JSW Steel: Compensation from creditors enough to cover for Bhushan Power assets
Mumbai: JSW Steel Ltd expects to be compensated adequately if Bhushan Power & Steel Ltd (BPSL) goes into liquidation after the Supreme Court scrapped its resolution plan for the bankrupt company.
The steelmaker said its agreement with the erstwhile creditors of Bhushan Power entitled it to compensation covering the value of the assets on its balance sheet in case of BPSL's liquidation. JSW Steel acquired Bhushan Power through the bankruptcy court in March 2021.
JSW Steel held net assets worth ₹ 14,091 crore related to BPSL on its consolidated balance sheet as of 31 March.
The company also said it had strong grounds for availing legal recourse after the Supreme Court on 2 May rejected its resolution plan and acquisition of BPSL.
JSW Steel's consolidated earnings for 2024-25, which were disclosed on Friday, included the financials of Bhushan Power.
'We have implemented the resolution plan of BPSL in compliance with the law and taken steps to successfully revive the company to its present state today,' JSW Steel's joint managing director Jayant Acharya told analysts during a post-earnings call on Friday evening.
'We along with our legal advisors have analyzed the matter and we believe we have strong grounds to avail all legal remedies,' he said.
Acharya declined to answer further questions related to BPSL as the matter is sub-judice.
BPSL's Odisha-based plant has an annual integrated steel production capacity of 4.5 million tonnes, while JSW Steel's total domestic capacity is 34.2 million tonnes, the largest for any steelmaker in India.
'The management during the Q4FY25 analyst call failed to give any definitive answers or future roadmap on the recent SC verdict,' said Parthiv Jhonsa, lead analyst for metal and mining at Anand Rathi Financial Services. 'Though the downside for the company is protected, no clarity was provided on the recovery of the original amount from creditors.'
JSW Steel reported a consolidated profit of ₹ 1,501 crore for the fourth quarter of FY25, up 14% compared with its profit in the corresponding quarter of FY24. Its consolidated revenue, however, fell 3% from a year earlier to ₹ 44,819 crore in the March quarter due to lower steel prices.
Earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of core performance, grew 4% to ₹ 6,378 crore in the fourth quarter.
EBITDA margin improved by a percentage point to 14.23% as JSW Steel's input costs and expenses narrowed. Prices of key raw materials such as coking coal and iron ore were cheaper due to tepid global demand for these resources in the January-March period.
'All the subsidiaries did well during the quarter, except perhaps Italy, due to some bottlenecks there. The losses in the US have reduced. So there was an improvement across the spectrum,' said Jhonsa of Anand Rathi.
For the ongoing first quarter of FY26, JSW Steel said its realizations continued to improve with coking coal costs falling further.
'Steel prices were low in December but slowly improved starting February. The trend continued in March and April, and we will see the impact of that in Q1,' Acharya said during the analyst call.
The steelmaker said it expects to produce 30.5 million tonnes of steel in FY26, up from 27.79 million tonnes in FY25, which was its highest-ever.
Even so, JSW Steel's profit in 2024-25 declined 61% to ₹ 3,491 crore, while revenue fell 4% to ₹ 1.69 trillion.
The company declared a dividend of ₹ 2.8 per share.
JSW Steel shares gained 0.29% to close at ₹ 1,008.5 the BSE on Friday. Benchmark Sensex ended the session 0.95% in the green.
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