Today, Lakshmi N Mittal, 50, ranked among the Indian `Billionaires XI' by Forbes magazine, has not only been acknowledged by the cheering crowds that sit and watch the performers in the steel industry, but has even motivated competitors to take a leaf from his book. The global steel industry has been noticing his meteoric rise-from humble beginnings as a steel trader, to one of the major players in the global steel industry. With his Rotterdam-based flagship, Ispat International NV (the term Ispat has its etymological origin in Hindi and means `steel'), Mittal has been constantly expanding his LNM group, which is headquartered in London.

Using the simple formula of buying out ailing state-owned steel mills at throwaway prices from cash-strapped governments and then downsizing and modernising them, Mittal has made inroads into the world's steel industry with his competitive prices.

Mittal's July 1998 acquisition of Chicago based Inland Steel Co. from Inland Steel Industries, Inc., at a price of $1.43 billion, set off in the global industrial circles the kind of talk that creates a cult figure. According to Mittal, the purchase made Ispat International the world's seventh largest steelmaker, with an annual capacity of more than 12.5 million tonnes and $4.5 billion in annual revenues-twice the level of revenues that Ispat International had earned till the Inland acquisition.

"Mittal had, by then, not only established himself as a strong player, but had also been acknowledged as one who would leave a profound impact on the global steel industry," says a Frankfurt based steel analyst, who has been closely monitoring his moves.

Inland's acquisition helped Mittal establish a major presence in the US, which, he has been saying, is the "most demanding market". Robert J Darnal, former chairman, president and CEO of Inland Steel Industries, observed at the time of the takeover that by marrying the experience of Inland Steel Co. (its name has since been changed to Ispat Inland Inc.), with the resources of Ispat International, Mittal created a leading global steel company with significant competitive advantages and greater opportunities for growth.

Mittal's formative years in the steel business came from his father Mohanlal Mittal. The young Mittal seemed to have been vaccinated with the business serum by his father. This early upbringing in all the aspects of the steel business was to prove a strong forte in Mittal's life-an assessment that is shared by all his friends and business associates alike.

Ispat Indo in Indonesia was Mittal's first venture. A single-site rod mill, established as a greenfield project in 1976, Ispat Indo later became the country's largest privately owned steel company. Other acquisitions include two German companies, Stahlwerk Ruhrort GmbH (SRG), a steelmaker in the Ruhr region, the name of which has been changed to Ispat Stahlwerk Ruhrort GmbH (ISRG), and Walzdraht Hochfeld GmbH (WHG), a wire-rod manufacturer in Duisburg. Both SRG and WHG were part of the German conglomerate, Thyssen AG. Mittal's acquisitions are not off-the-mark gambles. He carefully weighs the pros and cons of an acquisition, and pays special attention to factors that are vital for a successful acquisition-location of the mills, which must be close to a port and have access to low-cost and abundant energy supply and the availability of raw materials. One such "lean advantage" has been his use of direct reduced iron (DRI), an ore that is given special treatment to make it suitable for the production ofsteel.

This material used in steel production has resulted in huge savings for Mittal and enabled him to compete against other steel companies that rely on using scrap metal for the production of raw steel. DRI is much cheaper than scrap metal. And with DRI becoming the lifeline of Mittal's steel business, it was natural for him to try to get hold of DRI-origin sources, in an effort to safeguard a steady flow of the material for his mills. It was, indeed, a wise move, say European analysts, for Mittal to have purchased stakes in a Mexican iron mining company. As a result of this move, Ispat could secure the supply of DRI and moved on to become the world's largest producer and consumer of DRI.

Mittal's biceps began to bulge once he got his grip on the DRI supplies. Now, he has operations in the Netherlands, Germany, Trinidad, Mexico, Ireland, Kazakhstan, Indonesia and Canada. Added to this strategic move have been his unceasing efforts to produce low-cost, value-added steel, using leading-edge production technology.

But Mittal, whose LNM group has also diversified into shipping, power generation and distribution and the oil business, has not always been successful in his acquisition bids. His efforts in the latter part of 1997, to purchase a state-owned steel manufacturing company in Venezuela, CVG Siderurgica del Orinoco CA (Sido), for instance, was not successful, as a consortium of Latin American companies clinched the deal by bidding $2.3 billion, against Ispat's $2.06 billion.

The last two years were particularly tough as steel prices fell and earnings declined. But in the last quarter of 1999, business picked up, making him upbeat once again. He told Business Week recently that ultimately, there would be only two people left in the race. When asked who the two would be, the gladiator was rather modest and said: "I don't know."

-- India Abroad News Service