Indian tycoon world's largest
steelmaker By Siddharth Srivastava
NEW DELHI - An Indian has emerged as the world's
largest steelmaker and the richest man in Britain.
Non-Resident Indian (NRI) business
tycoon Lakshmi N Mittal's Ispat International has become
the world's largest steelmaker with the acquisition of
Wilbur Ross's Ohio-based International Steel Group (ISG)
in a deal worth US$17.8 billion that enables the newly
named
Mittal Steel Co to straddle four continents and 14
countries. Mittal Steel is to have an annual production
capacity of 70 million tonnes and projected sales of $30
billion this year.
The deal involves
Netherlands-based Ispat International - 77% of which is
owned by Mittal, 54 - buying his family's LNM Holdings
in a reverse takeover by issuing shares worth $13.3
billion to form a new company called Mittal Steel Co NV.
This new company will then pay $42 per share in cash and
stock - or about $4.5 billion - to buy ISG.
With
this deal, Mittal, who ranked fifth in the Sunday Times
Rich List last year with an estimated fortune of $3.5
billion, is now known to be worth $12 billion, placing
him ahead of Russian oligarch Roman Abramovich ($7.5
billion) and the Duke of Westminster ($4.9 billion),
British daily The Independent reported on Tuesday.
Mittal said the new formation, Mittal Steel,
"will be the largest and the most global steel company
in the world that will be listed in New York Stock
Exchange and Euronext Amsterdam". Post-merger, the
family will own 88% of the combined group. Minority
shareholders of Ispat International will hold 3% and ISG
will hold 9%. Mittal described his newest purchase as
"one of the largest integrated steel producers in North
America".
Until now, Arcelor SA, based in
Luxembourg, was the world's biggest steelmaker, with
reported sales of $29.2 billion in 2003. Analysts have
said Mittal's move to acquire ISG and restructure his
own assets enabled him to win a crucial "virility" test.
According to Mittal himself, more than creating the
world's largest steel group, this acquisition is
actually a part of a grand strategy. "Becoming the
largest steel producer is not an end in itself - to put
forward a globalized steel industry is the more
important thing. There is still room for consolidation
in the world steel industry," he said after the
acquisition.
Lavishing praise on Mittal, who is
referred as a "turnaround specialist", The Independent
said: "He is as much at home in Kazakhstan, where he
controls not only the steel works but also the trams, as
he is in 18/19 Kensington Palace Gardens, the 15-bedroom
mansion with an underground parking space for 20 cars,
which he bought last year for $128 million from Formula
One magnate Bernie Ecclestone. His industrial empire
stretches from Indonesia to Poland, via Mexico, the US,
South Africa and Trinidad." The Daily Telegraph,
reporting on the merger deal, said "separate accounts
released recently showed Mittal also paid himself a $2
billion dividend this year, dwarfing the $700 million
dividend paid by Arcadia Group to retail entrepreneur
Philip Green last week".
Indeed, Mittal has the
habit of being in the news. First it was for buying
decrepit steel mills in remote parts of the world and
cranking them into winners that led Wall Street Journal
to call him "Carnegie from Calcutta", then for buying
the most expensive residence in the United Kingdom,
Kensington Palace in London, and more recently this June
for the $50 million extravaganza of a wedding of his
daughter in a 17th-century chateau near Paris.
In the 1970s, his father, Mohan Lal Mittal, who
ran small rolling mills in Howrah, near Kolkata, got
disgusted with state controls that prevented private
investment in large steel projects. Mittal Sr went to
Indonesia, where he set up his first steel plant with an
investment of $15 million. In 1994, economic
liberalization and a projected steel shortage led Mohan
Lal to shift focus back to India. The group underwent a
partition of business interests in the family. All
foreign businesses were hived off into Ispat
International, a separate group, under the control of
Lakshmi while the Indian operations remained with his
younger brothers P K Mittal and V K Mittal. When he took
charge of Ispat International, its steelmaking capacity
was only 5 million tons. In the past 10 years, it has
shot up to 70 million tons. Lakshmi steadily built on
his father's acquisitions in the West Indies, Mexico,
Canada, Germany, East Europe and Ireland, and now
controls about twice the total steel production of
India, worldwide. The latest deal incidentally makes him
the richest Indian alive.
Ispat International
went for listing in 1997 on New York Stock Exchange.
After this, most of the group's acquisitions were made
under another company, Mittal Steel, as other
shareholders were wary of entering such risky zones as
Eastern Europe. Analysts say the special facet of
Mittal's rise was that he turned the steel industry's
crisis in 2001-04 after a global slowdown into an
opportunity. First he left the assured Indian market to
his brothers to explore the world, then marched headlong
into Eastern Europe when others wouldn't go. He then
bought ailing plants all over the world - in Romania
(2001), Algeria (2001), South Africa (2002), the Czech
Republic (2003) and Poland (2004) - at virtually
throwaway prices and turned them around.
If his
track record is anything to go by, clearly we have not
heard the last of Lakshmi N Mittal yet.
Siddharth Srivastava is a New
Delhi-based journalist.
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Mittal Steel Co to straddle four continents and 14
countries. Mittal Steel is to have an annual production
capacity of 70 million tonnes and projected sales of $30
billion this year. 
