Lakshmi Niwas Mittal has become the world's largest steel producer through a merger between his company Mittal Steel and International Steel Group. The $4.5 billion deal will create a company called Mittal Steel with 70 million tonnes of annual steel production capacity across 14 countries. Mittal Steel will have $31 billion in annual revenues and 165,000 employees worldwide, making Mittal the richest person in the UK and one of the richest people globally. The merger is expected to significantly consolidate the fragmented global steel industry by creating the first truly international steel giant.

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Mittal Steel's
Lakshmi Niwas
Mittal: The new
Numero Uno
The Billionaire Steel King
The Other Mittals
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NOV. 21, 2004
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The King Of Steel
With 70 million tonnes of steel capacity, Lakshmi Niwas Mittal becomes the world's newest steel czar with
$31 billion in revenues, $7 billion in profits, and 165,000 employees in 14 countries.
By Sahad P.V.
On the morning of august 24 this year, Lakshmi Niwas Mittal and his son
Aditya paid a visit to the offices of W.L. Ross & Co. on New York's 52nd street.
Mittal senior had spoken less than three weeks ago with Wilbur Ross Jr., the
firm's billionaire­investor boss, but this was to be their first face­to­face
meeting. If the 54­year­old Mittal, who had flown in from London in his private
Gulfstream jet, was excited about the meeting (he had reason to be), he didn't
show it. "On that day we exchanged each other's business strategy and
discussed how both our companies could work together," recalls Ross, who
two years ago had bought a few ailing steel companies in the us and built his
20­million metric tonnes (MMT) a year International Steel Group (ISG), which
Mittal was now eyeing.
The meeting, though inconclusive, ended with the promise of a
follow up, which the 66­year­old Ross did on October 1, when
he (and ISG CEO Rodney Mott) returned Mittal's courtesy by
calling on him at his London headquarters. Now, things were gathering momentum. But Ross
had something more pressing to take care of: his third wedding. Although invited, Mittal was too
busy to make it to the October 9 wedding, but he did remember to send Ross and his new bride
a present: a jewel­encrusted silver tray with a bottle of France's rare Petrus wine (a bottle of
1897 vintage can cost £9,200, or Rs 7.36 lakh).
The two weeks that followed were no honeymoon for Ross but a whirligig of meetings. On
October 25, at 6:35 pm India time, Mittal and Ross hurriedly convened a conference call for
analysts and reporters around the world. At the hour­long briefing, listened in to by this writer,
Mittal spoke first and announced that he was buying Ross' ISG for $4.5 billion (Rs 20,700 crore)
in part cash and stock. Plain and simple. "The deal was done in 60 days flat," Ross told BT over

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L.N. Mittal: Man of steel
Strategic ties: The Iscor Plant in
South Africa
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the phone from New York, on his way to catching a flight to Boston.
THE RISE AND RISE OF L.N. MITTAL
In less than three decades, Mittal has made it from
nowhere to the very top of the steel world.
1976: Joins Ispat Indo (65,000 mta capacity) in Indonesia,
set up by his father M.L. Mittal
1989: Makes his big first move. Buys into a steel plant in
Trinidad & Tobago (Caribbean Ispat: 0.9 MMTA)
1992: Buys Sicarsta of Mexico (3.4 MMTA) for $220 million,
compared to the $2 billion invested by the Mexican
government just a decade earlier
1994: Acquires Sidbec of Canada, which has a capacity of
1.4 MMTA
1995: Buys Ispat Hamburger Stahlwerk in Germany (0.86
MMTA)
Snags Ispat Karmet in Kazakhstan
(3.75 MMTA)
1996: Ispat Karmet acquires a power
plant and coal mines to assure
supplies
1997: Ispat International comes out with a $776 million IPO. Is listed
on NYSE and Amsterdam stock exchanges.
1998: Acquires Ispat Inland in the US (5.3 MMTA)
1999: Buys Ispat Unimetal of France
2001: Beats French company Usinor to acquire Ispat Sidex
in Romania (3.83 MMTA)
Picks up a majority stake in Ispat Annaba in Algeria (0.95
MMTA)
2002: Strikes a strategic equity partnership with Iscor South
Africa (6.25 MMTA)
2003: Acquires Ispat Nova Hut in Czech Republic (2.86
MMTA)
2004: Lines up plans for a 0.4 MMTA, $100­million cold
rolling plant in China
Acquires Ispat Polska Stal in Poland (6 MMTA), BH Steel of

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ISG Chairman Wilbur Ross with
L.N. Mittal
L.N. MITTAL'S A­TEAM
Aditya Mittal
President & Group CFO Designate
An MBA from Wharton,
28­year­old Aditya has played a key role in all
acquisitions since he joined the group in 1997. Is
the anointed heir to dad Lakshmi
Malay Mukherjee
COO Designate
This former general manager at
Steel Authority of India's Bhilai
plant rose to the top team as he
successfully turned around the
Karmet plant in Kazakhstan
Rodney Mott
President & CEO/ ISG
Now designated as the CEO of Mittal Steel's combined US
operations, Mott will be a key man given his influence with the steel
industry labour unions of the US. Helped Ross turn around ISG.
Bosnia (0.2 MMTA), and announces a merger with
International Steel Group of the US (20 MMTA)
While pulling off a mega deal in less than two months is impressive in itself, it's not the speed of
the dealmaking that has made the global steel industry sit up and take note. Rather, it's the size
of it and what it could mean for steel manufacturers around the world. At one stroke, Mittal Steel
(to be hammered out by merging flagship Ispat International with privately­held LNM Holdings)
becomes the world's biggest steel maker by far (see By Far The Biggest) with 70 MT in annual
capacity, $31 billion (Rs 1,42,600 crore) in revenues, $7 billion (Rs 32,200 crore) in profits, and
165,000 employees in 14 countries. Mittal Steel's closest rival, Arcelor, only has 43 MMTA
(million metric tonnes per annum) in steelmaking capacity. On a personal note, the merger, after
which Mittal and his family will own 88 per cent of Mittal Steel (Ross will hold about 8 per cent),
also makes the steel baron Britain's richest resident and one of the world's top 15 with a net
worth of about $19 billion (Rs 87,400 crore). "The deal will dramatically change the landscape of
the global steel industry," says Mittal, who had long been nursing an ambition to be the world's
No. 1 steelmaker.
Few doubt Mittal's claim. Soon after
the deal was announced, shares of
Ispat International rose some 17 per
cent to close at Euro 30 and those of
ISG jumped higher (19 per cent) to
close October 25 at $36 (Rs 1,656).
"It's the first time we are seeing a
major international consolidation in
the industry," says Raju Daswani,
Head of Research at London­based
Metal Bulletin, a trade journal. Adds
B. Muthuraman, MD, Tata Steel: "The
industry needs stronger players."
Despite the soaring steel prices, the
industry is fragmented. Before the
deal, the top three producers had
just a 10 per cent share of the
market, but the top three iron ore (a
raw material for steel) producers
control three­fourths of the supplies

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Sudhir Maheshwari
CFO/ LNM Holdings
Will play a significant role in the new entity. He has
played an important role in all M&As since he joined
the group in 1989 and has been the CFO of LNM
Holdings since 1992
Bhikam C. Agarwal
CFO/ Ispat International
Will continue to have an influential
role. He has been the CFO of Ispat
International, Mittal's only listed
company, and has 28 years of
experience in steel and related
industries
Roeland Baan
CEO (Central & Eastern Europe)/ LNM Holdings
Came on board this September as the CEO of LNM's Central and
Eastern Europe operations, where the group is the largest steel
producer (14 million metric tonnes).
and the top three automobile
companies account for 70­80 per
cent of the steel purchases. And if
steelmakers' profits haven't risen in
proportion to prices it's largely
because of soaring iron ore and
coke prices. With greater
consolidation, which this deal will
inevitably spur, investors expect
profits and, hence, stock valuations
to climb. "The jump in our stock price
is a clear indication of how much
investors want a consolidation in the
industry," says Aditya Mittal,
President & Group CFO Designate.
The Carnegie From Calcutta
Mittal's rise in the global steel industry is stuff that legends are made of. His biggest break was
the 1995­acquisition of Kazakhstan's national steel plant, Karmet, for $400 million (Rs 1,400
crore at the then exchange rate). Turning around a heavily loss­making plant that employed
70,000 people in a hostile environment wasn't easy. He was not allowed to cut staff, had to take
care of several social welfare costs like the running of the local tram system, schools and even
the local KGB office. But there was one factor that helped him: China, which later was to suck
most of the global steel demand, was just 400 miles away. Mittal hasn't looked back since. He
has made more than a dozen acquisitions, mostly in erstwhile communist republics like
Romania, the Czech Republic, Poland, Bosnia and even in civil war­ridden Algeria, and all of
them are largest in their respective countries and regions.
Mittal is no stranger to the US market, though. He already owns a 5.3­mmt plant, Ispat Inland, in
the US, but this has possibly been one of his most troublesome acquisitions­initially, the labour
union was hostile to the new owner, besides which there were huge pension liabilities on
Inland's books. Perhaps not coincidentally, the acquisition of ISG will help Mittal sort out the
labour issues too. A few months ago, ISG's CEO Rodney Mott, who will now head Mittal Steel's
US operations, had settled a similar labour agreement with the United Steelworkers of America,
and could well step in to help Inland.
"NEXT STOP HAS TO BE INDIA"
In a telephonic interview from London, L.N. Mittal spoke to BT on the deal and
his India plans. Excerpts:
How does it feel to be the world's No. 1 steelmaker?
Not very different actually. The target is not so much to be No. 1 as to bring
consolidation in the steel
industry, make Mittal Steel the most admired steel company, and generate

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returns to the shareholders.
Steel consumers are already sore over soaring prices. Will consolidation evoke a
backlash?
Prices are a function of demand and supply, and steel prices are up also because raw
material prices have jumped. The industry has suffered in the past and what you are seeing
now is a balance in supply and demand.
Are you worried about anti­trust issues?
Even after this acquisition, we will account for just 6 per cent of the world supply. So there's
no concern. Besids, lawyers from both sides (Ispat and ISG) looked at the issues and they
don't foresee any problems.
Will India be your next stop?
First, we need to have a footprint in China. But after that next stop has to be India. If the
government privatises SAIL, we will be interested.
Some people accuse you of using controversial business practices.
That's all nonsense. Countries where we've done business are all very happy.
Equally importantly, the deal will strengthen Mittal's position in the 120­mmta us market. ISG has
close contacts with big steel consumers such as automobile and consumer appliances
industries. Says Brian Rayle, steel analyst for the us­based FTN Midwest: "(The acquisition) will
give the Mittal group a major foothold in the us automobile industry." ISG, too, will benefit from
the synergies that Mittal's Ispat brings to the table. For instance, ISG has always been vulnerable
to fluctuations in raw material prices. But now it will be spared such shocks to a large extent
because Ispat owns several coal and iron ore mines. In fact, 40 per cent of the group's raw
material requirements are met from its own mines. Says Mittal: "The combined entity will have
both an excellent position in coal, coke and iron ore, the key inputs, and a strong presence in
the end sectors."
How well positioned is Mittal to weather an industry downcycle? Better than most, say analysts.
That's not just because Mittal's steel portfolio and markets are widespread, but also because
Mittal is known to run a tight ship. The key to his competitiveness is his choice of the steelmaking
process. Well before electric arc furnaces became the new standard compared to the more
energy­inefficient blast furnaces, Mittal was onto the technology. Besides, he realised that the
mushrooming of such steel mills would drive up prices of scrap metal and, therefore, placed his
bets on the direct reduced iron (DRI) technology, the raw material from which currently costs
$130 (Rs 5,980) per tonne compared to $250­300 (Rs 11,500­13,800) per tonne of scrap metal.
He has done that with all the rust bucket factories he acquired. Finally, Mittal keeps a manic
control on costs. His plant heads are expected to follow the Marwari partha system, where
production and costs are measured against targets every day. He himself videoconferences with
them from his London HQ at least once every week.

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Despite keeping a low profile,
Mittal likes to live life king­
FIVE THINGS THAT COULD
GO WRONG FOR MITTAL
» Regulatory concerns in the United States, where
Mittal now has a 40 per cent share in flat products
» China, whose super­charged growth has been driving
steel industry, could slow down, leading to excess
capacity
» Competitors such as Thyssen­Krupp and Corus in
Europe, and CSN in Brazil eyeing expansion outside
their regions
» Acquisitions could get much more expensive, making
it difficult for Mittal to earn matching returns on
investment
» Rumours and allegations of bribery in various deals
may come to haunt Mittal's new­found position
Still there are a few things that could upset
Mittal's calculations. Foremost are anti­trust
concerns. Post­merger, Mittal Steel will control
6­7 per cent of the global steel production of 1
billion tonnes. While by the standards of other
industries that's hardly a significant share,
soaring steel prices may well prompt the
regulators to keep a close watch on Mittal.
Then, China, which has been the biggest
steel consumer (one­fourth of the world steel
output), could slow down, creating excess
capacity in the industry. Besides, Mittal's
strategy so far has rested on buying steel mills
at rock­bottom prices, and then turning them
around into money­spewing factories. But as
the ISG deal shows, buying steel companies
is becoming an increasingly expensive proposition. It will get more so if his rivals, who so far
have lacked either his kind of speed or money, get into the act. And one man, Guy Dolle, CEO of
Arcelor, has already made known his ambitions of becoming an 80­90 MMTA capacity player.
Expensive deals will make it harder for Mittal to generate the kind of returns he has in the past.
That's one reason why he walked away from the deal for Venezuela's Sidor steel plant, which
eventually was acquired by a consortium of South American investors.
But typical of the man who came in from nowhere to become the world's biggest steelmaker,
Mittal isn't letting any of that faze him. He is raring to do more deals. Even before the ink had
dried on the ISG deal, he declared his interest in buying Turkey's largest steelmaker, Eregli
Demir ve Celik, expected to be privatised early next year. Besides exploring more privatisation
opportunities in the CIS republics like Ukraine and Russia, Mittal is eyeing India and China,
where he plans to invest $100 million (Rs 460 crore) in a cold rolling mill. Looks like steel's
newest czar wants to ensure that the sun never sets on his empire.
additional reporting by Ashish Gupta
The Billionaire Steel King
Lakshmi N. Mittal is as controversial as he is rich.
For a man who's spent almost a decade in Britain, L.N.
Mittal managed to keep a relatively low profile until recently,
when two events turned the spotlights on him. One was his
purchase of a 15­bedroom mansion in the royal Kensington
Palace Gardens. The mansion, previously owned by
Formula One racing boss Bernie Ecclestone, was bought by
Mittal for a whopping £57 million (Rs 473.10 crore) and
boasts an underground parking for 20 cars. The second
event was the wedding of his daughter, Vanisha, to Amit
Bhatia, a London­based investment banker at Credit Suisse
First Boston. Held over six days in London and Paris, the

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size. He forked out £57 m for
a 15­bedroom mansion in
Kensington Palace Gardens
(top) and splurged $78 m on
daughter Vanisha's wedding,
held over six days in London
and Paris (bottom)
$78­million (Rs 359­crore) extravaganza was attended by
the world's who's­who and featured performances by
Hollywood stars such as Aishwarya Rai and Shah Rukh
Khan, besides Australian pop diva Kylie Minogue.
Predictably, the wedding drew a mix of awe and outrage at
the ostentation.
Despite his fantastic wealth, estimated at $19 billion (Rs
87,400 crore), Mittal is said to be a family man. He's been
married to his wife Usha for more than 30 years now and
dotes on his two children. At a recent analyst meet in Paris,
when somebody asked Mittal how he intended to improve
on his son's deft handling of queries earlier in the day, Mittal
reportedly replied, "I don't intend to try; I intend to follow him.
He is the future."
As an entrepreneur, Mittal is known to be a risk­taker and
driven, and has an ability to make friends all over the world.
He logs more than 350,000 miles in his private jet, and has
done deals that his competitors wouldn't dare touch. Like
most people from his community, Mittal is a strict vegetarian,
and does yoga for an hour every day. Although Mittal
doesn't have any businesses in India (yet), his LNM
Foundation has been doing charitable work in the areas of
education and health. He has set up two technology
institutes in Rajasthan, and recently donated £75,000 (Rs
62 lakh) to set up a computer centre at Bhartiya Vidya Bhawan in Kolkata.
Inevitably, Mittal has his share of controversies. One even involves British pm Tony Blair,
who is supposed to have helped Mittal snag the Romanian Sidex by writing to the country's
pm to favour Ispat over Usinor, a French rival. Shortly before that, Mittal had donated
£125,000 to Blair's Labour Party. Then, there are rumours that Mittal bribed key politicians in
Kazakhstan and Trinidad & Tobago to buy the local steel plants. In fact, one of his former
executives alleged on a BBC show that Mittal paid $100 million in bribes for the Kazhak
acquisition. But to Mittal's credit, none of the accusations has stuck.
The Other Mittals
L.N. Mittal's brothers in India are laden with huge debt and losses.
When Lakshmi N. Mittal split from the family in 1995, all the
overseas businesses of the Ispat Group went to him, while
the Indian side of the businesses went to father Mohan Lal
Mittal and his two younger sons Pramod (P.K.) and Vinod
(V.K.). Since then LN and the father­sons team have
chartered different paths of growth. While a risk­happy LN
went globetrotting to buy out rusting steel plants, and then
turning them around, his two brothers were largely confined

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The clan: M.L. Mittal (fourth from
left) with sons V.K. (third from left)
and P.K. (fifth from left), and other
family members
to India, managing the Kolkata­based Ispat Industries.
Now, they must wish they had got their family's modest
overseas business instead. After a golden year in 1995,
when Ispat Industries racked up Rs 100 crore in profits, things have been going downhill.
The company, which produces sponge iron, hot rolled and cold rolled sheets from its two
plants in Maharashtra, has nearly Rs 5,300 crore in debt (along with sister concern Ispat
Metallics) and Rs 482 crore in accumulated losses. Although its lenders recently agreed to a
debt restructuring, and the past two years of steel boom have brought in modest profits, the
company is still struggling to consolidate its position in the industry.
Diversification Drive
While steel's poor performance in the mid­90s to early 2000 had a lot to do with Ispat's woes,
a large part of it had to do with the Mittals' penchant for diversification. Unlike their more
famous and successful sibling, the Mittal brothers in India have diversified into sectors such
as telecom, power and real estate. But such is the dire condition of its subsidiaries that in
2002, Ispat Industries had to write off investments in two of them­Central India Coal
Company and Central India Power Company. The Mittals did not speak to BT for this story.
Today, things are far from happy at Ispat. It has already earned the dubious distinction of
being one of the biggest defaulters of the Maharashtra State Electricity Board. Recently, the
Central government ordered a probe into the company's utilisation of its borrowings, erosion
of its net worth and accumulated losses. While the Kolkata High Court has restrained the
Serious Fraud Investigation Office from initiating an enquiry, it has allowed the Registrar of
Companies to pursue the matter.
Not surprisingly, then, Ispat Industries doesn't figure on the radar of any important fund
manager. The several brokerage houses that BT contacted for their view on the company
said that they no longer tracked the stock. Here's why: Its stock of Rs 10 face value is
currently quoting at Rs 12.50, at a time when even penny stocks in the sector have risen in
the last two years. Compare that to the performance of other big steel stocks: Tata Steel is
quoting at about Rs 300 and Jindal Steel at Rs 720.
Staggering losses and crushing debt haven't deterred the India­based Mittals from dreaming
up big plans. On the drawing board is a plan to up hot rolled coils capacity by 50 per cent to
3.6 MMT by the end of this financial year. By March 2006, Ispat wants to increase that by
another half to 5 MMT. Provided, of course, they convince lenders to put more money into
Ispat.
­Ashish Gupta
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