JSW Steel eyes Bhushan Power acquisition as SC sets Nov 3 final hearing

Jindal had offered Rs 19,700 crore to lenders as upfront cash for takeover of the company

With the final Supreme Court (SC) hearing scheduled for November 3, JSW Steel is hoping to see an end to its long-awaited acquisition of insolvent Bhushan Power & Steel. The latter had defaulted on bank loans worth Rs 48,000 crore. It was among the first 12 companies sent for debt resolution by banks in July 2017, following recommendations by the Reserve Bank of India.

Even after multiple investigations by the Enforcement Directorate (ED) and several adjournments by the SC, the acquisition of Delhi-based Bhushan Power has proved elusive for Sajjan Jindal-owned JSW Steel for more than a year.

Jindal had offered Rs 19,700 crore to the lenders as upfront cash to take over the company.

“JSW Steel was looking to have this asset handed over to them ahead of Diwali, so that they could capture the growing domestic demand better with additional sales. But the entire timeline has gone awry,” said an industry source close to the development.

Among several investigations, the ED has also objected to the JSW Steel acquisition in the SC, saying it was an associate company of Bhushan Power since it jointly held stake in a coal mining venture — Rohne Coal.  

According to the insolvency and bankruptcy law, company/relatives associated with former promoters are not allowed to bid for the insolvent company. JSW Steel is contesting the claim in court.

The Sanjay Singal-led Bhushan Power & Steel is a 2.3-million tonne integrated steel plant in Odisha. With the acquisition of this asset, JSW Steel gets instant presence in the eastern region of the country.

“We are simply awaiting the court decision. The resolution professional (RP) is running the business. We are idle. Most of my team at Bhushan Power has retired. We are not involved with the business,” said Sanjay Singal, former promoter of Bhushan Power & Steel.

Meanwhile, the domestic steel sector has picked up strongly since March, when the Covid-19-induced nationwide lockdown hit the economy. Companies remain focused on capturing retail and rural demand.

Prices of domestic steel have also been picking up since June at Rs 2,000 per tonne on a monthly basis until October.

“JSW Steel has its team employed though earnings are being taken by the lenders. Once the decision is made, we are hoping to see the business flourish. I have raised this business like my child. I definitely want to see it grow,” said Singal.

Meanwhile, JSW Steel has denied claims that any of its team members is being employed at Bhushan Power unit.

“No employee of JSW Steel is working for Bhushan Power at present since the asset is not officially with them. There have been team members who have retired from JSW Steel and joined there (Bhushan Power), but they are not JSW employees. It is the RP who has employed the team,” clarified an industry source. JSW Steel is also seeking immunity in the SC from the alleged offences committed by Singal.

“JSW Steel has made it very clear that it is not going to be the scapegoat for offences committed by former promoters of Bhushan Power. The company has already faced the brunt in the case of Monnet Ispat about 10 months ago, when it was fined close to Rs 30 lakh by the stock exchanges for not following disclosure norms,” informed an industry source.

The Mumbai-based steel producer had acquired Monnet Ispat for Rs 2,875 crore in 2018 under the Insolvency and Bankruptcy Code process.

In September last year, the National Company Law Tribunal had approved JSW Steel’s offer. In February this year, the National Company Law Appellate Tribunal cleared the plan of JSW Steel and gave the steel producer protection from Bhushan Power’s offences.

JSW Steel has been wanting to have presence in Odisha for a while now. The geographically diversified company, which already has presence in Karna­taka, Maharashtra, Haryana, and Tamil Nadu, has proposed a Rs 54,000-crore greenfield integrated steel plant in Odisha.