Lakshmi Mittal had a humble background growing up in India but became fascinated with steel manufacturing. He started his own steel company at age 26 and pursued opportunities globally. A key strategy for Mittal was acquiring struggling steel mills and turning them profitable through new technologies and management. This included a major acquisition in Kazakhstan near emerging markets in China. Mittal's focus on strategic locations and consolidation made his company the largest steelmaker in the world.

1. The Inspiring Story of Lakshmi
Mittal
Prof Venkatesh Ganapathy
April 2014

2. Lakshmi Mittal HUMBLE
MIDDLE CLASS
BACKGROUND
INDIAN
ENTREPRENEUR
JOINED FORBES LIST
OF WORLD’S
RICHEST TOP TEN
BILLIONAIRES
CREATED ARCELOR
MITTAL – THE
BIGGEST STEEL
COMPANY IN THE
WORLD , WORTH
OVER 100 Billion
pounds.

3. Family background
• Born in 1950 in Sadulpur, Rajasthan.
• Eldest of 5 children
• Named Lakshmi, after Hindu Goddess of
Wealth
• His father – job in a small British steel
company
• Lakshmi Mittal – brilliant in accounting and
mathematics

4. How inspiration turned into
passion
• Lakshmi Mittal fascinated by steel
manufacturing
• Fascination …… Passion
• Early in his career, Mittal handled Ispat’s steel
exports to SE Asia and Middle East
• Started his company at age 26.
• First steel mill in Indonesia – 26000 tonnes
steel, annual profit $ 1 m.

5. Indonesia , 1975
• Mittal went to retail market in Indonesia
• Looked at the prices of bars and rods
• Realized that there was a good margin in
business
• Dealt with Japanese competition by building a
mini mill with DRI technology in Indonesia

6. Problems with funding..
• Mittal had no cash to build a plant in
Indonesia.
• Even if he had cash, Indian Government would
not have allowed him to take the rupees
abroad.

7. Solution to funding problem…
• Mittal discovered that India had a scheme by
which he could invest overseas.
• Purchase equipment & building materials in
India, export them to Indonesia
• Indian government would lend him 85% of
cost of equipment and building materials as a
loan.
• He got a $ 3.7 million loan from Bank of India

8. In the first year itself…
• Mittal made a profit of $ 1 million in
Indonesia.
• Japanese started pulling out of Indonesia.

9. Supplier monopoly
• Mittal was banking on one supplier in West
Java for Direct Reduced Iron(DRI) and scrap
needed for the furnace.
• Years later, he ventured into Trinidad and
Tobago – Caribbean countries as they were
supplying DRI.
• Iron and Steel company of Trinidad and
Tobago (ISCOTT) were making losses. It was a
state owned mill.

10. Mittal told the politicians…
• “ Your company is losing $ 10 million every
month. Give me the management and I will
pay you $ 10 million every month”.

11. Think Local, Act Global
• Lakshmi Mittal determined to make his
company a global one so that it could be a
major player in the steel market across the
globe.
• Targeted International Business efforts in
Canada, Germany & then to Kazakhstan.

12. Kazakhstan
• Ninth biggest country in the world
• Country rich in natural gas, petrol, coal, gold
and diamonds
• Rich in minerals
• Bordered by China.

13. Location decisions - sharp
• Former Soviet Republic – financial mess
• Mittal acquired steel works in Temirtau for a rock
bottom price of $ 400 million.
• Kazakhstan – shared border with China.
• Demand for steel in China.
• It made great business sense!
• This single acquisition was a wise strategic
investment as Mittal eventually became a global
steel producer with operations in 14 countries.

14. Intelligent decision making
• Mittal recognised the need for a strong
management team for his expansion plans.
• He hired Indian managers
• Doubled production
• Sold to booming markets in East
• Success in Kazakhstan led to big ticket
investments in the future.

15. When Mittal identified
Kazakhstan..
• China was booming.
• China wanted steel to build high rises,
highways and airports,
• President of Kazakhstan decided to privatize
• Low bid for the plant due to its poor financial
condition
• Local tram and railway system was under loss.
• Salaries of workers not paid for months.

16. Mittal’s strategies in Kazakhstan
• He employed Indians in Kazakhstan who could
speak Russian and who had studied in Soviet
Union.
• Somewhat of a regio-centric strategy.
• Bought local tram and railway services
• Entered into agreement with the local
government that no new environmental laws
would apply to the plant for ten years from
the date of privatization.

17. Strategies paid off when…
• Lakshmi Mittal got the best bargain for
acquiring the plant in Kazakhstan
• Huge concessions including a moratorium on
payment of taxes
Moratorium
• A legally authorized postponement before
some obligation must be discharged

18. Smell of sweet success!
• Within 1 year, the Temirtau plant at
Kazakhstan made profits
• Steel production doubled
• 10000 miners and steel workers were able to
save their jobs
• Labour was paid every 15 days.
• Mittal – became so popular in Kazakhstan !

19. Ispat’s earliest opportunities
• One of Ispat’s first opportunities was Iscott in
Trinidad and Tobago.
• 1989 – Trinidadian government sought equity
partners to take over the operations.
• Mittal signed a lease for $ 11 million a year
with an option to make an outright purchase
after 5 years.

20. Iscott - challenges
• Though Iscott had a good infrastructure, bad
management led to heavy losses.
• Despite measures to improve environmental
performance, CIL (Caribbean Ispat Limited) faced
labour unrest due to poor safety policies and
slow pace of acculturation of upper
management.
• Market for steel was bad
• Steel replaced by substitute materials
• Growing influence of plastic

21. Sourcing Decisions of Mittal
• Based on
– Cost effectiveness
– Cost effectiveness
– Cost effectiveness
of raw material supplies.

22. Lakshmi Mittal – a visionary

23. Spot the invisible!
• International steel industry – fragmented.
• Local demand
• Great need for consolidation
• Lack of innovation
• Steel sector characterised by over capacity,
high indebtedness, rock bottom steel prices.

24. 2004-2006 : Mittal takes the world by
storm!
• 2004 – Mittal Steel – largest steelmaker in the
world – profits over $ 22 billion
• 2006 – acquisition of Arcelor steel despite
competition from European players.
• Arcelor steel – a company created through
merger of firms from Spain, France,
Luxemborg and Belgium.
• Lakshmi Mittal’s success - the whole world
noticed it!

25. Positive outcomes of intelligent
decision making
• Increase in steel prices
• Production capacity of steel increased
• Mittal expanded his empire to Africa, Australia
and China.

26. Dampeners!
• 191 accidents in 12 years in Kazakhstan
operations – absence of safety measures.
• Mittal gave donations to Tony Blair
government in the UK
• Quid Pro Quo
• Mittal wanted the support of Blair for
acquiring a Romanian steel plant

27. Personality
• Resembles somewhat like a Level 5 leader who
doesn’t seek publicity.
• Always think of growth
• No complacency
• Outstanding vision
• Entrepreneurship
• Leadership & success in Global steel
manufacturing.
• Indian values & ethos – can never fail you!

28. Sourcing Strategy
• Intention to acquire coal mines in Australia &
Russia ( backward integration) for steel
production.

29. Sourcing strategy (Cont’d)
• Mittal also invested in shipping and rail to cut
transport costs.
• Aim – improve last mile supply chain delivery.

30. Location decisions
• Mittal had the common sense to understand
that building something from a scratch would
take a life time
• He chose brownfield strategy over greenfield
strategy and the result was spectacular
success!

31. Logistics decisions
• Supply chain costs rise in a recessionary mode
in economy – Mittal’s challenge would have
been to create a cost effective, robust and
responsive and agile supply chain that could
meet the dynamics of the market place.
• Decided based on infrastructure facilities
• Explore transportation by shipping
• Multi modal transportation as an effective
means to control costs ?

32. Success = ?
• Success = Hardwork + Planning + risk taking
ability + intelligent decision making + eye for
detail + looking at what is not visible to others.
• Mittal chose the right technology at the right
time!
• Turned loss making plants into profit making
ones within a year!

33. Mittal – an active businessman
• Member of Foreign Investment Council in
Kazakhstan
• Member of International Investment Council
in South Africa
• Member of world economic forum’s
International business council.
• Member of International Iron & Steel
Institute’s Executive Committee.

34. Mittal - blending into local culture!
• Successful transnational strategy - local
responsiveness + economies of scale.
• HR policies ranged from geocentric to
polycentric.

35. To sum up, what were Lakshmi
Mittal’s strategies for success ?
• Acquire loss making firms and then turn them
around.
• Consolidate steel industry
• Use new technology (DRI)
• Bargain well with loss making firms to extract
the best price
• Use a different HR strategy (geocentric/
regiocentric)

36. To sum up, what were Lakshmi
Mittal’s strategies for success ?
(Cont’d)
• Buy steel plants in locations which are close to
markets that need steel.
• Example – Trinidad and Tobago were close to
US and Europe ; Kazakhstan was close to
China.

37. Expansion strategy – truly global in its outlook!
• Started from Indonesia
• Trinidad and Tobago
• Middle Asia
• Algeria
• Poland
• Romania
• Czech Republic
• South Africa
• France
• China &
• INDIA….!

38. What is the lesson from Mittal’s story?
• What the mind can conceive and believe, it
can achieve!
• Be Bold
• Risk taker - Fortune favors the brave!
• Success despite middle class roots!