Lakshmi Niwas Mittal (born 15 June 1950)[6] is an Indian steel magnate.

He is the chairman and chief executive officer of ArcelorMittal, the worlds largest steelmaking company. Mittal owns 41 percent of ArcelorMittal and holds a 34 percent stake in the Queens Park Rangers F.C. football team. Mittal is one of the richest men in Asia and in the United Kingdom.[7] and in Europe[8] He was ranked the sixth richest person in the world by Forbesin 2011, but dropped to 21st place in 2012, due to having lost $10.4 billion the previous year.[4] In spite of the drop, Forbes estimates that he still had a personal wealth of US$20.7 billion in March 2012.[4] He is also the 47th "most powerful person" of the 70 individuals named in Forbes' "Most Powerful People" list for 2012.[9] His daughter Vanisha Mittal's wedding was the second most expensive in recorded history.[10]

Mittal has been a member of the board of directors of Goldman Sachs since 2008,[11] and is also member of the board of directors of the European Aeronautic Defence and Space Company.[12] He sits on the World Steel Association's executive committee,[13] and is a member of the Indian Prime Ministers Global Advisory Council,[13] the Foreign Investment Council in Kazakhstan,[13] the World Economic Forums International Business Council,[13] and the Presidential International Advisory Board of Mozambique.[13] He also sits on the advisory board of the Kellogg School of Management in the US[13] and is a member of the board of trustees of Cleveland Clinic.[13] In 2006, The Sunday Times named him "Business Person of 2006", the Financial Times named him "Person of the Year", and Time magazine named him "International Newsmaker of the Year 2006".[13] In 2007, Time magazine included him in their "100 most influential persons in the world".[14]

Contents
[hide]

1 Early life and career 2 Philanthropy 3 Criticism and allegations o 3.1 PHS o 3.2 Slave-labour allegations and questionable safety records o 3.3 The Mittal Affair: "Cash for Influence" o 3.4 Queens Park Rangers o 3.5 Environmental damage 4 Personal life 5 Awards and Honours 6 Bibliography 7 See also 8 References 9 External links

[edit]Early

life and career

Lakshmi Narayan Mittal alias Lakshmi Niwas Mittal was born into a Hindu Indian Marwari business family in Rajgarh tehsil (also known as Sadulpur) of Churu district in Rajasthan, India. His family moved from (Rajgarh) Sadulpur, Rajasthan to

Calcutta in West Bengal. Mittal has two siblings Pramod Mittal and Vinod Mittal. He graduated from St. Xavier's College, Calcutta with a Bachelor of Commerce degree in business and accounting. After college, Mittal turned to his familys steel business which he helped run until a falling out with his parents and brother. After this Mittal branched into his own business with the purchase of a plant located in Indonesia in 1976.[15] It was this purchase which led to the creation of Arcelor Mittal. His father, Mohan Lal Mittal, ran a steel business, Nippon Denro Ispat. Until the 1990s, the family's main assets in India were a cold-rolling mill for sheet steels in Nagpur and an alloy steels plant near Pune. Today, the family business, including a large integrated steel plant near Mumbai, is run by Pramod and Vinod, but Lakshmi has no connection with it.[16] He married Usha, the daughter of a well-to-do moneylender. In 1976, due to differences with his father, mother and brothers, branched out on his the LNM Group, and he has been responsible for the development of its businesses ever since.

Mittal Steel is a global steel producer with operations in 14 countries.[citation needed] He said: "India remains a priority but not for investment. I'm not locating capital to India or China as I don't see things progressing there. We can't remain stuck, so we move on. Now our priority is to reduce debt, we sell non- core assets. But we continue to invest in mining and become selfdependent." [edit]Philanthropy

Mittal with then-president of Brazil Luiz Incio Lula da Silva, 2006

After witnessing India win only one medal, bronze, in the 2000 Summer Olympics, and one medal, silver, at the 2004 Summer Olympics, Mittal decided to set up Mittal Champions Trust with US$9 million to support 10 Indian athletes with world-beating potential.[17] In 2008, Mittal awardedAbhinav Bindra with Rs. 1.5

Crore (Rs. 15 million), for getting India its first individual Olympic gold medal in shooting.[citation
needed]

For Comic Relief 2007, he matched the money raised (~1 million) on the celebrity special BBC programme, The Apprentice.[citation needed] In 2002, Lakshmi Niwas Mittal and Usha Mittal foundation and the Government of Rajasthan partnered together to establish a university named theLNM Institute of Information Technology (LNMIIT) in Jaipur as an autonomous non-profit organization. In 2009, Lakshmi Niwas Mittal and Usha Mittal foundation along with Bharatiya Vidya Bhavan founded the Usha Lakshmi Mittal Institute of Management in New Delhi. [edit]Criticism [edit]PHS Lakshmi Mittal successfully employed Marek Dochnal's consultancy to influence Polish officials in the privatization of PHS steel group, which was

and allegations

Poland's largest. Dochnal was later arrested for bribing Polish officials on behalf of Russian agents in a separate affair.[18] In 2007, Polish government said it wants to renegotiate the 2004 sale to Arcelor Mittal.[19] [edit]Slave-labour

allegations and questionable safety records

Employees of Mittal have accused him of "slave labour" conditions after multiple fatalities in his mines.[20] During December 2004, twenty-three miners died in explosions in his mines inKazakhstan caused by faulty gas detectors. [edit]The

Mittal Affair: "Cash for Influence"

In 2002, Plaid Cymru MP Adam Price obtained a letter written by Tony Blair to the Romanian Government in support of Mittal's LNM steel company, which was in the process of bidding to buy Romania's state-owned steel industry.[21][22][23] This revelation caused controversy, because Mittal had given 125,000 to the British Labour Party the previous year.

Although Blair defended his letter as simply "celebrating the success" of a British company, he was criticised because LNM was registered in the Dutch Antilles and employed less than 1% of its workforce in the UK.[24]LNM was a "major global competitor of Britain's own struggling steel industry".[25] Blair's letter hinted that the privatisation of the firm and sale to Mittal might help smooth the way for Romania's entry into the European Union.[21] It also had a passage, removed just prior to Blair's signing of it, describing Mittal as "a friend".[24] [edit]Queens

Park Rangers

Recently, Mittal had emerged as a leading contender to buy and sell Barclays Premiership clubs Wigan and Everton. However on 20 December 2007 it was announced that the Mittal family had purchased a 20 per cent shareholding in Queens Park Rangers football club joining Flavio Briatore and Mittal's friend Bernie Ecclestone.[26] As part of the investment Mittal's son-in-law, Amit Bhatia, took a

place on the board of directors. The combined investment in the struggling club sparked suggestions that Mittal might be looking to join the growing ranks of wealthy individuals investing heavily in English football and emulating other similar benefactors such as Roman Abramovich.[27] On 19 February 2010, Flavio Briatore resigned as QPR chairman, and sold further shares in the club to Ecclestone, making Ecclestone the single largest shareholder.[28] [edit]Environmental

damage

Mittal purchased the Irish Steel plant based in Cork from the government for a nominal fee of 1 m. [edit]Personal

life

His residence at 18-19 Kensington Palace Gardens--which was purchased from Formula One boss Bernie Ecclestone in 2004 for 57 million (US$128 million)--made it the world's most expensive house at the time.[29] Mittal's house in Kensington, London is decorated with marble

taken from the same quarry that supplied the Taj Mahal. The extravagant show of wealth has been referred to as the "Taj Mittal".[30] It has 12 bedrooms, an indoor pool, Turkish baths and parking for 20 cars.[31]He is a vegetarian.[32] Mittal bought No. 9A Palace Greens, Kensington Gardens, formerly the British Philippines embassy, at 70 million in 2008 for his daughter Vanisha Mittal who is married to Amit Bhatia, a businessman and a philanthropist. Being a vegetarian, Mittal threw a lavish 'vegetarian reception' for Vanisha in the Palace of Versailles in France.[32] Mittal owns three prime properties collectively worth 500 million on the "Billionaire's Row" at Kensington Palace Gardens.[33] In 2005, he also bought a colonial bungalow for $30 million[34] at No. 22, Aurangzeb Road in New Delhi, India, the most exclusive street in the city occupied by embassies and millionaires, and rebuilt it as a house.[citation needed] [edit]Awards

and Honours

Year of Award or Honor

Name of Award or Honor

Awarding Organization

2010

"Dostyk" 1

Republic of Kazakhstan.

Forbes Lifetime 2008 Achievement Award 2008 Padma Vibhushan President of India. Grand Cross of Civil Merit Dwight D. 2007 Leadership Award Forbes.

2007

Government of Spain.

Business Council for Understanding. King's College London.

Eisenhower Global International

2007

Fellowship

European 2004 Businessman of the Forbes. Year Entrepreneur of the Year 8th honorary Willy 2004 Korf Steel Vision Award Steel Maker of the Year

2004

Wall Street Journal.

American Metal Market and World Steel Dynamics.

1996

New Steel.

He was the speaker at class of 2007's MBA commencement at the Wharton School of the University of Pennsylvania.[35] [edit]Bibliography

Tim Bouquet and Byron Ousey - Cold Steel (Little, Brown, 2008). Yogesh Chabria - Invest The Happionaire Way (CNBC - Network18, 2008).

Navalpreet Rangi-Documentary Film(The Man With A Mission, 2010).

[edit]See

also
Laxmi Mittal

Famous Born Born Nationality Indian

As Steel On June In Sadulpur, 15, Rajasthan,

Industrialist 1960 India

Lakshmi Narayan Mittal is an Indian born London based billionaire, well known for his unsurpassable business feats, larger than life persona, and opulent indulgences. Always making headlines with his entrepreneurial achievements and opulent lifestyle, Lakshmi Mittal tops the list of Britain's richest men, and the sixth wealthiest person in the world today, as per the Forbes Magazine. An executive member of the board of directors for the World Steel Association, International Investment Council in South Africa, International Business Council, the International Iron and Steel Institute's Executive Committee and many other global forums, it comes as no surprise that he is one of the most influential and powerful figures in the world today. Lakshmi Mittal is the chairman and chief executive of ArcelorMittal, which is apparently the largest steelmaking corporation in the world. Apart from his steel grip over the global steel manufacturing business, and his many luxurious indulgences, Lakshmi Mittal is also applauded equally for his philanthropist ideas. He has raised and contributed funds to support various community projects in different nation. Early Life Born on 15 June 1950 at Sadulpur, in Churu district of Rajasthan, Lakshmi Niwas Mittal had a very humble upbringing. His grandfather worked for one of the leading industrial firms, whereas his father was a businessman. The family relocated to Kolkata after his father joined a domestic steel company as a partner. Laxmi Mittal graduated in commerce from St. Xavier's College in Kolkata and joined the family business that also involved his two younger brothers Pramod Mittal and Vinod Mittal. A few years later, ambitious Mittal branched out of his family domestic business and moved to Indonesia only to emerge as world's biggest steel baron in the coming years. Career Lakshmi joined his family steel business soon after he graduated from college. However, he was quick to realize that opportunities were limited in India. Driven by ambition and the strong urge to explore international market, he moved to Indonesia. There, with his father's support, he bought a dilapidated old and non-profitable steel plant and turned it into a success story by doubling the turnout and making profitable business out of it. But, that was just the beginning of a new history in the world of steel. He founded his own company LNM group. His success largely rested on taking over unprofitable, state-owned mills and making huge turnovers by boosting the

production. He has been solely responsible for the growth of the steel business at an international platform. Lakshmi was the first to introduce the concept of "mini-mills" and "direct reduced iron" (DRI) as an alternate for steel making. This in turn proved to be a successful business strategy that was responsible for the growth of his firms. He started his international operations in Indonesia and Trinidad and Tobago before he expanded to 14 different countries acquiring several steel plants around the globe. In 2004, he managed to acquire more than 20 firms in Soviet Union including Kazakhstan, Romania and Ukraine. He soon started to make more acquisitions in America. His merger and later takeover with Arcelor, which is one of the biggest steel plants in the globe, earned him the status of a powerful international steel magnet. Over the years, Mittal has earned distinction as world's top steel tycoon and has received a number of awards. Achievements and Awards Mittal has always donated several millions of dollars of his wealth to various local causes. His Mittal Champions Trust and ArcelorMittal Foundation are two main charity organizations that have sponsored several causes. He also believed that individuals can empower themselves through means of good education. The L.N.M. Institute of Information Technology, Jaipur is an effort by him to contribute to the welfare of the society. Some of the awards that he has been bestowed with are Forbes Lifetime Achievement Award (2008), Padma Vibhushan (2007), Grand Cross of Civil Merit (2007), European Businessman of the Year (2004), Entrepreneur of the Year (2004), and Steel Maker of the Year (1996), to name a few. Personal Life Lakshmi Narayan Mittal is married to Usha Mittal who is the daughter of a well-known moneylender. The couple has two children, a son named Aditya and daughter named Vansiha. Aditya is married to Megha, who is the owner of a fashion brand Escade. His son is said to be the CFO of the ArcelorMittal and works for his father's steel business. Vanisha Mittal is married to Amit Bhatia a businessman and a philanthropist. Time Line 1960: Born in Sadulpur, Rajasthan India. 1976: He commenced his career with his father's steel business. 1996: Won the Steel Maker of the Year from New Steel. 2003: He established L.N.M. Institute of Information Technology in Jaipur. 2004: Bestowed with the Entrepreneur of the Year and European Businessman of the Year. 2006: He took over Arcelor, one of the largest steel companies. 2007: The Padma Vibhushan was given by the Indian government and the Grand Cross of Civil Merit by the government of Spain. 2008: Forbes Lifetime Achievement Award was granted to him.

The rise of LN Mittal lessons for investors

March 15, 2005

LN mittal has been in limelight for quite some. He is now in limelight for being the third richest person in the world. everyone seems to be focussing on his networth. I am more interested in how he got there i have read about him in the past and read about him in an article in the economic times. His key skill is in identifying bankrupt , beaten down steel plants / companies . He is able to value this company correctly and acquire it at that price ( in may cases the owner or goverment is desperate to offload it ). He then proceeds to turn it around and make it profitable. By applying this strategy across the globe in various situations, LN mittal has been able to build an empire , cut cost and initiate consolidation in this industry. The following comes to mind on seeing this happen - A company in the commodity industry can have a sustainable competetive advantages from two sources superior management and enduring low cost position ( which is also dependent on a superior management ) - Consolidation in a commodity industry improves the profitability of the top firms as it gives them better pricing power. - mittal steel it seems also is vertically integrated in ore and coke ( two key raw materials ). So with horizontal consolidation, he is also vertically consolidating. This gives him better pricing power. - He is expanding into new geography and trying to closer to demand ( China / India etc ). This will give him flexibility in the future to manage demand fluctuations. Other companies across the world are restricted to some geography and so if the demand drops in that region , they are in deep trouble. What is happening also highlights another point of the importance of a good management for commodity industry. Bad managements in the steel industry have run their companies aground and have been in red for quite some time. Recent demand surge and firm prices have given them a lease of life ( and they are promptly started increasing capacity ). Lets see how they manage the next downturn. LN mittals story has been a live case study for me see how a superior management can make a difference even in a commodity industry ( and that too as bad as steel ). vice versa a commodity industry cannot tolerate bad management ( a franchise company like FMCG can for some time ) That he is an indian is beside the point. The sad part is we are happy that an indian has made it !! sad because , he could not have achieved it in india he had to leave the country to achieve his ambitions. Hopefully in the future we will not force such people to look outside the country and would provide the atmosphere within the country

London-based
Mittal recently

Ispat International (now Mittal Steel) and its founder Lakshmi Niwas became the world's biggest steel maker, and has been named

by Forbes magazine as the world's third richest man. How does Mittal transform poor performing steel mills into power-packed profit centers? We bring to you an inside account written by written Gita Piramal and late Prof Sumantra Ghoshal. Sumantra Ghoshal was a leading management guru. Gita Piramal is managing editor, The Smart Manager. The two also co-authored a book: Managing Radical Change.

Acquisitions

is one of the three major routes for business expansion, the other two being

organic growth and strategic alliances. But why choose acquisition as a growth strategy? When is this strategy more appropriate? And, if you have chosen this strategy, what are the main do's and don'ts for managing it well? While not quite an Indian company -- incorporated in Holland and headquartered in London [ Images ] -- Ispat International N.V. (now called Mittal Steel) is Indian in both its spirit and management. In less that a decade, Lakshmi Niwas Mittal has spectacularly expanded the company from a wire rod manufacturer in Indonesia to the largest steel producer in the world, largely through an acquisitive strategy.
He can buy 44 lakh Maruti 800s! Lakshmi Mittal's $19-billion year!

In 1992, Mittal acquired a Mexican steel mill. From this case study, it is possible to distil some simple lessons about how to manage acquisitive growth. There are, of course, some variations depending on the nature of the industry, the history of the acquiring company, and the specific circumstances of each individual acquisition case. But, overall, there is a certain commonality in the pre- and the post-acquisition phases. The story of Ispat Mexicana (Imexa) Lakshmi Niwas Mittal's (widely referred to as 'LN' both inside and outside the company) faith in DRI (direct reduced iron) technology governed his choice of acquisitions. He believed in its future long before others. "This has spelt success for so many of my plants," he says. Starting in Indonesia in 1976, he bought mini steel mills using the DRI route in various countries and turned them around. Eventually in January 1995 Mittal acquired Hamburg Stahlwerke, the originator of DRI technology on which almost all LN's plants depend. According to Peter F Marcus, director of Paine Webber: "Lakshmi Mittal [ Images ] championed the practice of mini mills becoming integrated producers through the use of scrap alternatives."

This faith created 'the only true global steel company,' according to the Financial Times, and Mittal's reputation as a doctor of sick steel mills. In 1991, this reputation brought the Mexican government knocking at his door. In the early 1980s, the Mexican government decided to build a new steel mill -- Sicartsa II -adjacent to its existing Sicartsa facility located in Lazaro Cardenas. They invested $2.2 billion in a state-of-the-art facility, which included a pelletizer plant to produce iron pellets from ore, the first DRI plant in the world using the HyL III technology, electric arc furnaces, casters to roll molten steel into flat slabs and a mill to convert these slabs into plates to produce pipes for the then-booming oil industry. Before the factory was completed, however, the end of the oil boom coincided with a faltering economy which forced Mexico to devalue the peso. The government curtailed investment in the planned pelletizer plant, which forced Sicartsa management to source high cost iron pellets on the open market. The government also abandoned the planned plate mill, forcing the plant to sell steel slabs -- an intermediate product -- rather than finished steel plates. Three years after opening, the plant operated well below its capacity of two million tons per year and incurred significant operating losses. Mexican government officials publicly blamed the management and employees of the factory for the losses, and decided to privatize both Sicartsa factories in 1991. Based on Ispat's reputation for turning around Iscoot, a steel mill in Trinidad, the Mexican government invited Ispat to join two other steel companies in bidding for Sicartsa. The pre-acquisition negotiation process
The team: Mittal sent a due diligence team consisting of twenty managers representing

all line and staff functions chosen from Ispat's Trinidad and Indonesian plants and instructed them to develop plans to turn around the plant. Mittal also explained that some members of the due diligence team would have an opportunity to remain in Mexico if Ispat acquired the facility. There were no merchant bankers. The team was divided into sub-units to look at specific are as such as finance, marketing, management and costs. Each team had to make specific recommendations. "These had to be solid and do-able as the person making the recommendation could easily be called upon to implement it," said one manager. "This eliminates consultants and their ivory tower analyses. After this process, targets are fixed and LN largely steps out of the picture." Each team's report provided a valuable check on the other's to eliminate biases and oversight. The team's due diligence revealed a factory plagued by technical problems, running at 20% of capacity, producing low quality slabs and manned by a dispirited workforce. The Ispat team was

impressed, however, by the recent vintage of the assets, a young workforce with an average age of 27 years, and the supporting infrastructure. The team recommended bidding for the plant, and developed a turn around plan.
The bid: Ispat proposed acquiring all the Sicartsa II factory's assets and liabilities,

excluding contingent environmental liabilities. Ispat also bid for 50% equity stakes in several of the businesses that supported the Sicartsa II plant, including PMT, a producer of welded pipes, Pena Colorada, which provided the factory with iron pellets and Sersiin, which managed the deep water port facilities and distributed electricity. It took eight months to sew up the contract. Ispat proposed a total consideration of $220 million, consisting of $25 million in cash and $19 million n in ten year bonds (at 15% interest) issued by the Mexican government and secured by a warrant for 49% of Imexsa (not Ispat) equity. Of the cash component, $5 million was a loan from Trinidad and $20mn came from LN's personal resources. Ispat's bid outlined the company's five-year plan for improving Sicartsa's operations, and included a commitment to invest an additional $350mn, with a $50mn penalty if the company failed to follow through on its promised capital spending. Ispat's proposal also included a clause capping the number of employees it would lay off at 100 of the 1,050 workers. Impressed by the business plan, the Mexican government selected Ispat's bid. Ten members of the due diligence team remained in Mexico to run various departments, including Dr Johannes Sittard the former head of Iscoot, who served as the managing director of Imexsa from 1991 to 1993. The post-acquisition integration process
Stopping the bleeding: Ispat took control of Imexsa on January 1st 1992 in the midst of

a global recession in the steel industry, and had to briefly shut down the furnaces because there were no orders for the steel and no place to store the finished slabs. Despite the shut-down, Imexsa laid off only seventy people -- thirty fewer than the agreed-upon limit -- and ultimately hired an additional 270 employees. The $220 million consideration which Ispat had committed to more than halved almost instantly. The plate mill which had been lying abandoned -- still packed in crates -- was shipped to a Korean company. "Our focus is slabs and we didn't need the plate mill," RR Mehta, Imexsa's executive director told Business India [ Images ]. The deal brought in $135 million -- much of this went towards upgrading facilities. Mittal recalled his first steps at Imexsa: "In Mexico we did what we do with every business . . . we sat down with management of the acquired company to discuss various options for improvement

and we developed the business plan. We sat down with each of the departments to understand their problems and viewpoints and gave our input based on international experience and our due diligence." "Together we set very aggressive targets because we don't benchmark companies based on local standards, but on international standards. If the management of the acquired company is willing to commit to these targets, they stay. If they have any problems following our business plan and vision, they go. The Imexsa managers stayed," he added. Production Planning Manager Oscar Vasquez recalled his first meeting with Mittal: "In our first meeting, we presented two alternative production plans, one for 600,000 tons -- it was conservative and based on our past experience -- and another plan for 1.2 million tons. Mr Mittal saw both and said, 'forget the small plan, just let me know what you need to implement the second plan.' We expressed concern that we might not find a market for the additional slabs, but Mr Mittal said, 'You will have the volume because I'm going to take care of that for you'." Mittal used Ispat Indo's sales network to identify Asian customers for Imexsa's slabs, including a contract for 400,000 tons per year with a Taiwanese steel manufacturer. Although these orders provided low margins, they allowed Imexsa to increase capacity utilization while improving quality to win more profitable business. Imexsa also reduced costs by switching to suppliers willing to match the lowest costs provided at Ispat's Trinidad and Indonesia plants. The next step was to quickly develop cost-consciousness and discipline among the Imexsa management team. Jai K Saraf, Ispat International's finance director, and Sittard instituted a daily meeting of the heads of each department in the plant, which began after the day shift ended at 5:00 p.m. and generally ran until 9:00 or 10:00 at night. The team evaluated the previous day's cost, volume, productivity and quality performance, discussed the current day's results, and agreed on detailed targets by department for the following day. Om Mandhana, purchase director, described the purpose of the daily meeting: "The idea of the daily meeting was to cut red tape. You got together all of the people involved to talk through any issues, and as a means of coordinating and resolving day to day problems. The idea was to take a decision then and there rather than refer to committees." Raul Torres, melt shop director, recalled his first impressions of the meetings: "Before Ispat bought the plant, the boss just told us how we should do things, but the daily meetings were nothing like that. Dr Sittard asked a lot of detailed technical questions to force us to think through problems to their root causes." "If we were consuming too much steel in the electric arc furnaces, for instance, Dr Sittard would ask: 'Why are you consuming this amount of steel? Is there leakage? Why do you have this

amount of leakage? Are you losing steel in the slag? How do you plan to improve this? Is that the cheapest way in the world? Who does this best in the world? Can we adopt their technology?'" "We had open and sometimes heated discussions, but once we agreed on the right thing to do, it was easy to get Dr Sittard's approval and any resources you needed to make it happen. But you had to commit to improvements -- how much you were going to achieve and by when, and the entire team monitored how you did against the promised target." "And Dr Sittard was always asking for higher targets -- he always kept the pressure on us to increase volume and quality and cut costs." Imexsa's existing cost accounting system reported only aggregate production costs on a monthly basis, and was first available three weeks after the previous month ended. One of the first things the new management team did was to implement Ispat's daily reporting system which provided overall figures for each day's operations by the next morning. Led by Saraf, Imexsa's accounting department began collecting detailed volume, cost, quality and productivity data for each step in the production process on a daily basis. Initially, Imexsa's accountants collected these data themselves every day, and analysed it by hand. To monitor raw material usage, for example, the accountants asked warehouse workers to track the volume of materials leaving the storeroom each day. As the discipline steeped in, kudos flowed back. A JP Morgan report hailed Imexsa as the lowest-cost slab producer in the world, while Credit Suisse First Boston reported, 'At Imexsa, Ispat makes Nucor's cost position look almost amateurish.' Imexsa could land a slab in the middle of American at $35 a ton below Nucor's cash cost of production of $210 a ton. And Nucor founder Kenneth Iverson acknowledged, "Ispat comes in and runs the operations very well. They control costs very very closely." In 1992 -- the first year under Ispat ownership -- Imexsa increased shipments from 528,000 tons to 929,000 tons, decreased the cash cost per ton produced from $253 to $178, and earned a small profit. From 1992 to 1998 Imexsa increased annual steel shipments from 929,000 tons to over 3mn tons, and improved productivity from 2.62 to 0.97 man-hours per ton. Antonio Gonzales, the Pelletizing Plant Supervisor observed, "There is no feeling of having finished the turnaround . . . we keep resetting the targets, and now we are aiming for 4 million tons per year -- that's double our rated capacity." In 1997, MRR Nair joined Imexsa as managing director from the Steel Authority of India, the seventh largest steel company in the world, where he had served as chairman and CEO and had been awarded the Best CEO in India award.

Nair cited four mechanisms for maintaining constant improvement at Imexsa -- i.e. daily meetings and reports, quality programmes, global integration and stretch goals.
01. Daily meeting and daily report: The daily meeting, now held each morning for one

or two hours, continued to play a pivotal role at Imexsa. A typical meeting (in March 1998) was attended by representatives from each of the departments, most of whom wore the khaki Imexsa uniform. A few of the managers however wore red Imexsa jackets awarded to recognize achievement of ambitious goals, such as increasing one of the DRI facility's production nearly 50% above its rated capacity. On several occasions during the meeting, participants jokingly asked whether their targets were ambitious enough to earn a jacket. Nair guided the meeting with a series of questions, inquiring about the results of previous experiments to improve performance, asking what level of performance was budgeted for the following month, and probing why targets were not higher. Nair left the room for extended periods on two occasions during the meeting, but the discussion continued with the members of the different departments discussing targets and experiments among themselves. The participants frequently referred to the daily report which provided detailed data on cost, productivity, volume and quality for each of the departments.
02. Quality programmes: In 1998, Imexsa used standard quality tools, such as ISO

methods, to describe existing processes. Imexsa's quality efforts won numerous international awards and earned it the British Standards Institute's prestigious Company Wide Recognition, one of only two steel companies in the world so honoured (Iscoot was the other). More importantly, Imexsa's quality initiatives helped the company upgrade its products to serve more demanding customers. Imexsa enhanced its product mix from 97% low grade steel sold into construction applications in 1992 to 47% of slabs sold for demanding automotive and coated plate applications in 1997. Despite Imexsa's success, Quality Director Rafael Mendoza wanted more: "Traditional quality programmes such as ISO 9000 provide excellent statistical tools for documenting your current processes, but they are not as useful in accelerating continuous improvement. For this we introduced benchmarking, Top 10s and internal agreements." In benchmarking operating processes, quality team members looked at best practices within the Ispat network, the steel industry as a whole and also identified and studied related processes at global leaders such as Ericsson and General Electric.

When Imexsa management wanted to improve cafeteria service during the busy lunch hour, for example, a quality team studied the restaurant in a busy soccer stadium renowned for serving large quantities of excellent food quickly during half time. Imexsa would only work with customers and technology suppliers who agreed to openly share information on new technological developments and applications, and in turn agreed to open their plants for benchmarking. Mendoza was not worried that Imexsa would surrender competitive advantage by allowing other companies to benchmark the plant: "In the steel industry these days, all companies have access to good ideas through customers, suppliers and consultants. The difference is who can implement them successfully." In the Top 10 programme, each department identified projects to either cut costs or improve quality, quantified each project's financial impact (in US dollars per year), and rank ordered the projects from one to ten based on their bottomline impact. Each project was assigned to a project owner charged with selecting a multi-disciplinary team to quantify the benefits of the project, develop an action plan and monitor progress against agreed process milestones. In Mendoza's view, the Top 10 programme introduced a consistent discipline in translating proposed projects into financial results and allowed each department to prioritize its own projects for improvement. In 1996 Imexsa initiated a systematic program for making internal service agreements between Imexsa's departments and monitoring service delivery levels against these agreements. The head of the department receiving a service would meet once a year with each internal supplier to articulate their key requirements and agree on targets and concrete measures of service delivery. Before agreeing to target service levels, a service provider could request any prerequisites necessary to guarantee delivery. The maintenance department might agree to provide preventive maintenance on time, for instance, provided that they were notified at least one week in advance of the scheduled downtime. The head of the department providing the service was responsible for monitoring performance on a daily basis and reporting to the head of the internal customer on a monthly basis, who would sign off on the performance evaluation. If a service provider repeatedly failed to meet goals, the failure would be elevated for discussion in the daily meeting, but this had occurred only once in the programme's first two years. In 1998 Imexsa had 140 internal service agreements across 28 production and service departments and sub-departments in the plant. 70% of the agreements fulfilled 100% of the

requirements, 11% of the agreements met between 95% and 99%, with the remainder fulfilling less than 95%. These internal agreements yielded significant improvements in operations.
03. Knowledge integration programme: The Knowledge Integration Program (KIP) was

an Ispat corporate initiative designed by Mittal to "keep stirring the whole organisation." A few representatives from each operating and staff function (twelve in total) at each Ispat plant would meet twice each year. These KIP meetings lasted two to four days, and rotated among the plants in the Ispat network. Prior to the meeting, the department heads would send their suggestions for discussion topics to Ispat group headquarters in London, where the agenda would be set and then distributed to each of the participants in advance. During the meeting, the participants would review their performance against targets, including major accomplishments and disappointments, discuss common technical problems, update each other on developments in their plant and commit to future targets. The participants also communicated between KIP meetings, as Torres described: "If I have a question, I don't have to wait until the next KIP meeting. I can make a phone call or send an email to Canada [Images ] or Trinidad. I probably exchange at least one email every week with them."
04. Stretch goals: Each department in Imexsa committed to annual targets for

production volume, productivity and costs, and presented their plan for achieving these goals. The process was based on a firm philosophy of Ispat. As described by Nair, "Senior managers should ask the departments what they plan to do, rather than telling them what to do." At the same time, however, it was not a laissez fair. Nair and his team asked a lot of questions on the plans that were presented. "You achieved this level last year, why can't you do it again? They can achieve the level at another factory, what prevents you from doing the same? What can we do to help you achieve more?" At the end of such discussions, while the targets were very demanding, they were owned by the departments instead of being perceived as coerced from above. As Raul Torres described: "I feel the need to constantly improve performance every day, but its not forced on me by management. I'm not fighting against somebody else's budgets -- I agreed to the goal, and the best way to reach a goal is not with a big gun to your head. I set stretch goals because I want Imexsa to win." "At first, I wanted Imexsa to be the best steel plant in Lazaro Cardenas, then the best steel plant in Mexico, but now I ask 'why can't we be the best steel plant in the world?' We always wanted to be the best, but we couldn't because the old management put up too many limitations."

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"WHERE KNOWLEDGE IS WEALTH"

Thursday, March 20, 2008

CORPORATE MERGERS AND TAKE OVERS/CASE STUDY OF LAXMI NIWAS MITTAL

ABSTRACT The research paper briefly talks about mergers and take overs at the corporate world. The merits of mergers and take overs are highlighted. It has taken the case study of Mr.Laxmi Niwas Mittal, the global steel czar and has focussed the bottlenecks involved in acquisition of a Luxembourg based Arcelor steel company. It highlighted the importance of multi-cultural skills for the global business leaders. It focused at the Indias Competitive Advantages. At the end it has summed up with the strengths of Indian economy and appealed all Indians to stay in India itself because the returns outnumber the investments by being in India. ---When a piece of a log is subjected to severe pressure becomes charcoal. And if it is subjected to

extreme pressure results in a diamond. Entrepreneurs are made from men like that.

INTRODUCTION:

Now days, there is too much talk of Indian companies taking over the companies in abroad. The Tata Steels take over of Corus has hit the headlines. It was a very bold initiative by Ratan Tata. There was a talk of paying too much price for the acquisition of Corus by the critics. Over all it has demonstrated and displayed the leadership capabilities of Indian business leaders. Once upon a time when Lord Swaraj Paul made an attempt to take over an Indian company it was treated a hostile bid. It hit national headlines then. Many global MNCs used to take over Indian companies in the past. During the preliberalisation era foreign companies were on the offensive mode to take over Indian companies. In post liberalization, things have changed for better for the Indian industry. The Indian economy has looked up and is becoming a robust economy. As a result, the Indian industry changed its stance from being defensive to offensive. In this context, let us briefly define what is merger and take over. Merger refers to the process of two business units becoming one. On the other hand, take over refers to the process of taking over of one unit by a relatively stronger business unit.

MERITS OF MERGERS AND TAKE OVERS:

Both merger and take over has many merits such as Competitive edge in the market. There is synergy in this and one plus one is three, six or just more than that. The raw material can be purchased in bulk quantity thereby reducing the cost of production. When the cost of the product or service is reduced, the company has better chances to have more profits as well as it can compete with others by slashing down the prices. In a nut shell, there is 'economies of scale' and increased economic efficiency. There is increase in market share in the same segment or sector thereby having better brand image and good will for the company. Increased benefits to the shareholder value. The benefits so gained are passed on to the shareholders thereby increasing their value. There could be tax benefits to the company in few cases.

 Consolidation in the sector wise and it eliminates the unhealthy small time players who are weak and can not survive in the business. Many other strategic advantages. CASE STUDY OF LAXMI NIWAS MITTAL:

There is one global Indian who thrived in business with a strategy of series of acquisitions. He is none other than Mr.Laxmi Niwas Mittal. He was born in Sadulpur village, in the Churu district of Rajasthan, India. He graduated in Commerce from St.Xaviers College in Kolkata, India. He was born in Steel family. Due to the differences with his father and brothers he left India and branched out by doing business independently across the seas. His first attempt was in Indonesia where he acquired a steel company which is related to wire rod manufacturing and turned around and succeeded. One success led to another success and he began acquiring steel plants all over the world. He can also be called Take Over Tycoon. There are different ways and means by which any company can grow such as organic growth, mergers, strategic alliances and acquisitions. The secret to success for Mittal is series of acquisitions. He took over the companies at cheaper price which are not doing well and developed and turned around the same. Besides, he is an excellent negotiator, communicator and has deep understanding of cultural differences across the world. He always believed in his core strength steel and never believed in unrelated diversification. As a result LN Mittal is called as a Steel Czar and as crowned as the Carnegie of Steel. In Oct 2004 Mittal acquired International Steel Group of the US for $4.5 billion and became the largest steel producer in the world surpassing the global steel leader Arcelor. It indicates his business acumen, gut and intuition. And the mother of all acquisitions is the attempt to acquire Luxembourgbased Arcelor Steel. Mittal Steel made a daring $ 33 billion offer to take over its rival Arcelor. It was the boldest offer by any NRI to be made. There were lots of practical problems involved during acquisition. The French government went to the extent of protecting their company and adopted various techniques to prevent the acquisition. Mr. Mittal pursued up to the hilt. He allayed the apprehensions of the employees and also that of shareholders of Arcelor and after prolonged battle the company was acquired and the transition has been made smooth. Ultimately he created 100 million tonne steel company. In one situation, the chopper in which LN Mittal was traveling towards Paris was force landed by telling them that the chopper entered the restricted area. The captain of the chopper was so upset that he resigned to avoid such pressures. Then again Arcelor tried to negotiate the deal with a Russian Steel giant

Severstal who was one of its competitors in order to checkmate Mittal Steel. It was the toughest job for the Mr.Mittal to get the merger process evened out. Ultimately he succeeded in his bid and has become the President and CEO for Arcelor Mittal. In the confrontation between the stream and the rock, the stream always wins not through strength but by perseverance, quoted H.Jackson Brown, a noted Author. Now LN Mittal is the only Indian who controls any particular sector i.e. Steel sector in the world. No other Indian in the earth controls any particular sector but it has been made possible only for Mr.Mittal because of his passion and perseverance to become number uno steel czar in the world. MULTI-CULTURAL SKILLS:

The global scenario has changed drastically especially after the liberalization and privatization in India. The rapid growing technology has made the globe smaller. People began understanding, respecting and adopting the cultures of other countries. At the global level it is essential to focus on multicultural skills. The cultural gap amongst all the countries is getting narrowed down. And there are more efforts and avenues to grasp various cultural diversities across the world. Many companies across the world are coming to India and setting up their shops. It demonstrates and displays the strength of the Indian economy. In the past we have seen global MNCs and now we are witnessing Indian MNCs shopping across the globe and acquiring number of strategically significant companies. In the past Indian companies fell prey to global predators and now there is a U turn where Indian companies have turned out to be predators. INDIAS COMPETITIVE ADVANTAGE:

India has much inherent strength as a result the Indian economy is all set to conquer the world. Presently Indian economy is impacted by US economy and whenever there are changes in the American economy the spill over is felt across Asian markets. And in the near future Indian economy will be independent and will be shielded from American economy. Below are the few competitive advantages India has: Gateway to international markets in SAARC countries. Well developed research and development (R&D) infrastructure. Largest resources of untapped natural resources.

 Worlds largest democracy. Information technology base, in terms of both software and hardware. Technical and marketing expertise. English as the preferred business language. A vibrant capital market with 25 stock exchanges with over 9,000 listed companies. The largest supplier of cost-effective technical and non-technical manpower. Conducive environment for foreign investments by providing freedom of entry, investments, location, choice of technology and import/exports. A well-organized judicial system with a hierarchy of courts. Legal protection for intellectual property rights. A transparent approach for promoting domestic and foreign investment. Declining share of agriculture and allied industries in the GDP. The Economic Survey 2000-01 reveals that the contribution of services sector to the GDP is 40 per cent whereas agriculture and industry contribute 30 per cent. Increased investments in the priority and high growth sectors such as software, electronics, food processing, oil and gas, power, electronics and telecommunications, chemicals, electrical equipment, food processing etc., A well organized banking system with a network of 63,000 branches supported by a number of national and state-level financial institutions. Offers a large market (middle class population of over 25 to 35 crore with increasing purchasing power). Current account convertibility and capital account convertibility for foreign investors. Increase in the number of joint ventures or wholly-owned subsidiaries most of the domestic companies consolidated around their area of core competence by typing up with foreign companies to acquire new technologies, management expertise and access to foreign markets. Deregulation of interest rates with a greater freedom to banks to assess credit requirements. Large and solid infrastructure throughout the country. Simplified systems for administration in government departments. Special investment and tax incentives for exports and certain sectors such as power, electronics and software. Lower tariffs for trade. A transparent approach for promoting domestic and foreign investment. Significantly large manufacturing capabilities through latest technologies.

CONCLUSION:

The Indian economy is bullish with the GDP growing and inflation is within the healthy limits. Indians need not to go overseas to work. Rather they should work with in India itself so as to make Indian economy more vibrant. There are plenty of opportunities with in India itself. The foreign countries are getting more benefits by making use of Indian talent and expertise. What we get in return is far lesser than what we Indians invest in terms of abilities and capabilities to other countries. It is time Indians realized their inherent strengths and stayed in India itself. India has the highest percentage of young productive population in the world where as the population of China is ageing. Since there is productive population and strong and huge reservoir of human resources, India is set to become a developed country much before 2020 and will become a Super Power in the world by 2050. The dream is not what you see in sleep. Dream is the thing which does not let you sleep. References: Indias Competitive Advantage- Source: India Business Opportunities, Investment and Technology Promotion Division (Ministry of External Affairs, Government of India) and Arthur Andersen, June 2000

THEEND
Posted by Professpr M.S.RAO at 10:00 PM

1 comment:

SAMAIRA CHANDRA said... Hi I was very much helped by the information with this article. Many thanks at you very fascinating resource.

Bye May 26, 2008 11:47 AM

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Know About Me
Professpr M.S.RAO Professor M.S.Rao is the Founder of MSR Leadership Consultants, India with more than 30 years of experience in leadership development. He is recognized as one of the worlds leading leadership consultants, coaches and speakers. He created 11E Leadership Grid and Soft Leadership Grid. He is specialist in Leadership and Soft Skills Training. His areas of interest include Leadership, Learning and Development. He is the author of 16 books on leadership and published more than 250 papers and articles in international publications including Emerald, Sage, Leadership Excellence, T + D Magazine (ASTD), Leader to Leader and Personal Excellence. He is the Editorial Advisory Board Member and reviewer for several international publications including Emerald. He is the Adviser for Board of Global Leadership Awards Committee Malaysia and presided as the panel of judge for Global Leadership Awards 2011 and 2012. He can be reached at: [email protected] may also visit other Blogs: http://professormsraoguru.blogspot.com http://mgshyd.wordpress.com and http://mrkhyd.wordpress.com View my complete profile

Read more: http://profmsr.blogspot.com/2008/03/corporate-mergers-and-takeoverscase.html#ixzz22D8WFcaC Under Creative Commons License: Attribution

Abstract: Lakshmi Niwas Mittal, also called the 'Carnegie of Steel', built his steel empire by aggressively acquiring poorly performing steel plants at low prices in places like Trinidad & Tobago, Kazakhstan, Romania, Germany, Poland, Canada and America and turning them around into money-spinners. He is considered to be an industry visionary, spotting trends much before his

contemporaries and investing accordingly. In October 2004, Mittal announced that LNM would be acquiring International Steel Group of the US for $4.5 billion. If regulatory authorities approve, this could make the combined entity, named Mittal Steel the largest producer of steel in the world, surpassing the current world leader, Arcelor. Pedagogical Objectives:

To discuss the impact, this proposed acquisition would have on the global steel industry To discuss the current and future levels of consolidation in global steel and the risks that companies like LNM would encounter To discuss the 'demand from China' factor which is further driving consolidations in the steel sector.

Keywords : Entrepreneurship Case Study, Lakshmi Niwas Mittal, LNM Holdings, Mittal Steel, International steel group, Global steel industry, Consolidation in the steel industry, China's demand for steel, Direct reduced iron, LNM's acquisition strategy, Wilbur Ross Jr, Raw material prices in the steel industry Related Case Studies Steel Industry's Swinging Fortunes: The 'China' Factor POSCO in 2004: The World's Most Profitable Steel Market L N Mittal : Consolidating Presence Globally Global Steel Industry: The Country Factor Consolidation in Global Steel Industry: What Lies Ahead View all Industry Analysis case studies Recently Bought Case Studies Infosys Technologies: Dividend History and Market Infosys Technologies: Training for Retaining IBMs Growth Strategies in India Vodafones Strategic Move in Indian Telecom Market Lenevo's Acquisition of IBM's PC Division - The Making of a Legend?

Abstract: In his 16-year rise from obscurity to opulence, Lakshmi Niwas Mittal multiplied his steel holdings by 138 times. He is known mostly for his unique collection of steel mills in such countries as Trinidad and Tobago, Kazakhstan, and Mexico. He started right from scratch in the year 1989 and by 2006; he is the biggest steelmaker on the globe and held a dominant position in the US., employing 224,000 people spanning 49 different nationalities Mittal is a business tycoon who virtually came from nowhere, only to emerge as the worlds largest steelmaker. He is worlds richest Indian, and he was not at allembarrassed displaying his wealth. After acquiring steel plants all over the world, Laxmi Niwas Mittal seems all set to prove his Theory of Consolidation and Sustainability in the near future to come