JSW Steel to Sell 50% Stake in Bhushan Power for ₹16,000 Crore

Introduction

JSW Steel is reportedly exploring the sale of up to a 50% stake in Bhushan Power & Steel Ltd (BPSL), a significant move following a prolonged and complex legal battle for its ownership. Sources indicate that Japan’s JFE Steel, which already holds a 15% stake in JSW Steel, is the leading contender for the acquisition. The potential transaction is valued at approximately ₹15,000–₹16,000 crore and is anticipated to be finalized by December. This development comes shortly after the Supreme Court provided definitive legal clarity by upholding JSW Steel's resolution plan for BPSL, ending years of uncertainty.

The Long Road to Acquisition

The journey to acquire BPSL has been a turbulent one for JSW Steel. BPSL was among the 12 major corporate defaulters identified by the Reserve Bank of India in 2017, with outstanding loans exceeding ₹47,000 crore. In 2018, JSW Steel emerged as the highest bidder in a tightly contested insolvency process with a resolution plan of ₹19,700 crore. The plan received approval from the National Company Law Tribunal (NCLT) in 2019 and was subsequently upheld by the National Company Law Appellate Tribunal (NCLAT) in 2020. However, a series of legal challenges from former promoters and dissenting creditors, along with proceedings by the Enforcement Directorate, delayed the implementation. JSW Steel was only able to formally take control of BPSL's assets in March 2021.

The Supreme Court's Decisive Intervention

The acquisition faced its most significant challenge in the Supreme Court. On May 2, 2025, the apex court stunned the financial sector by quashing JSW Steel's resolution plan, citing procedural delays and violations of the Insolvency and Bankruptcy Code (IBC). The court ordered the liquidation of BPSL and directed lenders to refund the ₹19,350 crore already paid by JSW. This decision created immense uncertainty, forcing JSW Steel to file a review petition. In a dramatic reversal, the Supreme Court first paused the liquidation proceedings and later, on September 26, 2025, revived the entire resolution plan. The final judgment upheld the decisions made by the Committee of Creditors (CoC) and affirmed JSW Steel's ownership, providing the legal stability necessary for future strategic planning.

Strategic Rationale for the Stake Sale

With the legal ownership of BPSL firmly established, JSW Steel is now moving to optimize its asset portfolio. The proposed divestment is a strategic step to unlock value, reduce consolidated debt, and accelerate investments in high-grade and green steel production. Selling a stake to a strategic partner like JFE Steel is expected to enhance technology collaboration and improve product capabilities, particularly in specialized steel segments. JSW Steel has stated that its strategy involves evaluating various organic and inorganic opportunities, and this potential deal aligns with its long-term vision for growth and financial discipline.

Details of the Potential Transaction

Discussions for the stake sale are reportedly at an advanced stage. The deal involves offloading up to 50% of JSW's holding in BPSL, with a valuation pegged between ₹15,000 crore and ₹16,000 crore. JFE Steel's interest is notable given its existing relationship with JSW Steel. The two companies have previously collaborated on other ventures, including the joint acquisition of thyssenkrupp Electrical Steel India Pvt Ltd in October 2024 and a planned ₹5,845 crore expansion of their grain-oriented electrical steel manufacturing capacity announced in August 2025. Any final agreement will be subject to regulatory and board approvals.

Bhushan Power's Operational Profile

BPSL operates a 3.5 million tonnes per annum (MTPA) integrated steel plant located in Jharsuguda, Odisha. The facility manufactures a range of flat steel products, including hot-rolled coils and cold-rolled sheets, which are crucial for the automotive and construction industries. Since taking over, JSW Steel has invested significantly in reviving and expanding the plant's capacity, which has reportedly increased from 2.3 MTPA in 2017 to 4.5 MTPA in 2025. This asset is central to JSW's strategy to expand its footprint in eastern India.

Market Impact and Outlook

The news of the potential stake sale had a minor impact on JSW Steel's stock, which was trading 0.6% lower at ₹1,185 per share following the reports. The transaction, if completed, would significantly deleverage JSW Steel's balance sheet. BPSL has been a valuable addition, contributing an estimated 8-9% to JSW's profitability. The partnership with JFE Steel could further enhance BPSL's operational efficiency and product mix, creating long-term value for JSW Steel and its shareholders. The market will be closely watching for an official announcement, which is expected by the end of the year.

Conclusion

After navigating a complex and lengthy legal process to secure Bhushan Power & Steel, JSW Steel is now strategically positioning the asset for its next phase of growth. The potential sale of a significant minority stake to JFE Steel represents a move to monetize a portion of its investment, reduce debt, and forge a deeper technological and strategic alliance. This decision underscores a pragmatic approach to capital management and portfolio optimization, setting the stage for JSW's continued expansion in the Indian steel market.