BHUBANESWAR: With the Supreme Court rejecting JSW Steel’s resolution plan for Bhushan Power and Steel Ltd (BPSL), the company’s expansion plans in Odisha along with the state government’s steel march through big ticket investments may just have hit a roadblock.
In the immediate instant, the BPSL development could cast a cloud on JSW Steel’s Rs 2 lakh crore investment plans in the state. The steel major had acquired the debt-laden BPSL for Rs 19,700 crore in 2019 after the National Company Law Tribunal (NCLT) approved its insolvency resolution plan. However, the SC set it aside, terming it illegal and in violation of the Insolvency and Bankruptcy Code (IBC).
JSW has a number of key projects in the state - the biggest being the proposed 13.2 million tonne per annum (MTPA) steel plant at Paradip with an estimated investment of Rs 65,000 crore. Although major clearances have been obtained and groundwork complete, the project is moving at a rather slow pace.
The company had also announced an integrated EV and battery manufacturing project at Naraj in Cuttack involving Rs 40,000 crore. A green energy facility in Kandhamal with a proposed outlay of Rs 40,000 crore has also been planned.
However, a 5 MTPA steel plant proposed at Keonjhar worth Rs 35,000 crore has now assumed primacy since it is the home of Chief Minister Mohan Charan Majhi and the government is very keen to get it on rails.
“After the BPSL setback, JSW Steel may go back to the drawing board and rework its plans. The state government, on its part, must see that investor confidence is not impacted,” said an industry insider.
Apart from new projects, JSW Steel had also planned expansion of BPSL from 4.5 MTPA to 10 MTPA and proposed Paradip plant’s capacity from 13.2 MTPA to 24 MTPA for which an MoU has already been signed.
After acquiring BPSL, JSW had ramped up its crude steel output from 2.9 MTPA to around 4.5 MTPA and provided direct or indirect employment to around 20,000 people. “With BPSL’s fate hanging in the balance, JSW could face production cuts, dent in cash flow and challenges in debt servicing. The company could revisit its strategy,” sources said.
Additional chief secretary of Industries department Hemant Sharma said the government is committed to protect industrialisation interests of the state and will support any early resolution in the matter.
The company in a recent regulatory filing stated that it is reviewing the order and will determine its future course of action. Meanwhile, the Department of Financial Services (DFS) has reviewed the SC order with all the lenders and is expected to take a decision in the matter soon. JSW Steel’s existing assets in Odisha include two cement plants, a power plant, a 300-km slurry pipeline and a port terminal at Paradip. It had also acquired Ind-Barath Energy (Utkal) Ltd in Jharsuguda in 2022.