JSW Steel falls 7% as SC voids Bhushan Power acquisition

Shares of JSW Steel tumbled as much as 6.5% on Friday to Rs 961.90 on the BSE after India’s Supreme Court scrapped the steelmaker's Rs 19,700 crore acquisition of Bhushan Power & Steel, calling the 2021 deal “illegal” and ordering the liquidation of the debt-laden company.

In a major setback for the Sajjan Jindal-led company, the top court found that JSW Steel violated key terms of the Insolvency and Bankruptcy Code by completing the acquisition using a combination of equity and optionally convertible debentures instead of solely equity. The court also flagged the two-year delay in implementing the resolution plan, ruling that JSW’s conduct “frustrated the objective of IBC.”

The apex court said JSW’s plan should not have been accepted by the committee of creditors, describing the company’s actions as “malafide and dishonest” and noting that it took undue advantage of ongoing investigations by the Enforcement Directorate against the previous promoters.

JSW Steel had acquired a 49% stake in Bhushan Power and Steel in 2021 through the corporate insolvency process and raised its holding to 83% by October that year. The Odisha-based unit added 2.75 million tonnes per annum (MTPA) of capacity to JSW’s portfolio.

The company had offered Rs 19,350 crore to financial creditors — a nearly 60% haircut — and Rs 350 crore to operational creditors against admitted claims of Rs 733 crore. The National Company Law Tribunal approved the resolution plan in September 2019, a decision upheld by the appellate tribunal in February 2020.

Despite those approvals, the Supreme Court has ordered the liquidation of Bhushan Power, effectively nullifying JSW’s acquisition and raising fresh uncertainty over its assets.

Also read | Big blow: SC rejects JSW Steel's Bhushan Power and Steel resolution plan

Bhushan Power and Steel contributes about 10% to JSW Steel’s consolidated EBITDA and roughly 12.5%–13% of its total steel-making capacity of 37.5 MTPA, according to the company’s latest quarterly data. The ruling threatens to erode a meaningful portion of JSW’s operational footprint and earnings base.

JSW Steel’s legal recourse now hinges on a review petition.

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