To do or not to do: JSW Steel's BPSL acquisition hangs in fine balance

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26 Aug, 2025 12:21

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JSW Steel's Bhushan Power & Steel acquisition hangs in a fine balance with the NCLAT expected to take a decision within a month.

The National Company Law Appellate Tribunal, which concluded hearings earlier this week, has to decide if JSW Steel can get immunity from an investigation on earlier promoters of Bhushan Power & Steel (BPSL).

Executives from the industry say that the Tribunal may take a decision by March 4.

JSW Steel approached the courts for immunity after the Enforcement Directorate had attached BPSL's assets in October, as a part of its investigations into money siphoning allegations against the earlier promoters.

By all indications though, whatever the NCLAT decides, the final word may eventually come from the Supreme Court. Both, JSW Steel and the ED, may approach the Apex Court if the NCLAT decision doesn't go their way.

That is when JSW Steel may have to take call on its Rs 19,700 crore offer for BPSL that was approved by the NCLT in September. If the Supreme Court doesn't give it immunity, will the country's leading steelmaker go ahead with the acquisition, or not?

"At present, the company is all prepared to acquire BPSL. Teams have been formed, and the deal has been cleared by the banks," said a senior executive from the industry.

"But an unfavorable ruling could lead to a serious rethink," the executive added.

The contentions

An unfavourable ruling would be a setback, especially after hopes soared when the government, in 2019, notified Section 32A in the Insolvency and Bankruptcy Code (IBC).

The section protects an insolvent company from any wrongdoing committed before the start of the Corporate Insolvency Resolution Process. JSW Steel was hoping that the new clause will provide immunity from the Enforcement Directorate (ED) investigations.

But, the ED thinks otherwise. First, it contends that Section 32A ca not be used retrospectively. Second, it deems JSW Steel and BPSL as partners; besides a joint venture the two had formed to run a mine.

But, JSW Steel has argued that the JV is no longer in operation. And, it has not been closed only because the JV is expecting compensation from the government after the mining lease was cancelled.

The acquisition

JSW Steel was the surprise winner of a race in which Tata Steel for long was seen as the favourite. But, the Sajjan Jindal-company re-entered the race at the last moment and put in a bid that Tata Steel opted not to match.

The Tata company bid about Rs 17,000 crore.

The acquisition is important for JSW Steel, which can add BPSL's 3.5 million tons to its capacity, and stretch its lead over Tata Steel, which is now the second largest steel company in the country. BPSL has multiple facilities, including in Odisha and West Bengal.

But, it comes at a steep price. A green field project of a similar capacity could be about Rs 4,000 crore cheaper.

The timing is also crucial. Outlook for the sector is still clouded, and JSW Steel's third quarter profit was down 88 percent. These are not the best times to integrate a costly acquisition.

At the same time, stepping back from the acquisition will make it liable to pay fine, and even risk litigation.

It may all boil down to the stance taken by the courts. It also depends on the entrepreneurial instincts of Sajjan Jindal. He has taken many a risk in his career and has pulled off most of them.

What will be his call this time?