JSW Steel needs to rework strategy in Odisha after SC order on Bhushan Steel, says analyst

New Delhi: JSW Steel's ambitious cost optimization plans hit a roadblock as it will have to rework its strategy in Odisha after the Supreme Court order to liquidate Bhushan Steel and Power Ltd (BPSL), according to a BigMint report.

Last week on Friday, the Supreme Court set aside a resolution plan submitted by JSW Steel for Bhushan Steel and Power Limited (BSPL), holding it illegal and in violation of the Insolvency and Bankruptcy Code (IBC).

In its analysis report, BigMint said, "BPSL's strategic importance was in its location in the eastern part of India where JSW Steel had taken up considerable iron ore mining assets. The company's Netrabandha iron ore mine in Odisha, expected to commence production in Q1FY26 with an estimated capacity of 2 MT per annum, could have resulted in significant cost optimization of BPSL's operations.".

Besides JSW Steel has Narayanposhi Iron Ore & Manganese Block (185.1 MT reserve), Ganua Iron Ore Block (118.92 MT reserve) and Nuagaon Iron Ore Block (789 05 MT reserve) in Odisha.

Earlier JSW Group Chairman Sajjan Jindal had said that the acquisition of BPSL marks JSW Steel's entry into the eastern region. The acquisition not only aligns with core business and purpose but also establishes presence and accelerates growth vision in eastern India, Jindal had said in a letter to BPSL employees.

Located in Odisha's Jharsuguda, BPSL recorded a crude steel production capacity of 3.38 million tonnes (MT) in FY25. JSW Steel had envisaged ramping up BPSL's capacity to 5 MT, eyeing to benefit from the higher sales and realisations from value-added products such as colour-coated, galvanised sheets, pipes and wires.

However the future status of the plant and operations remains uncertain as of now, the markets research firm said.

In terms of impact on supplies, around 2.5 MT of largely flat products such as HR and CR coils will be hit if the BPSL plant goes from JSW Steel. The pipe manufacturers and re-rollers will be somewhat affected.

But now, with the BPSL expansion derailed by the court order, JSW's target of 50 MT of crude steel capacity by 2030 has received a minor setback.

The company is most likely now to focus on its other investments in Odisha- notably the 5 MT plant it has proposed to set up with POSCO, as well as the 13.2 MnT greenfield facility it is planning to set up with an outlay of Rs 65,000 crore.

A query sent to JSW Steel seeking a reaction over the analyst's comments did not elicit any reply.