The story of Lakshmi Mittal is such an inspiring story. Though he didn’t make our list of school drop out billionaires; he’s been nicknamed “Carnegie of Calcutta” after the 19th-century American drop out railroad tycoon; Andrew Carnegie. His story is that of a man, who rose from nothingness to join the coveted Forbes list of world’s richest top ten billionaires. He achieved this feat by creating ArcelorMittal; the biggest steel company in the world, worth over £100bn.
Let me also bring to your notice that this Indian-born steel tycoon is the wealthiest man in Britain, with an estimated fortune of £30bn. He is also well connected to rich and powerful men such as Nicolas Sarkozy, Bernie Ecclestone, Tony Blair and Bill Clinton.
Lakshmi Mittal was born in 1950 in a small town in India called Sadulpur, in Rajasthan. Being the eldest of five children, his parents decided to name him Lakshmi after the Hindu goddess of wealth. At the age of six, his family moved to Calcutta, where his father gained employment in a small British steel company. This gave the family the brevity to set up their own business, but it turned out to be quite challenging and tough.
While his father worked night and day to build their new business, Lakshmi Mittal, who happens to be a shy and introverted teenager graduated from a Jesuit college, St Xavier’s. Mittal surprised everyone, including his parents by receiving excellent grades in accounting and mathematics. But instead of becoming an employee accountant, Mittal joined the family’s company “Ispat” and that marked the turning point of his life.
How Lakshmi Mittal Created Arcelor Mittal Steel and became a Billionaire
Lakshmi was inspired ‘by the massive rollers driven by rubber belts and pulleys that flattened the red-hot steel into bars.’ Later on, Mittal went solo and founded the company, LNM Group in 1976 at the age of 26 and has been responsible for the development of its businesses ever since. He set up his first steel mill, in Indonesia, producing 26,000 tonnes and generating annual profit of $1m.
Lakshmi Mittal soon realized that to become a major player in the steel market, his steel would have to go global, just like car manufacturers, ship builders, iron and coal producers. Determined to make his company a global player, he started acquiring companies in Canada and Germany. Still not getting the big break he needs, he turned to Kazakhstan.
Back then, the former Soviet republic was in a financial mess and on the brink of bankruptcy. Mittal acquired the country’s Karmet Steel works in Temirtau for a knockdown price of $400m. Kazakhstan happens to share a border with China, where demand for steel was about to take off. That single acquisition turned out to be a very wise strategic investment as it propelled Mittal into the big league of international steel makers. Lakshmi Mittal became a global steel producer with operations in 14 countries.
Recognizing the need for a strong management team to execute his strategic expansion plans, he brought in Indian managers, doubled production and began selling to booming markets in the East. With luck, as well as timely judgment, he rescued Kazakhstan from financial ruin and paved the way for further large scale acquisitions.
Lakshmi Mittal was also the visionary who saw that the fragmented international steel industry, serving local markets, was crying out for consolidation. Many companies then were owned by the governments and innovative developments were not forthcoming in the steel industry. Though some companies had been privatized, the steel sector was still characterized by acute over capacity, high indebtedness and steel prices that had hit rock bottom.
Lakshmi Mittal created Mittal Steel in 2004 via a takeover of his private company, “LNM” by his public one; Ispat. Mittal Steel became the largest steelmaker in the world, with shipments of 42.1 million tons of steel and profits of over $22 billion in 2004.
In 2006, at the age of 58, Lakshmi Mittal took the world by storm by beating all European establishments to acquire Arcelor Steel, a company created through a merger of firms from Spain, France, Luxembourg and Belgium. Arcelor chairman, Guy Dolle, was forced to swallow his words after controversially dismissing Mittal Steel as a company of Indians paying with monkey money. After a long drawn battle, Arcelor’s shareholders decided to sell out despite opposition to the deal from politicians including former French President Jacques Chirac.
The creation of ArcelorMittal, the biggest steel company on earth and now worth over £100bn, couldn’t have come at a better time. The new group, led by Lakshmi Mittal launched into a worldwide commodities boom that has seen steel prices skyrocket from $240 a tonne in 2002 to $1,000 today. Arcelor Mittal was the first to produce more than 100 million tonnes of steel a year; that could double in a few years as Mittal Steel goes on another acquisition spree, extending his empire to Africa, Australia and China.
Today, ArcelorMittal employs 300,000 people in 60 countries, but accounts for only 10 per cent of global output, so it could grow much bigger before attracting the attention of the anti-trust authorities. ‘Certainly, there is the opportunity to grow,’ Lakshmi Mittal said recently. ‘To what size? You could go up to 150 or 200 million tonnes a year,’ he said.
Just as every successful entrepreneur is expected to face criticism, Lakshmi Mittal has attracted criticism. 191 people have died in accidents in the past 12 years at his Kazakhstan operations, where campaigners argue that more money should have been spent on safety measures. The company has strongly rejected allegations of negligence, but later earmarked an extra $1.2bn for improvements.
In Britain, Lakshmi Mittal has donated to the Labour party but ran into controversy in 2001 when he gave the party £125,000 just before the general election, allegedly in exchange for a letter from Tony Blair to the Romanian government supporting his bid for a Romanian steel plant. Both denied the allegation.
Lakshmi Mittal is proud to be Indian, but he considers himself a ‘global citizen’. Despite his immense wealth, his family’s 44 per cent stake in ArcelorMittal worth £24bn, he doesn’t seek the limelight. You won’t see him at Ascot, Wimbledon or the Proms, although he does attend football matches, after buying 20 per cent of London club QPR, where Formula 1 supremo Bernie Ecclestone is also on the board.
He is married to Usha Mittal, and both have a son and daughter, Aditya and Vanisha. Being flushed with cash, Lakshmi Mittal hit the news when he reportedly bought his third property in London’s Kensington Park Gardens, dubbed billionaires’ row, for his daughter, Vanisha. Lakshmi Niwas Mittal is no doubt a billionaire industrialist by all standards and he is treated as a national icon in his country, India.
Without showing signs of resting on his oars, Lakshmi Mittal is plotting his next move. He wants to secure deposits of coking coal and iron ore, which have doubled in price in the past four years and which are vital for the production of steel. He is in talks to acquire coal mines in Australia and Russia, while expansion elsewhere means that ArcelorMittal now meets 45 per cent of its iron ore requirements from its own supplies.
Lakshmi Mittal has also invested in shipping and rail to cut transport costs. The only part of the supply chain that remains outside his control is oil and gas: an area, perhaps, that could attract his attention before too long.
Aside his achievements in business, Lakshmi Mittal was awarded Fortune magazines “European Businessman of the Year 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 PaineWeber’s World Steel Dynamics.
In 2002, Lakshmi Mittal was involved in a political scandal with British Prime Minister Tony Blair, when a donation he made to the Labour party led to Blair’s intervention in a business deal flavoring Mittal, it was announced later he donated £2 million to the Labour Party.
Lakshmi 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 Forum’s International Business Council and the International Iron and Steel Institute’s 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 non-American, with an estimated wealth of US$25 billion. He has been on the Forbes list of world’s top 10 richest billionaires for more than five years running.
He is the wealthiest person in Britain. His house in Kensington, bought in 2003 for $128 million is the most expensive house ever purchased. He also paid upwards of $55 million to host his daughter’s wedding celebration in Versailles in 2004.
The story of Lakshmi Niwas Mittal has really proved that what the mind can conceive and believe, it can achieve. If only youths can aspire to be like Lakshmi Mittal, the world will be a better place.