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"Wealth hasn’t changed our lives"
The Economic Times, July 25, 2005
It’s been in the air for a while now. Over the Past few months, the buzz that LN Mittal is soon
going to set his eyes on India was only getting louder. The third richest man on earth after
the Big Bill and bulge-bracket investor Warren Buffett, is finally moving in for the kill. ET was
the first to break the big story of Laxmi Niwas Mittal’s India plans-he has just signed two
separate JVs with oil major ONGC & OVL and is now in advanced stages of finalisation for a 10
MT steel plant in Jharkhand.
Business-savvy readers of ET are familiar with the man and his mansions. From time to time,
we’ve brought you dispatches from Mittal Steel, the $30-billion, London based conglomerate
from where Mr Mittal is giving Bill Gates a run for his numero uno status – fighting the
new-age tech business with nerves of steel. This move is perhaps the most definitive
demonstration ever that he’s serious about India. While many would like to see it as
homecoming of sorts, India’s most famous corporate czar Laxmi Niwas Mittal himself, in his
carefully cultivated down-to-earth style, sees the oil deal on one which lends itself to energy
security for his country apart from bringing together two strong business entities. It’s
perhaps his way of putting his money where his mouth is.
The CEO of Mittal Steel is valued at an eye-poping $25 billion – that’s close to Rs 1,10,000
crore! – and is third on the global rich list rubbing shoulders with the likes of Bill Gates and
Warren Buffet. His #30 billion steel empire has been created largely by buying out
underperforming steel plants across the globe – and then turning them around. Today, Mittal
Steel has a presence in around 14 countries and stretches from Poland to South Africa. Last
weekend, however, was spent in Delhi as Mittal jetted in with Usha, after dinner on Friday.
And by Saturday evening, the big Oil deal was all done. Hectic meetings with two union
ministers and a battery of top ONGC officials through the day notwithstanding. LN Mittal had
lost none of his energy and charm when we caught up with him for a cup of tea. ET’s Ishani
Duttagupta, Soma Banerjee & Shubham Mukherjee covered a gamut of issues over a leisurely
chat. Excerpts from an exclusive interview.
1. What’s your outlook on the steel sector?
The Steel sector has been volume centric in the past and prices have been volatile with
consolidating taking place across different regions of the world. The year 2004 was an
excellent one and the industry benefited from the turn of events in China.
This changed recently due to the overhang of inventories in anticipation of the huge projected
growth. Industry is now trying to liquidate stocks and cut production to limit the overhang.
Apart from Europe, demand has largely been steady in other parts of the world. But with
recent developments on demand and minimizing of the overhand, things are expected to be
better in the fourth quarter.
2. You are also setting up a steel project in Jharkhand, which would be the group’s first real
investment in India. What is the status?
We plan to set up a 10-million-tonne steel plant in Jharkhand, talks for which are in the final
stages. We are hopeful of tying up details soon. I am waiting for the national ore policy,
which would help us in crystallizing our plans soon. Besides, we have also met the steel
minister and are now working on the clearances. We hope to sign the MoU within the next
few weeks.
3. How do you rate steel companies in India. Are there any worth taking over?
There are four or five large steel companies in India which are doing well. They are all run by
people who have global aspirations even as foreign investors are coming to India. I don’t
think they are going to put any of them up for sale. So it’s really a hypothetical question on
whether I would acquire these companies.
4. What does this diversification into oil mean for you?
Oil and steel are both volatile commodities which often move in tandem. As the world’s
largest steel company we have been a leader in consolidation in that sector and hope to bring
our knowledge and experience to the oil market which is also very globalised. As a global
player in one commodity, we hope to add the same perspective to the other one which could
also serve as natural hedge.
5. Are there any plans afoot to enter any of the new economy sectors. Maybe your son or
daughter could have expressed an interest there…
I belong to the old boys club and even my son Aditya is very happy managing the steel
business, which also keeps him very busy. My daughter has just joined the company board
and I hope to see her getting more and more involved in the existing business. So I do not
think there is any thing to announce on the new economy front yet.
6. You are valued at $25 billion. What do you do with so much money?
All this money is just on paper. If the sector does well then our stocks do well and that’s
when valuations go up. After a point it does not matter if it’s 10 billion or 20 billion. The
wealth has not changed our lives in any way. However, I believe in destiny.
7. Your yachts and mansions make almost as much news as your acquisitions. How does it
feel?
I really don’t give too much thought to such things. It’s just excitement created by the
media.
8. You are in the company of Bill Gates and Warren Buffet as the third richest man in the
world. Have you ever met them?
No, we have never met.
9. Do you have any political learnings and aspirations?
Since we operate in 14 countries, it would be difficult of us if we get identified with any of the
governments. However, in UK, I am, in my personal capacity, a supporter of the Labour Party.
10. How would you compare China, US and India as steel markets?
China is a market to reckon with, and is emerging as the largest producer and consumer of
steel. We recently acquired stake in China’s Huan Valin Steel Group. The US on the other
hand, is a fairly saturated market. As for India, the demand for steel is 100 MT, while output
is currently only 35 MT. Growth of the Indian steel sector last year was just 4% which fell far
short of the GDP growth. India needs far greater investments in steel and I’am big champion
for this at all global fora
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