India's Supreme Court Approves JSW Steel's $2.3B Deal

Post by : Monika

India’s Supreme Court has approved JSW Steel’s $2.3 billion acquisition of Bhushan Power and Steel (BPSL). This decision reverses a previous ruling that had rejected the deal.

The approval is seen as a major step in India’s efforts to resolve distressed companies under the country’s insolvency laws and to encourage corporate restructuring in the steel sector.

Background of Bhushan Power and Steel

Bhushan Power and Steel, based in India, had been facing serious financial problems for several years. The company struggled to pay its loans and was declared a non-performing asset by many banks. These financial difficulties made it difficult for BPSL to continue its operations efficiently and meet market demands.

To address the issue, JSW Steel, one of India’s largest steel manufacturers, submitted a proposal to acquire BPSL in 2019. The acquisition was part of the resolution plan under the Insolvency and Bankruptcy Code (IBC),

which India introduced in 2016 to handle companies that are unable to repay their debts. The IBC aims to protect creditors while providing an opportunity to revive businesses and preserve jobs.

Initially, the National Company Law Tribunal (NCLT), which oversees insolvency cases, approved JSW Steel’s takeover plan. The plan included investments to modernize BPSL’s production units, repay creditors, and retain employment for thousands of workers. This approval was welcomed by investors and industry experts as a positive sign for corporate restructuring in India.

Supreme Court Rejection and Concerns

In May 2025, India’s Supreme Court rejected the JSW Steel takeover plan. The Court cited procedural concerns and questioned whether the deal fully adhered to the rules of the IBC. This decision caused some worry in the market and among investors. There were concerns that rejecting the deal could discourage companies from participating in the resolution of distressed firms. Some feared that it could make the IBC less effective and reduce confidence in India’s bankruptcy framework.

The rejection also raised questions about the future of Bhushan Power and Steel. Without the acquisition, the company’s revival plan was at risk, and the jobs of thousands of employees could have been affected. Additionally, creditors and small suppliers who relied on BPSL’s operations were uncertain about the company’s ability to pay debts and continue business.

Supreme Court Reversal

After reviewing the case further, India’s Supreme Court decided to approve JSW Steel’s acquisition. The Court recognized that JSW Steel had made significant commitments to modernize BPSL and ensure job security. The Court noted that the acquisition would help revive the company, improve its operations, and fulfill the primary objectives of the Insolvency and Bankruptcy Code.

The Court emphasized that the IBC’s purpose is not just to recover debts for banks but also to transform struggling businesses into profitable companies. By allowing JSW Steel to acquire BPSL, the Court reinforced the idea that insolvency laws should encourage investment and corporate revival.

This reversal has been viewed as a positive signal for the market, showing that India’s legal system can balance regulatory compliance with practical solutions that support economic growth.

Impact on the Steel Industry

The approval of this acquisition is expected to have significant effects on the steel industry in India. With JSW Steel’s investment, BPSL will have access to modern technology, better production facilities, and improved operational processes. This modernization can increase efficiency, reduce costs, and enhance the quality of steel products produced by BPSL.

Moreover, the acquisition could improve competition in the Indian steel market. JSW Steel, as a major player, can leverage BPSL’s capacity to meet rising demand for steel both domestically and internationally. This is particularly important as India seeks to strengthen its position as a global steel producer.

The deal is also expected to boost investor confidence in the Indian steel sector. The successful implementation of the IBC and the Court’s approval demonstrate that the government and judiciary are committed to resolving distressed assets and encouraging private sector participation.

Job Preservation and Economic Stability

One of the key benefits of the JSW Steel acquisition is the preservation of jobs at BPSL. The company employs thousands of workers, many of whom rely on these jobs to support their families. By approving the takeover, the Supreme Court has helped ensure that these employees will continue to have employment, contributing to social and economic stability in the regions where BPSL operates.

In addition to protecting jobs, the deal ensures that suppliers, vendors, and smaller businesses connected to BPSL can continue their operations. The revival of BPSL helps maintain business relationships across the steel supply chain, preventing disruption and supporting the broader economy.

Investor Confidence and Market Reaction

The Supreme Court’s decision has been welcomed by investors, who view it as a reaffirmation of India’s commitment to a predictable and fair insolvency process. The IBC was designed to provide clarity and stability for investors, encouraging them to participate in resolving distressed companies. The Court’s approval of the JSW Steel takeover reinforces this principle.

Following the announcement, JSW Steel’s shares saw an initial rise, reflecting positive market sentiment. Investors believe that the acquisition will strengthen JSW Steel’s position in the market and provide opportunities for growth. However, the broader steel market continues to face global challenges, including fluctuating demand and international competition.

Importance of the Insolvency and Bankruptcy Code

The IBC has been a major reform in India’s corporate and banking sectors. It allows banks to recover loans from companies that are unable to pay debts while providing a structured process for acquiring distressed assets. The successful resolution of BPSL’s case demonstrates the effectiveness of the IBC in achieving its dual objectives: protecting creditors and reviving businesses.

The Court’s decision also sets a precedent for future acquisitions under the IBC. Companies looking to invest in distressed assets can have greater confidence that their plans will be considered fairly by the judiciary, provided they follow the proper procedures. This can attract more investment into struggling companies and help boost economic activity.

Challenges Ahead

Despite the approval, there are challenges ahead for JSW Steel and BPSL. The integration of BPSL into JSW Steel’s operations will require careful management. Upgrading technology, improving operational efficiency, and maintaining employee morale will be key to ensuring a successful turnaround.

Additionally, global steel markets remain competitive and volatile. JSW Steel will need to manage production costs, pricing, and international demand carefully. Success will depend not only on financial investment but also on strategic planning and execution.

Broader Implications

The Supreme Court’s approval has broader implications beyond this single acquisition. It sends a message to the corporate sector that India is serious about resolving distressed assets and supporting business revival. This can encourage further mergers and acquisitions, improve investor sentiment, and strengthen the Indian economy.

It also demonstrates the balance between legal oversight and practical business solutions. While regulatory compliance is important, the Court has shown that practical outcomes, such as job preservation and business revival, are equally critical considerations.

India’s Supreme Court approval of JSW Steel’s $2.3 billion acquisition of Bhushan Power and Steel is a landmark decision in the country’s corporate and legal landscape. It highlights the effectiveness of the Insolvency and Bankruptcy Code in resolving distressed companies and preserving jobs.

The deal is expected to revitalize BPSL, strengthen JSW Steel’s market position, and boost investor confidence. While challenges remain in integrating the companies and navigating global market conditions, the approval marks a positive step for India’s steel industry and corporate sector.

As the acquisition moves forward, industry observers, investors, and stakeholders will watch closely to see how JSW Steel manages the revival of Bhushan Power and Steel. This case is likely to serve as an example of how distressed companies can be successfully turned around under India’s insolvency framework.

JSW Steel acquisition Bhushan Power and Steel India Supreme Court decision