Caught in a power struggle

Once a master deal maker, Prashant Jhawar got ousted as the non-executive chairman of Usha Martin by the board earlier this week on a written requisition by the State Bank of India nominee director, Venkatachalam Ramkrishna Iyer, in what would go down as the rarest of rare cases in India Inc. He was replaced by former Securities & Exchange Board of India chairman GN Bajpai.

Jhawar’s ouster came after considerable friction with the lenders. The lenders, led by SBI, desired the promoters to pledge 13 per cent of their stake as security, since Usha Martin was in the red. While one faction of the Jhawar family agreed to pledge the required stake, Prashant Jhawar dragged his feet. Also, Jhawar had valued the wire-rope business, which has been put up for sale, at ~1,350 crore, while investment banks said it could fetch ~2,000-2,500 crore.

To resolve the deadlock, Iyer proposed Jhawar’s removal and the board accepted.

Clearly, had the company been profitable, things wouldn’t have come to such a pass. “After 2010, I was taking a lot of interest in social enterprises, thinking Usha Martin was secure...” Jhawar leaves the sentence hanging. A hands-off approach is how he has operated for the better part of his life.

Jhawar believes that as an entrepreneur, his job is to arrange finance, lay the road map, but not run the operations of the company. “I have always banked on professional managers and empowered them to run the business,” he says and cites examples.

In Usha Beltron, BK Biyani was appointed the managing director, and it became the most profitable jelly-filled cable business in the country. He brought in P Bhattacharya from Essar who ran the business at Usha Martin till 2010. “He had transformed the company and the performance of Usha Martin during his tenure was excellent. I have no comments on the company’s performance thereafter,” he says.

Usha Martin was the world’s largest maker of steel ropes, yet it remained a provincial company. What brought Jhawar national spotlight was the telecom business. The family joined the bandwagon in the mid-1990s with Telekom Malaysia and TVG Ventures when it bagged a licence to operate mobile services in Kolkata.

Here too, Jhawar got Arun Kapur from Modi Xerox to lead the company as CEO. Jhawar recalls that it wasn’t getting high profile professionals at that point to Kolkata. “There were hardly any opportunities. Selling them the job to come to Kolkata was the tough part,” he said.

In 2000, Hutchison bought Usha Martin Telekom. It was the number one choice in its licence area, and the telecom market was all set to explode. Many felt Jhawar could have realised better value if he had stayed on for a little longer. The same year Jhawar relocated to the UK.

“Since I relocated, the idea was to pass on the family baton so that there is continuity,” says Jhawar. The day-to-day executive responsibility of Usha Martin was given to Rajeev Jhawar.

Jhawar went on to set up the international business of Usha Martin in the UK, and to this effect acquired EMM, Aberdeen. European Management & Marine Corporation, a part of Usha Martin group, is one of the largest providers of wire rope products, shackles, slings, lifting, and rigging gear including marine mooring equipment and anchoring systems.

It was followed by an acquisition, Brunton Shaw, also into high quality and high performance wire products. Jhawar says, in the ~1,000 crore international business of Usha Martin, the European business is the most profitable.

Jhawar is now involved in passenger transportation and software in his capacity as chairman and the day-to-day affairs are run by CEOs.

His main focus since 2010 has been social enterprises. Usha Martin runs schools. It was also supposed to set up a university in Ranchi which was to be funded by Usha Martin. But the funds haven’t come through. Jhawar is the Chancellor of the University.

“Education is an area of personal interest for me because I believe it can potentially impact destinies,” said Jhawar.

He is also taking an active interest in a grassroots business fund, which is early stage fund for social enterprises and is supporting ventures in Africa and India. It is set up by an ex-IFC functionary.

With much on the table, is he done with Usha Martin? “My father and I are still on the board, and we are not quitting,” says Jhawar.