2012

Laxmi Mittal "The King Of Steel"

Leadership Search Paper Under Supervision of Dr. A. Moniem Hafez
MBA - Fall 2012 - G40 - Alexandria, Egypt

Mostafa Omar Azmy ESLSCA Business School 12/12/2012

Lakshmi Mittal

Lakshmi mittal is an Indian born British steel billionaire and one of the richest man in the world .As of March 2010, he is the fifth richest person in the world. He is also the richest person in Europe with a personal wealth of US$28.7 billion He was born on June 15, 1950 at Sadulpur, in Chiru district of Rajasthan, India in a poor family. The large family of 20 lived on bare concrete floors, slept on rope beds and cooked on an open fire in the brickyard in a house built by his grandfather. The family later on moved to Kolkata where his father Mohan Mittal became a partner in a steel company. Lakshmi Mittal graduated from St. Xaviers in Kolkata with a commerce degree in 1969. He began his career working in the family's steelmaking business in India. In 1976, he traveled to Indonesia to look into a real-estate investment for his father, but returned with the purchase of a rundown steel mill there. The same year Lakshmi Mittal founded Mittal Steel Company He split from his father and two younger brothers in 1994 and took the international arm, with interests in Indonesia .He moved to London in 1995. He married Usha, the daughter of a well-to-do money lender and he had a son ( Aditya) and daughter ( Vanisha). Mittal is the Chairman and CEO of ArcelorMittal, while his son Aditya is the chief financial officer. Mittal's daughter Vanisha, is also on the board. In the last few years Mittal Steel has made a number of acquisitions, buying up a network of steel producers in former communist countries including Kazakhstan, Romania and Ukraine, and pushing into the U.S. in 2004 with the $4.5 billion purchase of International Steel Group. Mittal Steel merged with Arcelor to become Arcelor-Mittal, in 2006. Arcelor-

Mittal Steel is the largest steelmaker in the world, with shipments of 103.million tones of steel and had 124.90 billion revenues in 2008 and employing more than 150,000 people. Lakshmi Mittal has become something of a cult figure in the global steel industry. His company Mittal Steel is the largest steel maker in the world. After the recent merger between Mittal Steel and Arcelor which raged a big debate throughout the Europe, Laxmi Mittal current controls 10% of the total steel production and the combined entity that has come into force post-merger is three times the size of its nearest competitors Lakshmi Mittal is also known for his opulence. In 2003, he acquired the Kensington mansion, said to be the worlds most expensive home, from Formula One racings Bernie Ecclestone for 70 million ($128 million). His daughter Vanishas $50 million wedding bash is touted as the most expensive wedding of the 20th century. The Financial Times named Mittal Person of the Year in 2006. In May 2007, he was named one of the "100 Most Influential People" by Time magazine. Mittal was awarded Fortune magazines European Businessman of the Year in 2004 and also Steelmaker of the Year in 1996 by New Steel, and the Willy Korf Steel Vision Award in 1998, for outstanding vision, entrepreneurship, leadership and success in global steel development from American Metal Market and PaineWebers World Steel Dynamics. In 2002 he was involved in a political scandal with British Prime Minister Tony Blair, when a donation he made to the Labour party led to Blairs intervention in a business deal flavoring Mittal, it was announced later he donated 2 million to the Labour Party. Mittal is an active philanthropist and a member of a few trusts. Mittal is a member of the Foreign Investment Council in Kazakhstan, the International Investment Council in South Africa, the World Economic Forums International Business Council and the International Iron and Steel Institutes Executive Committee. He is a Director of ICICI Bank Limited and is on the Advisory Board of the Kellogg School of Management in the U.S. In March 2005, Forbes Magazine named him the 3rd richest man in the world and the richest nonAmerican, with an estimated wealth of US$25 billion.

His Story
In 1976. young Mittal had been sent by his father to Indonesia to finalize the sale of a land Sr Mittal had bought a few years ago to build a steel mill, but had changed his mind since. Instead of going ahead with the sale deal. Lakshmi Mittal decided to stay back in Indonesia and build the steel project himself. He built his first steel plant from scratch, after resolving whatever issues had foiled his fathers plans earlier. This marked the star of a golden run.

The Meteoric Rise

Today Lakshmi Mittal is the face of a steel empire called Arcelor Mittal. the worlds largest steel company which accounts for 10% of all crude steel production. As the president and CEO of the company, he has steel-making facilities in 16 countries across four continents that serve his customer base spanning 150 countries. Recognitions have come aplenty. Times magazine had named him as one of the 100 Most Influential People in 2007. He swept away most of the awards in 2006. He was awarded Business Person of 2006 by the Sunday Times. International Newsmaker of the Year 2006* by Time Magazine and Person of the Year 2006 by the Financial Times for his outstanding business achievements. In 2008. he was listed by Forbes as the worlds fourth richest man. In January 2007. he was presented with a Fellowship from Kings College London, their highest award. The Government of India conferred on Lakshmi Mittal the Padma Vibhushan for his outstanding contribution to the development of steel industry in 2008. Mittal is a member of the Foreign Investment Council in Kazakhstan, the International Investment Council in South Africa, the World Economic Forums International Business Council and the International Iron and Steel Institutes Executive Committee. He is a Director of ICICI Bank Limited and sits on the Advisory Board of the Kellogg School of Management in the U.S and on the International Advisory Board of Citigroup.

The Milestones
His parents couldnt have named him more prophetically. Lakshmi or the Goddess of Wealth had definitely paced her hand of blessing on Lakshmi Mittal. 1976-1985 From his first steel plant in 1976. he added a rolling mill in 1977 and then put in a Japanese electric arc furnace. Eight years rolled by. Though not a technically qualified person, Mittals love for making steel gave him the confidence to build the worlds largest steel empire in his later days. By the time young Mittal left Indonesia in 1985. he had built the largest steel company in the private sector in that country. 1987-89 In late 1987. Mittal met a German steel expert who was the managing director of a company in Hamburg that had the most advanced mini-mill in Europe. Soon, Mittal went to Trinidad to take over a company that had recently lost a management agreement with his friends company. Mittal signed the contract which was a lease agreement with an option to purchase after five years. This was Mittals first taste of international success. In 1989. Mittals company formed the Caribbean Ispat to lease the Iron & Steel Company of Trinidad & Tobago, a modem, technologically advanced steel complex. Today. Mittal Steel Point Lisas produces 2.7 million tonnes ofDRI a year.

The next stop was Mexico. Mittal sensed an opportunity when the country announced the privatisation of its steel industry. He acquired Sibalsa. its third largest steel producer. Post acquisition Sibalsa was renamed Ispat Mexicana.Today. Mittal Steel Lazaro Cardenas is one of the worlds largest producers of DRI and lowest-cost, highest-quality slab producers. 1994-1997 Mittal bought Sidbec-Dosco, Canadas number four steelmaker from the Government of Quebec and renamed it Ispat Sidbec. And in 1995 he acquired Hamburger Stahlwerke in Germany. In the same year. Mittal formed Ispat International Limited and Ispat Shipping to provide technical and commercial services to the Group and to meet its growing shipping needs. The year 1995 also witnessed another acquisition that of the 5.5 million tons pa blast furnace steel plant in Kazakhstan. This plant was renamed Ispat Karmet. The year 1997 saw Mittal acquiring two more German companies. Ispat Stahlwerk Ruhrort and Ispat Walzdracht Hochfeld, from Thyssen AG. And then the inevitable happened. Ispat International, the company that controls the Groups steelmaking operations in Mexico. Trinidad & Tobago. Canada and Germany, floated on the New York and Amsterdam stock exchanges by way of a S776 million initial public offering. 1998-1999 The year marked Mittals acquisition of Americas fourth largest steelmaker. Inland Steel Company. It was renamed Ispat Inland. In 1999. as part of the consolidation of the European long products sector, Mittal bought the French company, Unimetal Group. Including Trefileurope and SMR. from Usinor. Millars Ispat International thereby became the largest producer of high-quality wire rods in Europe. 2002-2004 In 2003. Mittal acquired Nova Hut. the largest steel producer in the Czech Republic, from the Czech government and renamed it Ispat Nova Hut. In 2003. Mittal also stepped into South Africa. Here, he signed a business assistance agreement with the South African steel producer, Iscor in exchange for its shares. In 2004 following an agreement to support the South African governments growth objectives in the manufacturing sector, and approval from the countrys Competition Commission, Mittal took control of Iscor renaming it Mittal Steel South Africa. In 2004. after buying a controlling holding in Polands leading steel producer. Mittal acquired Bosnias BH Steel.

And in December 2004, Mittal completed the transaction to combine Ispat International and LNM Holdings to form Mittal Steel together with the simultaneous announcement of the acquisition of International Steel Group in the US to form the worlds largest steel producer. It was at this time that Lakshmi Mittal declared his intention to make the Group the lowest cost steel producer in every market1. This earned him the Fortune magazines European Businessman of the Year 2004. 2005 The year 2005 could be termed the precursor year for the formation of Arcelor Mittal. it was during this year Mittals entry into China happened. He acquired 36.67 per cent of Hunan Valin Steel Tube & Wire, one of Chinas top ten steelmakers. He completed the acquisition of ISG. merged it with his US operations and renamed it Mittal Steel USA. The year also witnessed the merging of all Europe operations of the company. Mittal Steel Europe. The acquisitions and the success finally earned Mittal a place in the Fortune Magazines Fortune 500. Mittal Steel was placed for the first time in the Global 500 List ranking 253rd in terms of revenues but 55th in terms of profit. In India, Mittal signed a Memorandum of Understanding with the state government of Jharkhand. Mittal Steel is expected to invest S9 billion establishing mining and steel making operations in the state. 2006 In May 2006. the merger of Mittal Steel and Arcelor Steel was finalised. 2009 Today Arcelor Mittal Steel is the worlds number one steel company and employs over 326,000 employees in more than 60 countries

Recession blues, cost cutting and hope

The worldwide financial crisis hasnt spared Arcelor Mittal Steel. The Luxembourg-based companys fourth-quarter 2008 earnings report was a bit scary. The slump in demand for steelwith production down by 45 percent globallyhas resulted in the most rapid downturn ever witnessed and a loss of $2.6 billion. We think we will reach the bottom of the cycle in first quarter 2009, Lakshmi Mittal told investors in a webcast following the release of the report. The company is launching cost-reduction and productivity-improvement measures aimed at saving S5 billion over five years during this period of recession. In its 1.240 workersstrong Cleveland plant, the company has laid off 450 of the union workers and would reassign a third of the 300 salaried workers to other company installations. Members of the

United Steehvorkers Local 979 may get temporary-layoff notices too. The company is also trying to cut its debt by S10 billion by the end of 2009. But. Mittal is optimistic about steel making a slow ascent before midyear. And nobody in the steel business is questioning him. After all, his empire of steel is an inspiring saga of guts and grit, an incredible sense of seeing opportunities during crisis, and a deep thirst to achieve that makes him an every Indians pride. When Vanisha. his daughter, married investment banker Amit Bhatia. newspapers estimated the wedding cost to be around S55 million. The engagement ceremony took place at the Palace of Versailles, once the home to Louis XIV. Frances Sun King. The marriage was followed by a reception at the Jardin des Tuileries in Paris. There were over 1,000 guests from all over the world who were put up in five star hotels in Paris. A specially written script by Javed Akhtar, who had co-penned Amitabh Bachchans greatest hits, showcased the love story of Vanisha and Amit in true Bollywood style choreographed by Farah Khan. A 20-page wedding book was the official invite. Lakshmi Mittals love for his children has never blinded him to the fact that to succeed in life or to be able to take the reins of a super successful business, your feet have to be firmly grounded. His belief was supported by his wife Usha. So when their son Aditya joined the family business, he came equipped with a Bachelors he came equipped with a Bachelors degree of Science in Economics with concentrations in Strategic Management and Corporate Finance from the Wharton School in Pennsylvania. He graduated magna cum laude. He joined Mittal Steel in January 1997 and was appointed Head of Mergers and Acquisitions for Mittal Steel in 1999. This role saw him lead the companys acquisition strategy paving the way for Mittal Steels entry and expansion into Central Europe. Africa and the US. As CFO of Mittal Steel, Aditya also initiated and led Mittal Steels offer for Arcelor to create the first 100 million tonne plus steel company. Aditya Mittal. is now the Chief Financial Officer (COO) of Arcelor Mittal Steel Company. Aditya Mittal and Lakshmi Mittal make the most powerful father-son duo in todays world of business. Lakshmi Mittal, tho Philanthropist and true Indian at heart Like his business, Lakshmi Mittals philanthropic activities are also spread across the world. Apart from the numerous charities and trusts of which he is a member, there are certain causes that are close to his heart. Like Indian sports. It was Mittal Champions Trust that got Abhinav Bindra, Indias first Olympic gold medal winner. a physical therapist, a mental trainer, and on that day when the bullets ran out. cartridges to practice with. Mittals trust is managed by his son-in-law. Amit Bhatia. Last year it supported 14 Indian athletes at the Olympics. Like archer Laishram Bombayla Devi, who picked up a bow and arrow after seeing people hunt in the fields near her home in rural India. She spent two years without a coach until Mittal Champion Trust stepped in. Now she trains with a foreign coach, and has a structured and disciplined training process.

Way back in 1995. Mittal set up a fund of $10 million to help support a few Indian athletes with an eye towards the London Olympics in 2012. If India is in an unwavering position on his map of priorities, his concern for the less fortunate in other countries is no less. Following the devastation of Hurricane Katrina in the U.S. Mittal Steel USA and Arcelor helped in rebuilding a battered Mississippi. And this is just one example. In the Forbes World Billionaires 2010 list steel mega mogul Lakshmi Mittals name figures as the fifth richest man on earth. Fortunes of the man who slipped to number eight position in 2009 list from fourth position in 2008 list (Recession has played its role here too), appeared to have staged a strong comeback this year. But if what one has read and heard about Mittal is true, then he has probably taken this slide in his stride. His famous line has always been. 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. He should know what he is talking about. After all he could have chosen to remain the scion of a prosperous steel industrialist comfortably pursuing a placid life of pleasure and work without making the humungous and indigenous effort of discovering new frontiers. Instead, at the age of twenty-six. he decided to roll up his sleeves, jump into the fray and leam firsthand all about the making of steel, and more importantly, the marketing of it.

Societal Contribution
Sports
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 Trustwith $9 million to support 10 Indian athletes with world-beating potential. In 2008, Mittal awarded Abhinav Bindra with Rs. 1.5 Crore (Rs. 15 million), for getting India its first individualOlympic gold medal in shooting. Arcelor Mittal Also financed the construction of ArcelorMittal Orbit for 2012 Summer Olympics. For Comic Relief 2007, he matched the money raised (~1 million) on the celebrity special BBC programme, The Apprentice.

Education
In 2002 Lakshmi Niwas Mittal and Usha Mittal foundation and the Government of Rajasthan partnered together to establish a university named the LNM 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.

SNDT Women's University renamed the Institute of Technology for Women(ITW) as Usha Mittal Institute of Technology after a generous donation from the Lakshmi Niwas Mittal Foundation.

Criticism and allegations

PHS Lakshmi Mittal successfully employed Marek Dochnal's consultancy to influence Polish officials in the privatization of PHS steel group, which was Poland's largest. Dochnal was later arrested for bribing Polish officials on behalf of Russian agents in a separate affair. In 2007 Polish government said it wants to renegotiate the 2004 sale to Arcelor Mittal. Slave-labour allegations and questionable safety records Employees of Mittal have accused him of "slave labour" conditions after multiple fatalities in his mines. During December 2004, twenty-three miners died in explosions in his mines in Kazakhstan caused by faulty gas detectors. 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. LNM was a "major global competitor of Britain's own struggling steel industry" 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. It also had a passage, removed just prior to Blair's signing of it, describing Mittal as "a friend". 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 percent shareholding inQueens Park Rangers football club joining Flavio Briatore and Mittal's friend Bernie Ecclestone. 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. 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.

Environmental damage Mittal purchased the Irish Steel plant based in Cork, Ireland, from the government for a nominal fee of 1 million. Three years later, in 2001, it was closed, leaving 400 people redundant. Subsequent environmental issues at the site have been a cause for criticism. The government tried to sue in the High Court to have him pay for the clean-up of Cork Harbour but failed. The clean up was expected to cost 70 million. France steel plant Mittal has around 50 units in Europe and 20,000 employees are working altogether in these units. So, Half of his revenue comes from european continent.Mittal's France steel plant is facing threat of getting nationalized by the government. In 2010, blast furnace unit alone is closed. But, rest of the units are operating as usual. Still, employment of around 580(workers of blast furnace) is a question mark. For this purpose, french government has given him tenure till December 1, either to sell full steel plant or leave it for making it nationalized. There are tycoon's interested in buying full steel plant, but not blast furnace unit alone. On the other hand, Mittal is willing to sell only blast furnace unit and not full steel plant.

Leadership Style
We should not only continuously challenge and improve ourselves; we should also actively encourage and foster talent and responsibility in others. We want everyone in our company to find in their professional lives a capacity to put the best into what they do. If you show initiative and accept challenges, then there will be no hindrance to your growth. Lakshmi Mittal, Chairman and CEO, ArcelorMitta

This is not about creating a giant, it's about creating the sustainability of the steel industry Lakshmi Niwas Mittal

Qualities and characteristics

1- Hard working 2- Outstanding vision 3- Convincing, Motivating and guiding

4- Zeal and fierceness 5- Capacity to lead Bravery

A transactional leader:
Mittal is a transactional leader who guides and motivates his followers in the direction of established goals by clarifying role and task requirements.

The Leader in Mittal:

1- An Inspiring individual 2- A corporate leader in business 3- Started the trend of mergers around the world 3- A caring family man

References:
1- wikipedia - Laxmi (Lakshmi) Mittal 2- Business Week - Collective News and Articles on Laxmi Mittal 3- ArcelorMitta Website 4- Forbes Magazine - Collective News and Articles on Laxmi Mittal