Mittal makes headlines again

  • Business
  • Saturday, 04 Feb 2006

IF there is one Indian-born industrialist who managed to hog the limelight in the European press for more than a week, it has to be steel magnate Lakshmi Mittal who controls Mittal Steel Co. 

The richest Indian, who is also the world’s third richest man and whose wealth Forbes puts at US$20bil, launched a takeover of Luxembourg-based Arcelor SA - the world’s second largest steel maker- for US$24bil. For now, the takeover plan is not going his way as leaders in Luxembourg, France and Spain where Arcelor has factories, are opposing the deal for fear it would result in many jobs cuts. 

This is despite the assurances Mittal has given that “cost-savings would come from slimming down of the companies’ purchasing, distribution and operational businesses, and not from layoffs.” Arcelor has 96,300 workers.  

While Mittal says the merger would “create value”, Arcelor CEO Guy Dolle has criticised Mittal Steel’s takeover bid, saying it was “destructive to shareholder value.” 

To fend off Rotterdam-based Mittal Steel’s bid, Dolle had hoped for support from Nippon Steel Corp - the world’s third largest player – and South Korea’s Posco. However, Dolle has since softened, indicating he is “flexible”, should Mittal want to talk. 

Lakshimi Mittal

Why the battle for supremacy when Mittal Steel is already in the forefront of the global steel industry? 

Fortune said Mittal believes the “steel industry would consolidate around three or four super efficient heavyweights, with its own group in the vanguard.'' 

He wants to combine both Mittal Steel and Arcelor to create a super giant that would control 10% of the global steel production. With that, his empire would stretch from Asia through Africa and Europe and onto the US. 

This is not the first time Mittal has been caught in controversy. In 2002, he had handed a donation of £125,000 to Britain's Labour Party and this led to the Mittalgate storm. 

It was reported then that the “British Prime Minister intervened to help Mittal buy a large Romanian steel company by writing to his Romanian counterpart. This affair left Labour wide open to the charge that the party was doing favours in return for donations.” 

''Mittal has always provided plenty of ammunition for his critics. His personal fortune, worth about US$20bil, is flaunted in a manner that recalls the excesses of 19th-century American industrial barons,'' Fortune said. 

Just for his daughter Vanisha's wedding, he spent £30mil for a week of “pomp and pageantry in the finest style'' that culminated in a party at the Versailles and a concert by Australian pop star Kylie Minogue.  

Born into a family of steel makers in Rajasthan, India, the 55-year-old Mittal now lives in London. The father of two (Vanisha and Aditya - the CFO of Mittal Steel) started out with a steel mill in Indonesia in 1976.  

Since 1990, he built his company, Mittal Steel, through three of the world’s 10 largest steel takeovers. His steel holdings include operations in the US, Poland, South Africa, the Czech Republic, Romania, Macedonia, Ukraine, Kazakhstan, China and Canada. 

“His ability to transform ailing state-owned steel mills into money spinners is a result of an operating efficiency that his rivals struggle to match.  

“And his secret is knowing when to hunt down acquisition targets,'' Fortune said, adding that Mittal was confident he could overcome any hurdles.  

He lives in a £9mil (RM62mil) house, grandly named Summer Palace, on Bishops Avenue, north of London. But last year, he paid £57mil for a house in Kensington Palace Gardens that was owned by Bernie Ecclestone, the Formula One promoter. 

The sale was by far “a record for a British property. Comprising Turkish baths, a ballroom and a jewel-encrusted swimming pool in the basement, the house is next door to Kensington Palace, the former home of the Prince and Princess of Wales, and to the London home of the Sultan of Brunei.” 

He rarely gives interview, but in a recent one, he said there were two things that he enjoyed. “One is working and the second is success. It brings more and more opportunities. You look at those opportunities, you take some decisions and ... you love it.” 

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