JSW Steel Shares Crash Over 7% After Supreme Court Scraps Bhushan Power Deal

Market Performance

JSW Steel shares crash by over 7% during Friday's trading session following a significant legal setback. The plunge came amid reports that the Supreme Court of India has scrapped the company's resolution plan to acquire Bhushan Power and Steel Ltd (BPSL).

Investors reacted sharply, leading to a sell-off in the stock. As of the end of the trading day, the stock had lost over ₹19,700 crore in market value.

Main News

As reported by CNBC-TV18, the Supreme Court has rejected JSW Steel's resolution plan for BPSL four years after its acquisition. Instead, the court has directed the liquidation of the indebted steelmaker.

This unforeseen decision has shaken the industry and sparked significant concerns about the effectiveness of India's insolvency resolution framework.

The Exchange has requested a clarification from JSW Steel following a Moneycontrol report dated May 2, 2025, titled "Setback for JSW Steel as SC directs liquidation of Bhushan Power and Steel."

JSW Steel's Clarification

In a formal response to the exchanges, JSW Steel confirmed that it had received information about the judgment on May 2, 2025.

"We learned that the Hon'ble Supreme Court pronounced Judgment today, i.e., 02-05-2025, rejecting the Resolution Plan submitted by the Company and approved by NCLAT, on certain grounds," the company stated.

JSW further added that it has not yet received the official court order and will evaluate the situation in detail before deciding on the next steps. Once the complete judgment is available, legal advisors are expected to be consulted.

Reasons Behind Supreme Court's Decision

According to the reports, the Supreme Court cited two primary reasons for its decision:

• Delay in Execution: JSW Steel failed to implement the resolution plan within the timeframe stipulated by India's Insolvency and Bankruptcy Code (IBC).
• Financing Structure: The company used a mix of equity and optionally convertible debentures (OCDs) instead of pure equity, which did not align with regulatory expectations.

Company Details

JSW Steel had emerged as the winning bidder in one of India's most significant insolvency cases involving Bhushan Power and Steel Ltd.

Timeline of Events:

• 2019: JSW acquired a 49% stake in BPSL through the IBC route.
• 2021: Acquisition completed, boosting JSW's capacity by 2.75 million tonnes per annum (mtpa).
• October 1, 2021: JSW increased its stake to 83.3%, consolidating its control over BPSL.

The acquisition was a strategic move aimed at increasing capacity and unlocking expansion potential.

Summary

The news that JSW Steel shares crashed due to the Supreme Court's order to liquidate BPSL marks a significant setback for the steel giant. The company now faces the challenge of understanding the legal ramifications and preparing its following action.

This development impacts JSW's immediate valuation and raises broader concerns about long-term investment strategies through India's insolvency process.