JSW’s ₹19,700 crore Bhushan blow: What triggered it and what we know so far

JSW Steel may be forced to write off its ₹19,700 crore investment in Bhushan Power & Steel Ltd (BPSL), after the Supreme Court declared the 2021 acquisition illegal and ordered the company into liquidation. The decision caused JSW shares to fall 5.5% on Friday to ₹972.15, and could potentially shave off 10–15% of the company’s production capacity and around 10% of its consolidated EBITDA.

JSW Steel had acquired BPSL as part of its aggressive expansion plan and invested ₹3,500–4,500 crore post-acquisition to expand capacity from 2.75 MT to 4.5 MT. Plans were in place to raise it to 10 MT by 2030–31.

CLSA noted BPSL accounts for 10–11% of JSW’s FY25–27 EBITDA and highlighted the $800/tonne investment made for 3.5 MT of capacity. Morgan Stanley called the verdict “materially negative,” citing BPSL’s key role in JSW’s growth strategy.

What happened:

Supreme Court ruling: The apex court ordered BPSL’s liquidation, calling JSW Steel’s acquisition invalid.

Why the deal was scrapped:

• JSW used a mix of equity and optionally convertible debentures (OCDs) in violation of IBC norms.
• The resolution plan was not implemented within IBC timelines.
• The Committee of Creditors (CoC) and the resolution professional failed in their statutory duties.

Financial impact:

• JSW may face a ₹4,000–4,500 crore EBITDA shortfall in FY25.
• BPSL accounts for over 13% of JSW’s production and 10% of EBITDA.
• The company may need to write off the entire ₹19,700 crore investment.

Market reaction:

Shares fell sharply; JSW’s market cap dropped to ₹2.37 lakh crore.

Company response:

JSW said it will review the order with legal advisors before deciding next steps.

Broader implications:

• Raises serious concerns over the credibility of insolvency process.
• Could impact investor confidence in future acquisitions of distressed assets.