Undisputed king of steel, Lakshmi Mittal projects...
The story of Lakshmi Mittal is an inspiring story. Though he didn’t make the list of school dropout billionaires, he’s been nicknamed ‘Carnegie of Calcutta’. His story is that of a man, who rose from nothingness to join the coveted Forbes list of world’s richest top 10 billionaires. He achieved this feat by creating Arcelor Mittal – the biggest steel company in the world, worth over US $ 130 billion.
Mittal was born on June 15, 1950 in a desert village in India’s state of Rajasthan. The village had no electricity or basic amenities and therefore, Mittal’s career qualifies as a genuine case of ‘rags to riches’. He spent his initial years living with his family on bare floors and rope beds in a house built by his grandfather. He studied primarily in a Hindi medium school.
Mittal’s father – Mohanlal Mittal – who was a manger of a small steel mill, always dreamed of giving his son a good start in life. With that determination in mind, he moved the family to Kolkata and before long, started a small-scale steel mill called Ispat Industries.
That was where he first learned about business from his father, who was busy developing the steel business while young Mittal was excelling at business and accountancy at St. Xavier’s College in Calcutta. After graduation, Mittal worked for the family firm for a while.
Thereafter, he obtained a B. Com degree in the first class from the University of Calcutta. But instead of working for the government, Mittal joined the family’s company and that marked the turning point of his life.
This was the period when the Indian government imposed tight restrictions on the output of steel from private mills in India. In 1975, Mittal persuaded his father to open a small steel mill in Jakarta and to appoint him as manager. One year later, he bought the Jakarta operation from his father and formed his own company, Ispat International, part of the Mittal family business.
Lakshmi Mittal soon realized that to become a major player in the steel market, his product would have to go global, just like car manufacturers, shipbuilders, iron and coal producers. Determined to make his company a global player, he started acquiring few loss-making companies in Canada and Germany. Still not getting the big break he needed, he turned to Kazakhstan.
Back then, the former Soviet Republic was in a financial difficulty and was on the brink of bankruptcy Mittal bargained and acquired the country’s Karmet Steel works in Temirtau for a knockdown price of US $ 400 million.
Recognizing the need for a strong management team to execute his strategic expansion plans, he brought in Indian managers, introduced double production sessions and began selling to booming markets in the East. With timely judgment, he rescued Kazakhstan from financial ruin which paved the way for him to acquire more large-scale mills.
With time Lakshmi Mittal became a global steel producer with operations in 14 countries.
Mittal invested in new technology: electric-arc mini-mills, which manufactured steel from scrap steel, avoiding the need for blast furnaces to extract liquid iron from the ore. It meant lower production costs and greater production flexibility. He anticipated that the expansion of mini-mills in the steel industry would force up the cost of scrap steel and he explored the use of directreduced iron (DRI) as an alternative raw material.
He sourced his DRI from state-run steel plants in Trinidad and Tobago, reducing the cost of his raw materials and increasing profits.
In the late 1980s, in a deteriorating global economy, Mittal offered to take over the multimillion-dollarloss-making steel plant in Trinidad and Tobago, with an option to buy after five years. Mittal turned the mill into profit within a year, cutting back the workforce and reducing costs but investing US $ 10 million in new equipment. By acquiring the plant, he also secured his source of cheap DRI and began to produce steel at increasingly competitive costs in the global market.
Mittal went on to repeat this successful formula in Mexico, Canada, Germany, Ireland and other countries. He acquired a huge, loss-making blast furnace operation in Kazakhstan, laying off nearly a quarter of the plant’s 85,000 workers but announcing plans to invest US $ 500 million over the coming five years.
Increasingly, the company was able to use its global scale and its own shipping fleet to route both raw materials and finished product to the most advantageous markets, while Mittal’s rigorous management ensured that best practices and efficiencies at any plant in the global network were quickly spread to other plants.
In the United States, the financier Wilbur Ross had begun to buy up failing the US plants to create the International Steel Group, which he sold to Mittal in 2005 for US $ 4.5 billion, creating the Mittal Steel Corporation, the world’s largest steel maker. In 2006, after a hardfought and bad-tempered takeover battle, Mittal acquired the European steel giant Arcelor to create Arcelor Mittal, producing three times more steel than its nearest rival, Nippon Steel.
Mittal is a generous philanthropist and part of many trusts. He received the Grand Cross of Civil Merit by Government of Spain, the Padma Vibhushan by Government of India and the Forbes Lifetime Achievement award.
What lessons can we learn from Lakshmi Mittal?
His following quotations will give you a guideline.
“Everyone experiences tough times, it is a measure of your determination and dedication how you deal with them and how you can come through them.”
“I built a steel plant from the grassroots, so I learned all the nuts and bolts. When there was a problem, I would be able to guide them, though I am not a technical person.”
“The torch relay is an excellent embodiment of all that the Olympic Games have come to symbolise – a celebration of the human spirit. Personally, to me, it represents striving to be the best in whatever we do, never giving up despite the odds and a commitment to health and fitness.”
“Always think outside the box and embrace opportunities that appear, wherever they might be.”
“In business life, first of all, you need to have commitment, dedication and passion for what you are doing.” “Bold decisions can be a very transformative decision. Analyse and take bold decisions.”
“I’m not a person who sets very high goals, my goal posts keep on changing as we move forward in life. It’s always been one step forward. Always make small steps forward, you become stronger and you gain confidence, then you change your goal posts again.”
“During an economic crisis, there has been and will always be exciting opportunities.”
“Differentiate yourself from the rest.”
“You could start with very high ambition but keep both the legs on land and be realistic. You could reach to stars of sky but you need to be very much realistic. You could start with very high ambition and reach to higher level but be realistic.”
“You also need very powerful team with you in moving forward. Sometimes, you may be disappointed with your progress or lost on the road of life but your team players will stand with you if you have treated them nice.
“Top-class degree from top-class university never guarantees you success. You have to apply your inner guts and senses to reach to the next level of success.”
(Lionel Wijesiri is a retired company director with over 30 years’ experience in senior business management. Presently he is a freelance journalist and could be contacted on lawije@gmail.com)