, 2018.