Home Laxmi Mittal is at 91st in Forbes billionaire list

Laxmi Mittal is at 91st in Forbes billionaire list

Laxmi Mittal, the CEO of Arcelol Mittal, is the fourth Indian billionaire after Mukesh Ambani, Azim Premji, Shiv Nadar, Cyrus Mistry .Mukesh Ambani holds the 13th in global ranking, while Laxmi Mittal the 91st.

Learning the tricks of the trade

Laxmi Mittal, born into a Marwari family in 1950, he grew up in Calcutta. After finishing his college education in 1970, he joined his father steel business in Calcutta. He worked as an apprentice in his father’s steel mill.

His entry in business: Making the sick mills profitable

In 1976 he went to Indonesia and took over a sick steel mill in Indonesia and made it profitable in a period of 10 years. In this period he gained confidence and perfected his business acumen in the steel business. He named the export arm of the company Ispat Steel group.He searched for sick steel mills and bought them. He took over a steel mill in Trinidad and Tobago.

The world is full of sick steel mills

In the meantime, there were many steel companies in the world that were making losses and struggling to survive. The numbers grew not only in the industrialized western economies but also in the erstwhile soviet republics. The stress was mounting in the western world after the signing of the world trade agreement. This led to the lowering the tariff barriers and allowing more of the cheaper imports from China and India thereby creating bankruptcies very frequently.

In the profit seeking western world, the loss making steel companies were a burden to the investors. The companies started consolidating. The stronger gobbling up the weaker ones. LTV steel of US took over Republic Steel and Jones and Laughin steel. The International steel group took over the LTV steel along with Bethlehem Steel, Weiston Steel and Acme steel. The international Steel Group was still lacking in profitability, and Mittal took over the ISG in 2004.

On the other hand the Arcelor steel  of France took over Aceralia (Spain), Usinor (France), ARBED (Luxumburg) and Dofasco (Canada). Then Arcelor merged with Mittal steel and formed the Arcelor Mittal, with it’s  headquarters in Luxemburg. ArcelorMittal kept on the act of taking over sick mills in US like the Thyssenkrupp steel and Kazakistan, Brazil lastly in Bosia Herzogovina in 2017.

Mergers did create efficiency but also over capacity

However, inspite of creating the biggest mergers of steel companies, Laxmi Mittal failed to create the wealth proportionately. This is because the Chinese were creating more steel and selling those all over the world cheaply. He then planned to open plants in China but was however shut out. The industry had huge over capacity and the demand was far less.

This compelled him to  close down many factories in UK and France and other countries. This led to huge confrontation with the local unions and the political leadership had to intervene. This gave Mittal lot of bad publicity.

Trying to retain the world rank of billionaires

As the steel business inspite of consolidating so much had not brought in humongous profits, Mittal’s wealth declined and his rank came lower and lower every year in the Forbes Billionaire list. In 2005, he was at number 3 in the list, in 2012 at 21, in 2015 at 82, and 135 in 2016. It seems that he had to close down some factories, sell off lot of assets to regain his rank at 91 in 2019.

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