Lakshmi Mittal and the Growth of Mittal Steel

Topics: Arcelor Mittal, Mittal Steel Company, ArcelorMittal Pages: 2 (766 words) Published: November 15, 2010
In 2007 a controversial merger between Mittal Steel and Arcelor closed, creating ArcelorMittal. The merger was the brain child of Mittal CEO, Lakshmi Mittal and his son, Aditya. Under Lakshmi's leadership, the family owned Mittal Steel had grown from obscure origins in India to become the largest steel company in the world. The story dates back to the early 1970s. At that time, the family-owned company was facing limited growth opportunities in India. Regulations constrained expansion opportunities, and Mittal was facing competition both from state-owned rival, Sail, and a private national champion, Tata Steel. So Lakshmi's farther financed his son, helping him set up a steel-making plant from scratch in Indonesia in 1975. To reduce costs in his Indonesian plant, Lakshmi did not smelt iron ore, but instead directly purchased reduced iron pellets. His supplier of these pellets was a struggling state-owned steel firm in Trinidad. Impressed by Lakshmi's success in Indonesia, in 1975 the Trinidadians asked him to turn their firm around under a contract. Mittal set up another company to run the Trinidad plant. In 1989, after a successful turnaround, Mittal purchased the Trinidadian plant in its entirety. Now the company that had been born in India had two major foreign operations, but that was just the beginning. The global steel industry had been in a slump for a quarter of a century due to excess capacity and slow demand growth as substitute materials replaced steel in a number of applications, but Lakshmi saw opportunity in purchasing the assets of distressed companies on the cheap. His belief was that the global steel industry was about to turn a corner, driven in large part not only by sustained economic growth in developed nations, but also by growing demand in newly industrializing nations including China and his own native India. He saw all sorts of opportunities for buying poorly run companies as they came up for sale, injecting them with capital, improving...
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