It’s greenfield for now, but Mittal could always revert to Plan B
Ironically, while his Indian origin was quite overhyped
during the Arcelor acquisition talks, steel tycoon Lakshmi Mittal has taken quite a while to develop a serious India focussed business strategy. But that is now changing fast.
On February 7, 2008, Arcelor-Mittal joined hands with Shivalik Bimetal and Germany based DNick to set up a metal cladding plant in India to tap opportunities present across the globe. Exactly four days after this agreement was announced, Arcelor-Mittal received provisional approval to acquire close to 7,700 acres of land from Orissa Government to set up the plant’s first leg.
Earlier, in 2006, Mittal had announced setting up a 24 MMTPA greenfield capacity in India, with 12 MMTPA each in Jharkhand & Orissa with total investment of $20 billion. Ashok Jainani, Head of Research, KSL India, says, “Setting up a steel plant requires all the patience, energy one has. There are many sensitive issues like environment, policy et al to be addressed cautiously.”
The question is why is Mittal not planning inorganic growth in India, which has been his preferred route? Arcelor-Mittal has a three point growth charter, aim for product diversification; acquire assets, which add up to the value chain and expand in more and more geographies. Sudhir Maheshwari, EVP Finance & M&A Head, Arcelor-Mittal, told B&E, “Consolidation will continue to form core part of our strategy. But India is a different ball game. It offers huge raw material resources unlike other geographies. Going greenfield in India makes more sense at the moment...” But that could be an eventuality, as per experts. After all, in China, L. N. Mittal slowly & steadily constructed his empire around Hunan Valin. Aditya Mittal, CFO, Arcelor-Mittal revealed to B&E, “We are not really following two different strategies. It is one strategy; expansion in key markets. India is currently about greenfield…” So while the company is not revealing its cards yet, it has rightfully kept its options wide open.
Ironically, while his Indian origin was quite overhyped
during the Arcelor acquisition talks, steel tycoon Lakshmi Mittal has taken quite a while to develop a serious India focussed business strategy. But that is now changing fast.On February 7, 2008, Arcelor-Mittal joined hands with Shivalik Bimetal and Germany based DNick to set up a metal cladding plant in India to tap opportunities present across the globe. Exactly four days after this agreement was announced, Arcelor-Mittal received provisional approval to acquire close to 7,700 acres of land from Orissa Government to set up the plant’s first leg.
Earlier, in 2006, Mittal had announced setting up a 24 MMTPA greenfield capacity in India, with 12 MMTPA each in Jharkhand & Orissa with total investment of $20 billion. Ashok Jainani, Head of Research, KSL India, says, “Setting up a steel plant requires all the patience, energy one has. There are many sensitive issues like environment, policy et al to be addressed cautiously.”
The question is why is Mittal not planning inorganic growth in India, which has been his preferred route? Arcelor-Mittal has a three point growth charter, aim for product diversification; acquire assets, which add up to the value chain and expand in more and more geographies. Sudhir Maheshwari, EVP Finance & M&A Head, Arcelor-Mittal, told B&E, “Consolidation will continue to form core part of our strategy. But India is a different ball game. It offers huge raw material resources unlike other geographies. Going greenfield in India makes more sense at the moment...” But that could be an eventuality, as per experts. After all, in China, L. N. Mittal slowly & steadily constructed his empire around Hunan Valin. Aditya Mittal, CFO, Arcelor-Mittal revealed to B&E, “We are not really following two different strategies. It is one strategy; expansion in key markets. India is currently about greenfield…” So while the company is not revealing its cards yet, it has rightfully kept its options wide open.
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IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
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Top Articles on IIPM:-
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