Lakshmi Mittal Curated
Chairman and CEO, ArcelorMittal
CURATED BY :
How do you view the recent cut in India's long-term outlook by S&P?
The India story is definitely not over. We are in the process of continuous growth. India has tremendous potential to grow. The middle class is growing and the country has the great advantage of a young and aspiring population. India is surely impacted by global crises. Before the 2008 crisis, everyone thought India was decoupled from the global economy but the crisis showed we were not. This is one reason behind the slow growth in the last one year. The European economy is affecting us. But even a growth of seven per cent is better than most of the world. While we should continue to strive for a much higher growth rate, we should neither be contented nor think the India growth story is over. Whatever may happen in terms of politics or you may call it a paralysis, the country will grow. I am very positive about it.
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There is a controversy on the usage of natural resources and their allocation. Should natural resources be auctioned or given away?
I have never been given anything in my life and I have always worked to get everything. Why should anything be given away? At the same time, there has to be a transparent and equitable system.
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Is it the problem with overseas companies like ArcelorMittal and Posco? Domestic companies like Tata Steel seem to get things done faster.
Brownfield expansions are easier than greenfield, as fewer approvals are required. Companies like Tata can continue to grow and it will be a much easier task than starting from greenfield. If I had to start this refinery greenfield in Orissa or Karnataka, I do not think we would have made such fast progress.
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How do you react to the low progress in India? For how long are you ready to wait for such projects which have not progressed in more than five years?
The process of securing approvals is going on. However, the pace is low here. My people are spending a lot of time here. I am unhappy about it. I feel bad but we are not giving up. But where you cannot control, you have another opportunity. Indian projects are one of the several projects for us. If approvals don't come, capital allocation won't follow. We have a rigorous capital allocation system.
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Where does India figure in ArcelorMittal's global ambition?
India is clearly high in our priority list but it is low in our investment list. It depends on the progress of projects and investments move up or down with the speed of progress. Every three months we have a discussion on allocating capital. Capital is scarce.
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Has Arcelor Mittal slowed down its investments in India?
We are not seeing the progress we would have liked. Our commitment to India remains and the Bathinda refinery is a testimony. If the stage is set right, things can progress. Our refinery is built through a public-private partnership, which people perceive to be an extra hindrance.
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Do you see more and more Indian companies doing mergers and acquisitions in the US or Europe?
I do not even think on such lines. To me, M&A is not driven by country; it is driven by your business. I never chose to go in a country because everybody was flocking there. I will go to a country if my business takes me there.
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Do you see India reaching the same level as China in 20 years?
It is a very difficult question. Our benchmark should not be China, it should be the US. China's benchmark is not India. Why should our benchmark be China? Our strengths are very different. We have a very young group which is more than 50 per cent of the population. The developed world, including Europe, should be our benchmark.
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Is energy a more lucrative and certain investment in India?
Our country has huge requirements, be it in steel, mining, energy, IT or consumer goods. We are a growing economy like China 20 years back. Our company has and will have focus on mining as well as energy.
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What is the scope of public-private partnerships for your projects?
A partnership, public-private or private-private, does not make a difference. As long as the partners are aligned together and have the same mindset and agenda, things work; like it happens in a marriage.
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Considering HPCL do you think the partnership route with a public or a private Indian company is better?
When we joined this project, we just had a piece of land. That was not enough. Moreover, this project was lying dead for long and this acted as another handicap. What I want to say here is that one formula cannot apply to all projects. Every project will have its own set of problems and we have to address them. In my steel project I am dealing with individual states but in this project I had to deal with three states and thousands of people for laying the 1,017-km crude oil pipeline. It was a difficult task when states knew we were laying pipelines in their area but the project was not coming up in that state.
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What are the growth initiatives for oil and gas in India
HMEL (Hindustan Mittal Energy Ltd) is a platform for us to grow in exploration and production. We should not jump too fast. We should not set our goals too high. We have to make a space and position for HMEL by product delivery and quality. Unless this foundation is perfect, any further investment will have difficulty. The current project needs to stabilise, earn profits and returns. Once it starts doing so, we are here to stay.
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What do you think about the importance of bold decisions and the risks associated with them to get through in life? -Lakshmi Mittal
Wasn’t Manmohan Singh right about India having very short window of opportunity for investments?
Is there some kind of problem, something that keeps you from investing further in India?
On the Forbes issues, it was written that you have to sell your asset to sustain your business. Is that?
Are these ups and downs which you see in your life, do you take them in as your strength?
With the changing political scenario, what are your views in India and would you like to commit more to invest business in India?
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 ?
How do you read this resistance to the plant in West Bengal about the Nano project in which Ratan Tata has faced?
Does it worry you about the pace and the kind of resistance that you could face in land acquisition?
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?
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?
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.
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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.
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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.
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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.
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You have earned a lot of money throughout your work life. What are your plans after retirement?
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.
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