Brij Bhushan Singhal started Bhushan steel in 1987, by acquiring a steel plant which was struggling to survive. He entered into the steel business along with his sons Neeraj and Sanjay, bringing the old steel plant to life. The company focused on the production of secondary steel, and its customers were majorly from the auto sector. Bhushan steel had four major plants. viz Sahibabad, Khopoli, Odisha, Hosur. They had Sophisticated and high-end technology to support their production and used the help of Japanese technology to manufacture steel. This indeed gave the company an edge over the other companies in the market.[1]


The time during which they had set foot in the industry was a period where the steel business was at its peak, and there was a lot of optimism surrounding it as well. The industry was dominated by state-run enterprises which were holding the lion’s share of it. The demand was also considerably high, both in the global as well as domestic markets. They soon rose to become the third- largest steel produce in the country, with big names such as Maruti Suzuki, Mahindra and Mahindra, and Tata motors as their major cities.[2]


Bhushan steel imported most of their input, and it restrained and limited their production activities. Hence they decided to construct a new plant in Odisha so as to address this issue, the decision came at a time when the business and the sector as a whole was flourishing and thus, the banks were more happy to lend them. Bhushan Steel got a huge amount of loan from the banks and started the construction of the plant in 2005. As per the plan, the plant was set to help the company in controlling the availability of raw material and ensure that there was enough supply of ore and coal to meet the production needs.[3]


Amongst everything, the completion of its Odisha plant seemed to be Bhushan Steel’s only ray of hope. The first phase of construction was completed in 2010. And by the end of the FY 2010-11, the company showed a debt of 11,404 crores. However, Bhushan Steel was still undeterred and went on borrowing with a view to complete the construction. The firm, along with the lenders, believed that once the plant reaches its full capacity, they would make enough profits to repay the debt. But what actually happened was entirely different. Enormous borrowing and falling profits slowly made the company tremble with losses. While Bhushan Steel went on borrowing one loan after the other, the plant’s construction never finished. Further, in 2013 the company witnessed a terrible accident which killed 3 workers and left 29 injured. While problems took new faces, everyone was shown the reality, which was bitter than they thought. The company’s spending alone stood at 1600 crore by the end of 2014.[4]



The dirty dozen refers to 12 of the largest defaulters in corporate India against which banks have been asked to initiate bankruptcy proceedings by the RBI. These 12 defaulters account for nearly Rs. 2.8 Lakh crore worth of bad loans and include the likes of Essar steel, Bhushan Steel and Bhushan power and Steel.[5] Bhushan steel has been Charge sheet by the Serious fraud Investigation office (SFIO) naming 283 accused. Apart from SFIO, the CBI and ED are also probing this case. According to the investigation agency, Bhushan Power and steel limited misused funds by fraudulently diverting Rs 2,348 crore (approx.) from the loan account of Punjab National Bank (New Delhi and Chandigarh), Oriental Bank of Commerce (Kolkata) IDBI bank (Kolkata) and UCO bank (Kolkata) to the accounts of various shell companies without any obvious purpose. Bhushan power and steel Ltd allegedly diverted the funds through its directors and staff.

Bhushan represented one of the largest of the ‘Dirty Dozen’ distressed companies put into bankruptcy under India’s new Code last year at the request of the country’s central bank. The Resolution Professional appointed under the IBC to supervise the restructuring was Vijaykumaar V Lyer, of Deloitte. Bhushan Steel’s lead bank was State Bank of India. Bhushan, a mid-sized Indian steelmaker with annual revenue of around US$2 billion, was put into proceedings after proving unable to service its debt of more than US$6.2 billion.[6]

An application for initiating Corporate Insolvency Resolution Process (“CIRP”) was filed by Punjab National Bank against BPSL under section 7 of the Insolvency and Bankruptcy Code, 2016. In pursuance of the initiation of CIRP and the public announcements therein, resolution plans were submitted by Tata Steel Limited and JSW Steel Ltd (“JSW”). It is imperative to note that the Committee of Creditors (“CoC”) had refused to open the resolution plan submitted by Liberty House, as it was filed post the deadline to submit resolution plans as per section 25 (2) (h) of the Code read with Regulation 39 (1) of the CIRP Regulations. Against this decision of the CoC, an interim relief was ordered by the NCLT on an application filed by Liberty House which in turn was challenged before the Appellate Tribunal (“NCLAT”) by Tata Steel Ltd.[7]

SECTION 7 of the said Code states- Initiation of corporate insolvency resolution process by financial creditor.[8]

Bhushan Steel was one of the accounts in RBI’s initial list of companies referred to the Insolvency and Bankruptcy Code for resolution. Prior to that, the consortium led by SBI and PNB had failed to revive the company under stressed asset resolution schemes. These included S4A and 5/25 schemes for which the Joint Lenders Forum was formed by the consortium.[9]


The banks which were once very positive about lending to Bhushan Steel now started to feel the increased burden of bad debts and demanded repayment. A forensic audit was also put into place, which was led by Deloitte. Alongside this, the CBI also started investigating the case. This brought into various light mishappenings which were otherwise not visible. The CBI probe claimed that the then Chairman of Bhushan Steel, S.K.Jain, bribed bank officials to grant loan extension and had defaulted more than 100 crores. The stock prices fell drastically as stakeholders panicked and looked for immediate relief. By 2014, the company officially entered the bankruptcy court. It was auctioned as per the rulings. Among the huge bidders JSW and Tata Steel, and the latter emerged as the winner. It is noteworthy that Bhushan Steel has been the first company to emerge successfully out of bankruptcy. The banks had to take a 37% haircut on their dues, considering the rest to be standard. As per the documents, Bamnipal steel and Tata steel together hold a 72.65% stake in the company. Further, Tata steel officially took control of Bhushan Steel by repaying a debt of 35,200 crores and renaming it as ‘Tata steel BSL’.[10]


The paper gives a brief information, that how Bhushan steel came out from the tag of “THE DIRTY DOZEN”. Case study of Bhushan steel which turned out to be a success after Tata company acquired it with the help of Corporate insolvency resolution plan (CIRP) of Insolvency and Bankruptcy Code 2016. IBC law which aims at providing speedy resolution process to the creditors for recovery of their money due from debtors helped the creditors in the said case with the help of proceedings as mentioned in the Code. It not only helped the creditors, but also removed a company from a debt trap to a flourished company, which turned out to be a huge success. After the acquisition of Bhushan steel by Tata company it regained its position in the market. Due to IBC 2016, many companies were removed from the debt trap.


[2] Ibid

[3] Ibid


[5] Mayur Shetty, ‘Dirty dozen’ bankruptcy cases to be resolved in current fiscal,


[7] Akhil Kumar and Ayushi Singh, Punjab National Bank v. Bhushan Power and Steel Limited: Many

hits and a few misses,

[8] S.7 of Insolvency and Bankruptcy Code, 2016.



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