**JSW Steel’s Acquisition of BPSL Invalidated by Supreme Court: Implications and Recovery Options**
The Supreme Court’s recent decision to annul JSW Steel’s ₹19,700 crore acquisition of Bhushan Power & Steel Limited (BPSL) has significantly impacted the company’s growth strategy, particularly its goal of reaching a steel production capacity of 50 million tonnes by 2030. This ruling has disrupted JSW Steel’s plans, as it had previously settled ₹19,350 crore to pay off BPSL’s creditors. The Odisha Jharsuguda plant, which was part of the acquisition, accounted for 13% of JSW’s total production and contributed approximately 10-11% to its earnings before interest, taxes, depreciation, and amortization (EBITDA). Analysts predict that the loss of this asset could lead to a reduction of ₹4,000–4,500 crore in JSW’s EBITDA for FY26, affecting 2.5 million tonnes of flat products and creating ripples in downstream sectors.
The Supreme Court’s ruling also requires banks to return the ₹19,350 crore paid by JSW under the March 2020 Committee of Creditors (CoC) agreement. This amount was part of the settlement for the ₹47,204.51 crore owed to BPSL’s financial creditors, which include major public sector banks like the State Bank of India, Punjab National Bank, and Canara Bank, as well as private lenders such as Axis Bank and Karur Vysya Bank. With BPSL now facing liquidation, lenders are expected to recover significantly less than what was outlined in the resolution plan, which could further strain earnings, especially given the current pressures on public sector banks’ margins and anticipated rate cuts by the Reserve Bank of India in FY26.
In light of this setback, JSW Steel and the affected lenders have the option to file a review petition with the Supreme Court within 30 days, as permitted under Article 137 of the Constitution. While a complete reversal of the ruling is deemed unlikely, analysts suggest that there may be potential for partial relief, particularly regarding the funds already paid by JSW. A new bench may consider the petition, especially since Justice Bela Trivedi, a member of the ruling bench, is set to retire soon.
The government is also evaluating the Supreme Court’s decision. M. Nagaraju, Secretary of the Department of Financial Services, indicated that the matter could soon be presented to the government for possible legal or policy action. Experts believe that the Centre might consider issuing an ordinance to reinforce the finality of resolution plans and limit post-resolution litigation, potentially drawing from amendments to the Insolvency and Bankruptcy Code to provide statutory protection for resolution applicants.
In conclusion, the Supreme Court’s ruling poses significant challenges for JSW Steel and its growth objectives, while also impacting the financial landscape for lenders involved. The potential for a review and government intervention may offer some avenues for recovery, but the future remains uncertain as stakeholders navigate the implications of this landmark decision.
**FAQ**
*What are the potential recovery options for JSW Steel after the Supreme Court ruling?*
JSW Steel can file a review petition with the Supreme Court within 30 days, seeking partial relief regarding the funds already paid. Additionally, the government may consider legal or policy actions to address the situation.
