NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) approved the resolution plan put in place by JSW Steel to take over the debt-laden Bhushan Power & Steel (BPSL).The appellate tribunal on Monday ruled BPSL will be exempted from the ongoing criminal investigation against the former promoters of Bhushan Power after its takeover by JSW Steel, paving the way for the Sajjan Jindal-led firm to complete the process of its impending acquisition. However, the promoters will continue to face the probe under the money laundering act by the Enforcement Directorate.
In October, NCLAT had ordered a freeze on the Rs 19,700 crore payment by JSW Steel under the resolution plan. Even after it was declared a winning bidder by the NCLT a year ago, JSW Steel had moved NCLAT seeking immunity from the criminal investigation affecting the asset under insolvency, contending that an absence of any such protection would jeopardise the feasibility and viability of its resolution plan.
Notably, the ED had attached assets worth over Rs 4,025 crore of debt-ridden BPSL in connection with its money laundering probe linked to an alleged bank loan fraud under the former promoters’ reign. Incidentally, the government had amended Section 32A of Insolvency and Bankruptcy Code (IBC) that provides immunity to the new management of the insolvent company from the investigation.
Still, the investigative agency had argued that the amended Act will not have a ‘retrospective effect’ and will not apply to JSW Steel. The NCLAT, however, rejected the pleas challenging the BPSL sale. It now remains to be seen if the investigative agencies will move the Supreme Court against the verdict.
With this order, banks can now kiss goodbye to the bad loans, at least this painfully large one, at a time when lenders are saddled with the worlds’ worst bad-loan ratio.
Bhushan Steel owes its lenders more than Rs 47,000 crore and over Rs 780 crore to operational creditors.
For JSW Steel, the acquisition will help it add 9 million tonne per annum (mtpa) in capacity taking its total capacity to 26 mtpa, factoring in its 5 mtpa capacity expansion at Dolvi unit and 3.5 mtpa capacity of BPSL in the next few months.
Jindal is also keen to de-risk the acquisition as it has an expansion plan lined up. The company plans to place BPSL in an SPV until turnaround happens, and later merge it into JSW Steel. JSW’s net debt stands at Rs 49,550 crore at the end of December.
Possible merger on the cards?
Jindal is also keen to de-risk the acquisition as it has an expansion plan lined up. The company plans to place BPSL in an SPV until the turnaround happens, and then later merge it into JSW Steel.