The steely Lakshmi Mittal

Lakshmi Mittal may well emerge as the most visionary Indian businessman of the last 50 years after Dhirubhai Ambani. The Tatas and Birlas built empires based on grit and inheritance. Dhirubhai constructed what is now, in two separate avatars (RIL and R-ADAG), the greatest self-built business empire in Indian history with a combined turnover in 2005-06 of well over Rs 1,10,000 crore.

But Lakshmi Mittal has gone several steps further. He already controls a globe-girdling steel business with sales of $29 billion (Rs 1,30,000 crore). If he swallows Arcelor, the world’s second largest steel company, Mittal Steel will control global steel sales of $68 billion (Rs 3,05,000 crore), dwarfing even the Ambani and Tata empires. And he would have done it in exactly three decades since he travelled to Indonesia to set up a tiny steel plant there in 1976 at the age of 25.

Mittal will pull off the Arcelor deal for three reasons. One, he has no ego. The racist insults he has suffered from the European business elite during his takeover battle with Arcelor have washed off him like water off a duck’s back. Two, he has pride which is wholly different from ego. Pride engenders determination. Three, Arcelor’s shareholders know that a Mittal-Arcelor merger will create a 72-tonnes-a-year steel giant that will stand up to the real threat lurking around Europe’s corner: China. Chinese steel makers are exploding with new capacity. In a few years they will dominate global steel.

Why will Arcelor’s shareholders vote for Mittal? They have already seen the value of their shares go up by over 30 per cent since Mittal announced his hostile bid. They also know that the world steel industry is fragmented. Even Mittal-Arcelor together will account for just 10 per cent of global steel output. Consolidation is inevitable. Without fortification, Arcelor itself could become a juicy takeover target (in 2007?) for a Chinese steel maker. That, Arcelor’s European shareholders have finally figured out, could be worse than being acquired by another “European” company like Mittal’s which is run out of London, registered in Holland and listed in New York. Over 70 per cent of Arcelor’s shares are held by US and European financial institutions. Most are ambivalent about Mittal’s cash-cum-stock offer but are listening carefully to the Indian’s well-crafted pitch.

And the racism? Of course it exists. Brown men are meant to run corner grocery stores or at best harmless midsized hotels (the Chatwals), food and spice outfits (the Noons) or smallish steel mills (Lord Swaraj Paul). While the Continental European media has been especially racist about Mittal (“nepotic”, “family-run”, “not one of us”, etc), the British press has been relatively restrained. That’s not because the British are not racist. They are. But they are also pragmatic. The Protestant British have experience of this sort of thing—they formed the East India Company in 1599 and even though their 150-year occupation of India was brutal, they did not prosletyse. That is why India has such few Protestants and so many Catholics. The laidback Spanish and Portugese Catholics made no money out of India (except a bit in Goa) but a lot of converts. Most British and Fench companies made their money in their Asian and African colonies using guns. Indian companies are making their money today in the West using GDRs. Therein lies the essential difference between the aggressive posturing of Guy Dolle, Arcelor’s CEO, and the gentle but tough-as-nails Mittal.

The pragmatic British press is perfectly happy to see Laksmi Mittal become the world’s largest steel producer. He will after all employ native white Britons in his expanded business, energise the local British economy and give European steel—for long a near-sick industry industry—ballast, momentum and even cachet. So what if Lakshmi is brown? A peership for him is inevitable (the smart money is on “Lord” Mittal by 2008). Mittal is known to be close to Tony Blair and is a generous Labour donor.

Predictions are dangerous but here’s one to chew on. In five years, Lakshmi Mittal, then 60, will be the world’s wealthiest man, ahead of Bill Gates and Warren Buffett and many multiples ahead of the Ambanis. Personal wealth of course does not matter much in the ultimate analysis. There are superior measures of real success. But Mittal’s journey from Kolkata to London via Indonesia will go down as the most extraordinary since Dhirubhai sailed from Chorwad in Gujarat to Aden in 1949 and then back to Mumbai in 1958 to create the conditions in which other visionaries like Mittal could flourish globally.

Email: minhazmerchant@business-leaders.com