Supreme Court scraps JSW Steel’s bid to acquire Bhushan Power: Report
Supreme Court Scraps JSW Steel’s Bid to Acquire Bhushan Power: Major Setback in Steel Industry Consolidation
Table of Contents
Supreme Court’s Landmark Ruling
In a significant development that has sent shockwaves through India’s steel industry, the Supreme Court of India has rejected JSW Steel’s resolution plan to acquire Bhushan Power and Steel. The ruling comes four years after the initial takeover and includes an order for the liquidation of the debt-ridden steelmaker, as reported by CNBC-TV18 on Friday.
Key Court Decision
The apex court declared JSW Steel’s acquisition plan “illegal,” stating it should not have received approval from Bhushan Power’s committee of creditors. This ruling marks a crucial precedent in India’s corporate resolution framework.
Market Impact and Share Price Movement
The market’s immediate reaction to the Supreme Court’s decision was significant, with JSW Steel’s shares experiencing a sharp 5 percent decline. This market response reflects investor concerns about the implications of the ruling for both the company and the broader steel sector.
Market Response
The stock market’s reaction indicates the significance of this ruling for the steel industry’s consolidation efforts and corporate debt resolution processes in India.
Acquisition Background and Details
JSW Steel had emerged as the successful resolution applicant with a substantial bid of ₹19,700 crore ($2.35 billion) for Bhushan Power. The acquisition, completed in 2021, was part of a broader industry consolidation trend and aimed at strengthening JSW Steel’s market position.
Original Deal Structure
The multi-billion dollar acquisition was structured as part of India’s insolvency resolution process, representing one of the largest deals in the steel sector.
Financial Implications and Debt Overview
The scale of the financial implications is substantial, with Bhushan Power having owed over ₹4.7 lakh crore to financial creditors when it was initially shortlisted by the Reserve Bank of India. This debt led to the company’s admission under India’s insolvency and bankruptcy code in 2017.
Fraud Investigation and Legal Proceedings
The case’s complexity is further heightened by Punjab National Bank’s 2019 criminal proceedings against Bhushan Power’s former board of directors. The bank had uncovered a significant fraud amounting to 38 billion rupees in the company’s accounts, adding another layer of legal scrutiny to the situation.
Key Stakeholders’ Response
- JSW Steel and Bhushan Power: No immediate comment on the ruling
- Punjab National Bank: Lead investigator in fraud proceedings
- State Bank of India: Key member of the committee of creditors
- Committee of Creditors: Original approval of the resolution plan
Industry Outlook and Future Implications
This landmark ruling has significant implications for India’s steel industry consolidation efforts and the effectiveness of the insolvency resolution framework. The decision may influence future corporate debt resolution processes and merger & acquisition strategies in the sector.
Future Considerations
The ruling raises important questions about the stability of resolved cases under the Insolvency and Bankruptcy Code, potentially affecting investor confidence in similar resolution processes.
Published on May 2, 2025
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