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JSW wins Bhushan Power in NCLT

Bhushan Power was taken to NCLT on RBI direction after it defaulted on loans of Rs 47,000 crore to 33 banks.

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JSW Steel Ltd will take over Bhushan Power & Steel from Sanjay Singal after the National Company Law Tribunal (NCLT) on Thursday approved its bid of Rs 19,700 crore. Bhushan Power was taken to NCLT on RBI direction after it defaulted on loans of Rs 47,000 crore to 33 banks.

While approving the order on Thursday, the bankruptcy court said that profits made by Bhushan Power during the insolvency period must be distributed to the creditors. The acquisition of Bhushan Power will help add 3.5 million tonne a year of capacity to the JSW's footprint in the eastern part of the country. JSW's bid of Rs 19,700 crore was higher than the bids of Tata Steel and Liberty House.

In the first round of bidding Liberty House had submitted a bid of Rs 18,500 crore, Tata Steel Rs 17,000 crore while JSW Steel Rs 11,000 crore. JSW Steel later raised it to Rs 19,700 crore.

Tata Steel had challenged JSW's revised bid in NCLAT, but this plea was dismissed in February this year and JSW Steel was declared the highest bidder by the Committee of Creditors (CoC).

There were doubts if the bid should go through as Allahabad Bank and Punjab National Bank had reported accounting frauds of Rs 5,600 crore.

The sale won't be affected by criminal proceedings against the former founders of Bhushan Power on the alleged siphoning off of funds, the court said on Thursday. It also appointed a monitoring panel to oversee implementation of JSW's resolution plan. The NCLT also slapped a fine of Rs 1 lakh on Bhushan Power & Steel's promoter, Sanjay Singhal for the alleged fraud his company committed.

Apart from JSW, the bankruptcy process has aided the purchase of Electrosteel Steels by billionaire Anil Agarwal's Vedanta and boosted Tata Steel's buy of Bhushan Steel Ltd. ArcelorMittal has won the biggest steel plant under the insolvency process, Essar Steel India, but is yet to get control due to legal challenges.

In July 2018, JSW and partner, the Apollo Global Management LLC-backed Aion Capital Partners, bought Monnet Ispat & Energy under the new bankruptcy process. JSW plans to look for a partner for Bhushan Power, as it did for Monnet, once the deal is completed. Adding Bhushan Power would allow JSW to reach its goal of increasing capacity to 45 mt in India and having an overseas capacity of 10 mt by 2031.

Hammer Falls

Bhushan Power was taken to NCLT after it had defaulted on loans of Rs 47,000 crore to 33 banks
JSW's bid of Rs 19,700 crore was higher than bids of rivals Tata Steel and Liberty House
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