Lakshmi Mittal Curated
Chairman and CEO, ArcelorMittal
CURATED BY :
You were moving ahead slowly and nicely with the integration of Arcelor with Mittal even after a slump gripped the steel market. What was the flash point that led you to shift gears and go as far as to cut productions?
For many business people the collapse of Lehman Brothers was an important moment. I remember this moment very well, it happened a few days after the ArcelorMittal Leadership Conference was held in Delhi. It was a meeting of the 650 top executives of the company. The atmosphere was normal, but the collapse of Lehman Brothers was a first really strong warning bell. The world is witnessing the worst global recession since 1945. Most people will not have witnessed anything like this during their careers so far.
You have earned a lot of money throughout your work life. What are your plans after retirement?
So you are still interested in earning money for the company?
Has any of your acquisition bids worldwide been as complicated and fiercely-fought like Essar Steel?
ArcelorMittal has been involved in many acquisitions over the past 25 years, including, of course, the merger between Arcelor and Mittal Steel in 2006 to create ArcelorMittal. So complexity and competitiveness is something we are very used to. Each acquisition has its own unique features, and the same is true with Essar Steel. At a simplistic level, this is the sale of a sizeable integrated asset that requires investment and a dedicated plan to improve performance. On that basis, there are parallels with other similar sized assets we have acquired in the past. But what is remarkable here is that this is a test case for the new insolvency law. And as we have seen, the path so far is not straightforward as the previous owners (the Ruia family) are not willing to give up their assets readily. Many are watching to see if the IBC will achieve its objectives of delivering a fair return to creditors and [find] a long-term custodian for the asset that defaulted under its previous owners, in a timely manner. We must have confidence that ultimately the IBC will achieve its aims and the strongest bidders will succeed, in the best interests of Essar Steel.
How do you see the progress of the Essar Steel case so far? What major changes are needed to make the IBC more effective and less litigating?
The resolution process for Essar Steel, like in other IBC cases, has clearly had its challenges, and the timetable has already been extended once. From what I have seen, those running the process are doing their best to adhere to it and keep it on track, but we are seeing many twists and turns, often legal, which are impacting the ambitious original timetable. But we are encouraged by the fact that we are now at a stage where the committee of creditors (CoC) has had a chance to review our bid, allowing us to engage with them on the issue of eligibility. The IBC itself is a significant reform for India’s banks which will impact the perceptions and confidence of investors in India and abroad. Getting it right is critical to the success of the country’s financial and economic reforms. However, we are still in the early days and there are stresses and tensions of this new standard that is being tested, and which will hopefully be resolved over time. (Section) 29A, in particular, has caused unexpected consequences and I would expect to see amendments being implemented, though the spirit of the law is clear. In reality, it is creating a lot of confusion and delay.
After waiting for over 10 years to set up a greenfield steel plant in India, do you think the bid for Essar Steel will be ArcelorMittal’s last chance to get its foothold in the country?
I certainly would not describe it as a last chance, but it is a great current opportunity for us to establish a meaningful presence in India. And our conviction is that ArcelorMittal is the most credible and suitable custodian for this asset. Essar Steel would benefit from an owner that has the expertise to set the company on a successful track for the future — that means a proper industrial company with management that knows how to generate value from a steel plant not just for today, but for the longer term. We really believe that together with our partner, Nippon Steel, we can bring a lot of value to Essar in alignment with the government’s ‘Make in India’ policy and its desire to triple steel-making capacity by 2030. We also have a MoU with SAIL to construct an automotive steel plant in India, similar to the successful VAMA joint venture in China, and both parties continue to progress in that project.
How do you see competition from home-grown companies such as JSW Steel and Vedanta for Essar Steel? Why do you think only foreign investments can take the country’s capacity to 300 million tonne by 2025?
At present, there are only two bids being evaluated: that of ArcelorMittal and Nippon, and that of the Numetal consortium. I certainly don’t think only foreign companies can triple the country’s capacity to 300 million tonnes. But if you work on the basis of the replacement cost of around $1000 per tonne — and that is conservative — then you are looking at an investment of $200 billion over the next 12 years to reach the target. That’s a lot of investment for 3 or 4 companies to make.
70 के दशक में इंडोनेशिया में एक स्टील फैक्ट्री खोलने के बाद, क्या आपने कभी महसूस किया है कि आप में जोखिम लेने की क्षमता है?
आज इस मुकाम को हासिल करने के लिए आपने क्या कदम उठाए?
क्या यह आपके जीवन का एक हिस्सा था जिसे आपने बहुत कमाया है इसलिए अब आपको भी बहुत खर्च करना होगा, जैसे 500 करोड़ रुपये का घर खरीदना या बेटी की शादी में 200 करोड़ रुपये खर्च करना?
आप भारत में व्यवसाय शुरू करने की योजना कब बना रहे हैं?
Why the decision to bring your top management to New Delhi?
Does it worry you about the pace and the kind of resistance that you could face in land acquisition?
Are you disappointed with the pace?
Do you get the sense that there is an absence of a political will?
How do you read this resistance to the plant in West Bengal about the Nano project in which Ratan Tata has faced?
Is there a definite deadline beyond which you are not prepared to wait?
So when you read about this resistance you don’t have to rethink of your own project in Orissa given the slow pace you’re not worried that you may face the same problem ?
Is there a deadline you expect these projects to start?
With the changing political scenario, what are your views in India and would you like to commit more to invest business in India?
You are facing one of the biggest crisis of your career is that true?
Are these ups and downs which you see in your life, do you take them in as your strength?
As inventories are cleared, will people start the production again?
On the Forbes issues, it was written that you have to sell your asset to sustain your business. Is that?
How optimistic are you about India?
Is there some kind of problem, something that keeps you from investing further in India?
Wasn’t Manmohan Singh right about India having very short window of opportunity for investments?