JSW Energy's ₹ 16,084 Crore KSK Mahanadi Acquisition: Why the Creditors Kept 26%

JSW Energy won KSK Mahanadi Power, a 3,600 MW coal plant in Chhattisgarh, through insolvency for ₹ 16,084 crore. The creditors kept 26% of the equity on top of ₹ 15,985 crore in upfront cash, so they shared the turnaround upside. In April 2026 JSW exercised its option to buy that 26%, which takes it to 100% once closing formalities finish.

By Kautilya PE · Updated November 11, 2026 · 6-min read

Why did the creditors keep 26% of the KSK Mahanadi plant?

JSW Energy paid ₹ 16,084 crore for a power plant whose lenders were owed twice that. It was one of the largest thermal takeovers through India's bankruptcy courts, and the clever part was the structure: the creditors did not just take cash, they kept 26% of the plant, sharing in the turnaround they were funding. About 13 months later JSW moved to buy that slice too, and is set to own all of it.

• The setup. The resolution plan was approved by the NCLT on February 13, 2025 and completed on March 6, through a purpose-built subsidiary. Financial creditors took ₹ 15,985 crore in upfront cash plus 26% of the equity; operational creditors got ₹ 99 crore. Reports say JSW planned to fund it with about ₹ 13,000 crore of debt and ₹ 3,084 crore of quasi-equity.
  • In plain terms, the Insolvency and Bankruptcy Code (IBC): when a company cannot pay its debts, control passes from its owners to its creditors, who run a supervised auction for a new owner. The money goes to the lenders, the old owners usually get nothing, and a court approves the winning plan.
• The move. JSW took 74% at closing and the creditors 26%, an equity split rather than a clean cash exit. In April 2026 it exercised its option to buy the creditors' 26% and reach 100%. It also acquired, through a separate insolvency, the Raigarh Champa rail company that hauls the plant's coal, for ₹ 700.10 crore, and renamed the plant JSW Mahanadi Power.
• The point. Two lessons in one deal. For strategy: a half-built distressed asset is a bargain because finishing it is far cheaper than building from scratch, and JSW inherited land, coal, rail and grid connections worth far more than the price. For deal-making: leaving creditors a slice of equity can make a resolution easier to agree, because they share the upside rather than just absorbing a haircut, and the buyer can buy them out later.

The deal at a glance

The creditors' choice: a 50% haircut on their claims, but 235% of what liquidating the plant would have paid them. Sources: NCLT order.

Deal Radar

The numbers

Over five years in insolvency, then a staged takeover: 74% at closing, the rest by option about 13 months later, plus the railway. Sources: NCLT order, JSW releases.

What actually happened. Chhattisgarh and Mumbai, 2019 to 2026

• A distressed plant sold for a fraction of what it would cost to build. KSK Mahanadi had been in insolvency since 2019, its lenders owed ₹ 32,335 crore. JSW won it for ₹ 16,084 crore, about half the claims but well over double the liquidation value. The plant already had land, coal supply, rail, water and grid connections for all 3,600 MW, and half was generating. Buying that through the courts cost far less than assembling it from scratch, which is the whole appeal of a distressed acquisition.
  • Why that matters: this is the mirror image of a trophy purchase. Instead of paying a scarcity premium for an irreplaceable asset, JSW paid a deep discount for a damaged one, and the value is the gap between the price and the cost of replacement.
• The creditors kept skin in the game, which helped the deal get done. Most resolutions pay creditors in cash and end the relationship. Here JSW took 74% and left the lenders 26%, so they shared in the recovery if the turnaround worked. That alignment can make a plan easier to approve, because creditors accepting a 50% haircut are more willing when they keep a stake in the upside. JSW then exercised its option to buy the 26% out in April 2026, to take full ownership.
  • In plain terms, a haircut: the share of what it is owed that a lender agrees to give up. A 50% haircut means creditors accepted about half, because the plant was worth far less than the loans made against it, though 235% of liquidation made the plan the best available outcome.
• JSW secured the supply chain, not just the plant. A coal plant is only as reliable as its fuel logistics, so JSW also bought the Raigarh Champa railway that hauls its coal, through a separate insolvency, for ₹ 700.10 crore, completed March 26, 2026. Owning the rail line removes a critical dependency and a chokepoint. Buying the plant and the railway that feeds it is a full supply-chain approach, not a single-asset grab.

Featured Deal

The 26% the creditors kept: why a resolution left lenders holding equity

Real deal, NCLT-approved February 2025; completed March 6, 2025; option to reach 100% exercised April 9, 2026. Figures from JSW releases and the NCLT order. Note: this deal completed in early 2025 and is covered across its full arc. Not investment advice.

First, the unusual structure

• Most bankruptcy resolutions pay creditors an agreed sum in cash and hand the buyer 100% of the company. The relationship ends at closing.
• Here JSW took only 74% of the equity at closing. The financial creditors kept the other 26%, alongside ₹ 15,985 crore of upfront cash.
• About 13 months later, in April 2026, JSW exercised its option to buy that 26% and move to full ownership. The creditors held equity through the first year of the turnaround, then sold it back.

The three-part answer

• Leaving creditors a stake shares the upside they are funding. Creditors accepting a 50% haircut are giving up half their money on the bet that the plant recovers. If they keep 26%, they participate in that recovery rather than just absorbing the loss, which makes the haircut easier to swallow. Aligning the buyer and lenders on the outcome, rather than settling entirely in cash, can be what gets a difficult plan approved.
• It lowers the buyer's upfront cash without lowering the price. Paying creditors partly in equity means JSW committed less cash at closing than a 100% cash deal would require, while still delivering the full ₹ 16,084 crore of value. For a buyer running several deals at once, conserving cash matters, and the equity it handed over was a claim on a business it controlled and intended to fix anyway.
• The buyout option turns the creditors' stake into a temporary bridge. JSW did not intend to share the plant permanently; it structured an option to buy the 26% back. That let creditors ride the recovery and then exit at a value reflecting the turnaround, while JSW reached the 100% it always wanted. The equity split was never the end state; it was a financing and alignment tool with a built-in exit.

The structure in full: 74% to JSW and 26% to creditors at closing, then a buyout option exercised about 13 months on. Sources: NCLT order, JSW filings.

Sector Signal

Three things this deal confirms about Indian power and distressed M&A

The pattern: the bankruptcy courts have become the main route to acquire thermal capacity, and JSW is now a repeat buyer. Sources: Insolvency Tracker, NCLT orders.

• The bankruptcy process is now the main way to buy thermal power cheaply. This is one of the largest thermal resolutions India has seen, and it follows other power-sector resolutions. As a fleet of over-leveraged coal plants works through insolvency, the IBC has become the primary route to acquire baseload capacity at a discount to replacement, with JSW now a repeat buyer.
• India is still buying coal even as it builds renewables. JSW added 1,800 MW of operating coal capacity, up to 3,600 MW when the expansion completes, right as its renewable pipeline grows. Peak demand keeps rising, so despite the net-zero pathway, coal remains the backbone of supply, and distressed thermal assets are being bought, not retired. The transition is additive for now, not substitutive.
• Consolidators are buying the supply chain, not just the asset. JSW did not stop at the plant; it bought the railway that feeds it coal. In distressed infrastructure the operational dependencies, fuel, logistics, grid, are as important as the asset itself, and securing them is what separates a reliable acquisition from a fragile one. Expect serious consolidators to keep buying the whole chain, because a cheap plant with an insecure fuel line is not actually cheap.

The economics of a half-built plant: finishing what exists is far cheaper than building it new, which is the core of the bargain. Sources: JSW release, NCLT order.

Valuation Pulse

Was ₹ 16,084 crore a bargain? Three ways to judge a distressed price

The full supply-chain buy: the plant for ₹ 16,084 crore, and the railway that feeds it for ₹ 700.10 crore, both through insolvency. Sources: JSW filings.

• What '235% of liquidation value' means: the plan pays creditors more than twice what they would get by selling off the plant's assets piecemeal. In an insolvency the liquidation value is the floor, so a plan far above it is what makes creditors prefer a sale to a shutdown, even at a steep haircut.

The discipline. Judge a distressed price against replacement cost and the alternative of liquidation, not the old loans. The 50% haircut is a headline about lender losses; the 235% of liquidation shows the plan was the best outcome available. For JSW, the value is the gap between ₹ 16,084 crore and what 3,600 MW of connected, half-built capacity would cost to create, which is large. The real risks are execution, finishing the 1,800 MW still under construction, and the debt taken on alongside other deals.

Deal Structure Clinic

The equity-split resolution, and why the buyer left creditors a stake

In plain terms, a resolution plan: The offer a bidder makes for an insolvent company. It is not a purchase from an owner; it is a proposal to the creditors for how much they will be repaid and how, approved by their vote and sanctioned by the tribunal. Once approved it binds everyone.

In plain terms, paying creditors in equity: Instead of settling entirely in cash, the buyer gives creditors shares in the company being rescued. They receive less cash upfront but keep a claim on the future value, so their return depends partly on how well the buyer runs the asset.

Three mechanics this deal showcases

What the resolution buys: an operating half, a half-built half, and a fuel-and-logistics chain already in place. Sources: JSW release.

• An equity split aligns the buyer and the creditors. By taking 74% and leaving lenders 26%, JSW gave creditors a reason to want the turnaround to succeed, not just to be paid and leave. Shared ownership aligns incentives during the fragile early period after a rescue, when the asset still has to be restored to health. Alignment is worth engineering when the outcome depends on execution the creditors are trusting the buyer to deliver.
• The buyout option keeps control on a schedule. JSW structured the right to buy the 26% later, so shared ownership was always temporary and the path to 100% set from the start. That lets a buyer conserve cash and share risk early, then consolidate once the asset is performing and the remaining stake reflects the recovery. Build the exit into the structure, so shared ownership does not become permanent by accident.
• Buying the supply chain removes the dependency that kills cheap assets. A distressed plant bought without its fuel logistics is exposed to whoever controls the coal line. JSW closed that risk by acquiring the railway too, through its own insolvency. When you buy distressed infrastructure, map the critical dependencies and secure them, because the discount on the asset means nothing if a supplier or a logistics chokepoint can hold it hostage.

M&A 101

Buying a distressed asset through the courts: the three-step playbook

In plain terms, a distressed acquisition: Buying a company that cannot pay its debts, through a court-run insolvency process rather than from a willing seller. The price is set by what creditors will accept against the alternative of liquidation, and the buyer inherits an asset that is usually damaged and needs restoring.

The three steps, using this deal

• Step 1: Value the discount to replacement, not the discount to debt. The prize in a distressed deal is buying something for far less than it would cost to build. JSW paid ₹ 16,084 crore for 3,600 MW of connected, half-built capacity that could not be replicated for the money. Anchor your bid to what the asset would cost to create from scratch, because that gap, not the haircut, is your margin of safety.
• Step 2: Structure the creditors' payout to get the plan approved. Creditors decide the outcome, so shape the plan to what they will accept: enough cash for certainty, and here a 26% stake for upside. Leaving lenders a share aligned them on the turnaround and reduced JSW's cash at closing, while a buyout option preserved the path to full control. Design the payout around the voters, not just the price.
• Step 3: Secure the whole operating chain before you rely on the asset. A cheap plant is only cheap if it can actually run, which depends on fuel, logistics and grid access. JSW bought the coal railway alongside the plant, closing the biggest operational dependency. After a distressed purchase, identify what the asset needs to function reliably and secure it, because the turnaround fails on the missing link, not the headline asset.

Where it leaves JSW: past 10 GW of operating capacity while carrying a heavy acquisition-debt load. Sources: JSW release.