SC verdict on Bhushan Power and Steel resolution may burn a Rs 22k-cr hole in JSW pocket
NEW DELHI: The Supreme Court’s decision to revoke the resolution plan of Bhushan Power and Steel Ltd (BPSL) could burn a ₹22,000 crore hole in the consolidated turnover of JSW Steel.
BPSL, which was acquired by the Sajjan Jindal-promoted JSW Steel in 2021, earned revenue of ₹21,800 crore in FY24 and posted a total profit of ₹671 crore — 3.4 times the profit earned in the previous year. It reported its highest-ever annual steel sales of 2.96 million tonnes, up 17.5% year-on-year in 2023–24. In the first nine months of FY25, BPSL has generated ₹15,800 crore in revenue.
The setback for JSW Steel goes beyond the loss of 3.5 million tonnes per annum of production capacity and approximately ₹22,000 crore in turnover; it also includes the significant expenses incurred to ramp up that capacity.
The company has invested around ₹3,000 crore in expanding BPSL’s capacity. It is currently undergoing the second phase of expansion, which aims to increase capacity from 3.5 million tonnes to 5 million tonnes. JSW Steel had also availed a loan of ₹10,800 crore from State Bank of India (₹7,300 crore) and Bank of Baroda (₹3,500 crore) to acquire BPSL. BPSL itself also has total secured loans of around ₹4,000 crore.
On May 2, the Supreme Court rejected JSW Steel’s ₹19,800 crore resolution plan for Bhushan Power and Steel, citing several anomalies in the conduct of the Corporate Insolvency Resolution Process (CIRP). BPSL will now undergo liquidation. Financial creditors had submitted claims of ₹47,000 crore against the company. With the resolution plan declared invalid, lenders will have to wait until the liquidation process is completed to recover any dues. During the CIRP, valuers had pegged the liquidation value at ₹9,700 crore.
Legal experts say the Supreme Court’s judgment is a major setback for the Insolvency and Bankruptcy Code (IBC), as it undermines a fundamental principle of the law — the commercial wisdom of the Committee of Creditors (CoC).
“The Supreme Court decision casts serious doubt on the bona fides of the CoC and the Resolution Professional (RP). The ‘commercial wisdom’ of the CoC was considered paramount and generally not subject to judicial intervention unless decisions were demonstrably unreasonable or violated the law,” says Vijay K. Singh, Senior Partner at S&A Law Offices.
According to him, the NCLT, NCLAT, and the Supreme Court will now likely be more circumspect about decisions taken by the CoC.