Post the split of the business, the destinies of L. N. Mittal and his siblings have been dramatically different. But one can also find them converging on some fronts now
For steel tycoon and Arcelor Mittal Chairman Lakshmi Niwas Mittal, leaving home ground to face the challenges and opportunities of the global business world, way back in 1976, proved to be the most ingenious business decision he ever took in his entire life. Initially, the move was made so that he could manage the international operations of Nippon Denro Ispat, his father M. L. Mittal’s steel firm; an expedition that started with a defunct steel plant in Indonesia. As the world now knows and acknowledges without batting any eyelids, turning around depressed steel assets was meant to be one of Mittal’s greatest strengths; coupled with a keen eye for the right opportunity. Ultimately the company’s operations had to be split in the family due to differences, and the international operations went to L. N. Mittal. From there on, L. N. Mittal began an exciting journey of self discovery and a dizzying ascent to the top of the global steel industry, a journey that culminated in the much celebrated takeover of Arcelor to form the Arcelor Mittal group. As far as the younger two brothers, Pramod Mittal and Vinod Mittal are concerned, they got the Indian operations of the company as per the split, and run Ispat Industries as Chairman and Vice Chairman respectively.
While it is hard to compare the two companies head to head, there are some interesting aspects of their businesses that are worth a mention. The most interesting is the aggression with which they entered each other’s turf, and also in the manner in which they have often faced issues with governments on the way. Through their holding company Global Steel Holdings Ltd., Pramod Mittal and Vinod Mittal have taken over steel making facilities in Philippines, Bulgaria and Nigeria. Arcelor Mittal continues to struggle with respect to operations in India (part of the reason being a now defunct condition in the split that prevented Lakshmi Mittal from doing so). In fact, the elder Mittal tried his trademark brownfield route when it tried to acquire SAIL and later IISCO, which were both shot down by the government. Even his plans for Greenfield expansion in Jharkhand with a 12 mtpa plant have faced abnormal delays.
In the case of Ispat Industries, its total output expanded remarkably to 16.4 mtpa by 2006, but of late, some of its projects ran into major trouble. The Nigerian government cancelled its SOPs to the company in 2008 for 1.3 million ton Ajaokuta Steel and Nigerian Iron Ore Mining. It planned to help in rehabilitation of Zimbabwean government owned Zimbabwe Iron & Steel Company, which was mired in a corruption scandal that rocked the entire establishment; and the project was given up. Similarly, its plans in Serbia also ran into trouble. By 2008, the company’s capacity was again back to 2.9 mtpa. One of the biggest problems with the company has apparently been its investments in nations which have been prominent on the international corruption watch list.
For steel tycoon and Arcelor Mittal Chairman Lakshmi Niwas Mittal, leaving home ground to face the challenges and opportunities of the global business world, way back in 1976, proved to be the most ingenious business decision he ever took in his entire life. Initially, the move was made so that he could manage the international operations of Nippon Denro Ispat, his father M. L. Mittal’s steel firm; an expedition that started with a defunct steel plant in Indonesia. As the world now knows and acknowledges without batting any eyelids, turning around depressed steel assets was meant to be one of Mittal’s greatest strengths; coupled with a keen eye for the right opportunity. Ultimately the company’s operations had to be split in the family due to differences, and the international operations went to L. N. Mittal. From there on, L. N. Mittal began an exciting journey of self discovery and a dizzying ascent to the top of the global steel industry, a journey that culminated in the much celebrated takeover of Arcelor to form the Arcelor Mittal group. As far as the younger two brothers, Pramod Mittal and Vinod Mittal are concerned, they got the Indian operations of the company as per the split, and run Ispat Industries as Chairman and Vice Chairman respectively.
While it is hard to compare the two companies head to head, there are some interesting aspects of their businesses that are worth a mention. The most interesting is the aggression with which they entered each other’s turf, and also in the manner in which they have often faced issues with governments on the way. Through their holding company Global Steel Holdings Ltd., Pramod Mittal and Vinod Mittal have taken over steel making facilities in Philippines, Bulgaria and Nigeria. Arcelor Mittal continues to struggle with respect to operations in India (part of the reason being a now defunct condition in the split that prevented Lakshmi Mittal from doing so). In fact, the elder Mittal tried his trademark brownfield route when it tried to acquire SAIL and later IISCO, which were both shot down by the government. Even his plans for Greenfield expansion in Jharkhand with a 12 mtpa plant have faced abnormal delays.
In the case of Ispat Industries, its total output expanded remarkably to 16.4 mtpa by 2006, but of late, some of its projects ran into major trouble. The Nigerian government cancelled its SOPs to the company in 2008 for 1.3 million ton Ajaokuta Steel and Nigerian Iron Ore Mining. It planned to help in rehabilitation of Zimbabwean government owned Zimbabwe Iron & Steel Company, which was mired in a corruption scandal that rocked the entire establishment; and the project was given up. Similarly, its plans in Serbia also ran into trouble. By 2008, the company’s capacity was again back to 2.9 mtpa. One of the biggest problems with the company has apparently been its investments in nations which have been prominent on the international corruption watch list.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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