With a stay in Bhushan Power & Steel-buy, JSW Steel gets a much-needed breather, and clarity

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26 Aug, 2025 12:21

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On October 14, the National Company Law Appellate Tribunal stayed JSW Steel from paying for the acquisition of Bhushan Power & Steel, which is undergoing insolvency proceedings.

This basically delays the process, and adds a few more months before JSW Steel can take the keys of Bhushan Power & Steel. It was on September 5, that the National Company Law Tribunal had approved the Rs 19,700-crore acquisition.

A setback? Not really. Actually, it is a relief.

And that is because of two things. One, this gives the steelmaker some more time during which it hopes the economic climate will improve, with higher prices and demand for its products.

JSW Steel's production in the second quarter dropped by 8 percent from a year earlier, to 3.84 million tons. For the six months of the financial year, the numbers fell by 3 percent to 8.08 million tons.

A change in the economic circumstances for the worse makes it even more difficult for the acquirer to turnaround an acquisition. JSW Steel plans to nearly double Bhushan Power & Steel's present capacity of 2.75 million tons, in the next five years.

But to be able to do it, JSW Steel would need enough capital to invest in Bhushan Power & Steel's units. But capital outlay won't be easy, especially with profits falling 56 percent in the first quarter, and the second quarter looking similarly dismal.

So extra time  - even of a few months - at this juncture,will help the steelmaker, which will be hoping that the demand will pick up during the second half of the year.

The stay from the Appellate Tribunal also takes care of a major concern of the company.

The enforcement agencies had been on the heels of the erstwhile promoters of Bhushan Power & Steel on allegations of money laundering. This led to fears that JSW Steel may be liable for any future litigation. The steelmaker had thus approached the courts for relief from immediate payment, which was to be done within 30 days of the September 5 announcement.

And when the Enforcement Directorate, on October 12, said it has attached assets worth over Rs 4,025 crore of Bhushan Power and Steel Limited, there were immediate questions on the viability of the acquisition, and if the bid amount stands.

A breather has now come in the form of the NCLAT order on October 14.

The Tribunal said: "ED while conducting investigation under PMLA is free to deal with or attach the personal assets of the erstwhile promoters ... not the assets of the corporate debtor which have been financed by creditors and acquired by a bona fide third party resolution applicant..."

The tribunal also prevented the ED from attaching Bhushan Power & Steel's assets.

"Yes, the decks are clear," said an industry analyst. "All hurdles are taken care of. A formal announcement of JSW Steel taking over Bhushan Power & Steel may come as early as December," added the analyst.

In a separate development, JSW Steel promoters have repaid Rs 1,200 crore worth loan by releasing JSW Steel and JSW Energy pledged shares of combined Rs 2,500 crore.

It released 7.01 crore shares of JSW Steel, representing 2.90 percent of the share capital; and 11.88 crore JSW Energy shares, equal to  7.24 percent of the share capital.

In September, JSW Steel promoters had repaid Rs 1,148.59 crore, to release 5.07 crore of pledged shares.