Global Impact of Indian Management: A story of Mittal Steel

SABYASACHI G. DASTIDAR and SHUBHAM MAHESHWARI

Department of Mechanical Engineering, Malaviya National Institute of Technology, Jaipur.

Abstract: In the recent decades, a large number of Indias leading corporate houses have expanded internationally and have made their presence felt in the global market. They have been consistently growing and have proved their mettle in a tough and competitive marketplace. A company that emerged as the leader in the steel industry globally was Mittal Steel. A very young company, Mittal Steel was formed in 2004 after a $4.5bn takeover of International Steel Group of the US, and a merger of Mittals existing assets LNM and Ispat International. This company has proved its dominance in the global market by merging with Arcelor in 2006 to become the leading steel manufacturing company in the world, ArcelorMittal thus making it an ideal example for the other emerging Indian companies by becoming the first truly global steel company. Keywords: Mittal Steel, ArcelorMittal, Globalisation, Merger, Indian management, LN Mittal Research Objective: Mittal Steel has set the pace for the consolidation and globalisation of the world steel industry. They have taken on a range of acquisitions, many of them formerly public sector-owned companies, and transformed them into successful projects. In the process they have spread best practice and modern production techniques throughout their plants. Their capital investment programme is unmatched in the industry. So there was a need of detailed study on the policies and strategy of the company which has resulted into its unmatchable success today.

Address for correspondence: SABYASACHI G. DASTIDAR 52-A, Pocket A, Mayur Vihar phase-II. New Delhi 110091, India. E-mail: sgdmnit@gmail.com SHUBHAM MAHESHWARI B-27, Path No.5, Jamna Nagar, Ajmer Road, Sodala. Jaipur-302006, Rajasthan, India. E-mail: maheshwarishubh.2007@gmail.com

INTRODUCTION: The aim of the study is to do an analysis of the growth strategy of Mittal Steel, which is one of the most diversified steel companies in the world in terms of asset location and market presence across all regions. As such, Mittal is not overly dependent on any single region, product, or end market. In this work, attempts have been made to understand how a man who had his roots from a small village in Rajasthan, India planned his mind and made his short and long term goals, resulting in the formation of a globally successful empire which is in front of everyone. On January 27, 2006, Mittal Steel unveiled an unsolicited $22.7 billion bid for Luxembourg based Arcelor. This step was the benchmark for Mittal steel. Through this step they impacted the management globally and thus proved that Indian Entrepreneurs are the best in world. This is the motive behind the study of Mittal steel in the reference to the subject GLOBAL IMPACT OF INDIAN MANAGMENT.

COMPANY PROFILE: Mittal Steel Company was one of the worlds largest steel producers by volume, and also the largest in turnover. The company merged with Arcelor on 25 June 2006 to form a new company ArcelorMittal which is now the worlds leading steel company, operating in more than 60 countries. CEO of Mittal Steel, Lakshmi Mittal's family owned 88% of the company. Mittal Steel was based in Rotterdam but, managed from London by Mittal and his son Aditya Mittal. It was formed when Ispat International acquired LNM Holdings (both were already controlled by Lakshmi Mittal) and merged with International Steel Group Inc. (the remnants of Bethlehem Steel, Republic Steel and LTV Steel) in 2004. The merger with Arcelor in 2006 has been successfully approved by shareholders and directors of Arcelor making L.N. Mittal the largest steel maker in the world. All the major global steel markets are spearheaded by ArcelorMittal, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks which cover all the key steel markets present in over 20 countries spanning four continents. Through its core values of Sustainability, Quality and Leadership, ArcelorMittal commits to operating in a responsible way with respect to the health, safety and wellbeing of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment and of finite resources.
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During the year ended December 31, 2010, ArcelorMittal had steel shipments of approximately 85 million tonnes and crude steel production of approximately 90.6 million tonnes, earning revenues of $78 billion, representing approximately 8 percent of world steel output. ArcelorMittal is also listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Brussels (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). ArcelorMittal produces a range of finished and semi-finished products. ArcelorMittal produces flat products, including sheet and plate, long products, including bars, rods and structural shapes, and stainless steel products. The Company operates in five segments: Flat Carbon Americas; Flat Carbon Europe; Long Carbon Americas and Europe; Asia, Africa and Commonwealth of Independent States (CIS) (AACIS), and Distribution Solutions. On February 18, 2011 ArcelorMittal and Nunavut Iron Acquisition Inc. announced they had taken up over 93% of the Baffinland Iron Mines Corporation (Baffinland) under their joint offer. On January 25, 2011, ArcelorMittal approved the spin-off of ArcelorMittal's stainless and specialty steels business into Aperam.

EVOLUTION OF MITTAL STEEL: The history of the Mittal Group can be traced back to the 1950s when Mohan Mittal, the father of L.N. Mittal, the head of Mittal Steel laid the foundation of Ispat Group in India. In 1976, L.N Mittal moved to Indonesia and acquired a steel plant Ispat Indo. Adopting innovative practices and cutting edge technology, the Mittals managed to bring a turnaround at Iscott, a loss-making government owned steel firm in Trinidad and Tobago, and within a year. This set the stage for further expansions. The Mittal Steel group was formed when two sister companies in the Mittal family, LNM Holdings and ISPAT International, were merged to form Mittal Steel in 2004. Mittal Steels growth was founded on a consistent philosophy: that to be able to deliver the range and quality of products customers demand the modern steel maker must have the scale and worldwide presence to do so competitively. The growth of Mittal Steel in the last two decades can be categorized as: 1989: Acquisition of Iron and Steel Company of Trinidad and Tobago 1992: Acquisition of Sibalsa 1994: Acquisition of Sidbec-Dosco 1995: Acquisition of Hamburger Stahlwerke

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Ispat International Ltd. And Ispat Shipping formed Acquisition of Karmet. 1997: Ispat International NV goes public 1998: Acquisition of Inland Steel Company 1999: Acquisition of Unimetal 2001: Acquisition of ALFASID Acquisition of Sidex 2002: Business assistance agreement signed with Iscor 2003: Acquisition of Nova Hut 2004: Acquisition of Polski Huty Stali Acquisition of BH steel Acquisition of Macedonian facilities from Balkan Steel Creation of Mittal Steel and proposed acquisition of International Steel 2005: Acquisition of a stake in Hunan Valin ISG Acquisition completed Mittal Steel Europe created Mittal Steel makes Fortune 500 list of top companies MDA with Liberian government Acquisition of Kryvorizhstal MoU with State of Jharkhand, India Acquisition of Stelco subsidiaries Stake lifted in Mittal Steel Zenica 2006: January: Historic moment for Global Steel Industry (Mittal Steel bids for Arcelor) February: Expansion and strong results April: Renewal after Hurricane Katrina and new galvanized line May: US clears the way for bid June: Historic agreement to create the No.1 Global Steel Company

FINANCIAL STATEMENT: Income statement after its merger with Arcelor (US $ in millions) DECEMBER 31st 2010 78,025 (71,084) 6,941 (3,336) 3,605 2009 65,110 (62,913) 2,197 (3,875) (1,678) 2008 124,936 (106,110) 18,826 (6,590) 12,236 2007 105,216 (84,953) 20,263 (5,433) 14,830 2006 58,870 (48,411) 10,459 (2,960) 7,499 49

Sales Cost of sales Gross margin Selling, general and administrative Operating income (loss) Other income, net
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Income from investments in associates and joint ventures Interest expense Interest income Fair value adjustment on Convertible Bonds and call options on Arcelor Mittal shares Net gain (loss) on other derivative instruments Net foreign exchange result and others Financing costs, net Income (loss) before taxes Income tax (expense) benefit Net income from continuing operations (including noncontrolling interests) Discontinued operations, net of tax Net income (including noncontrolling interests) Net income attributable to noncontrolling interests Net income attributable to equity holders of the parent
(Source: www.arcelormittal.com)

451 (1,578) 133 427 43 (1,225) (2,200) 1,856 1,479 3,335 (330) 3,005 (89) 2,916

58 (1,696) 190 (897) (28) (386) (2,817) (4,437) 4,512 75 75 43 118

1,653 (2,516) 497 (177) (156) (2,352) 11,537 (1,098) 10,439 10,439 (1,040) 9,399

985 (1,839) 577 423 (88) (927) 14,888 (3,038) 11,850 11,850 (1,482) 10,368

301 (1,124) 251 (11) 230 (654) 7,195 (1,109) 6,086 6,086 (860) 5,226

Brief of the income statement:The income statement presents information on the financial results of a company's business activities over a time period. It communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue. Following points were noticed in ArcelorMittals Income statement: ArcelorMittal's sales and operating income declined sharply from 2008 to 2009 but then slightly increased from 2009 to 2010. ArcelorMittal's net income from continuing operations (including non-controlling interests) declined sharply from 2008 to 2009 but then slightly increased from 2009 to 2010. ArcelorMittal's net income attributable to equity holders of the parent declined sharply from 2008 to 2009 but then slightly increased from 2009 to 2010.

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Statement of Financial Position, Liabilities, & Stockholder Equity DECEMBER 31st

2010 Short-term debt and current portion of long-term debt Trade accounts payable and other Short-term provisions Accrued payroll and employee related expenses Other payables Other creditors Revaluation of derivative instruments Other amounts due to public authorities Unearned revenue and accrued payables Accrued expenses and other liabilities Income tax liabilities Liabilities held for sale and distribution Current liabilities Long-term debt, net of current portion Deferred tax liabilities Deferred employee benefits Long-term provisions Other long-term obligations Non-current liabilities Total liabilities Common shares, no par value Treasury shares, at cost Additional paid-in capital 6,716 13,256 1,343 1,933 2,090 1,526 402 828 121 6,900 471 2,037 30,723 19,292 4,006 7,180 1,738 1,865 34,081 64,804 9,950 (427) 20,198

2009 4,135 10,676 1,433 1,949 1,810 1,349 905 731 217 6,961 314 11 23,530 20,677 5,144 7,583 2,121 3,244 38,769 62,299 9,950 (2,823) 20,808 29,738 3,372 61,045 4,353 65,398 127,697

2008 8,409 10,501 3,292 1,949 1,942 1,320 1,094 791 317 7,413 775 370 30,760 25,667 6,395 7,111 2,343 1,582 43,098 73,858 9,269 (5,800) 20,575 30,403 751 55,198 4,032 59,230 133,088

2007 8,542 13,991 1,144 2,008 1,703 1,535 549 909 571 7,275 991 266 32,209 22,085 7,927 6,244 2,456 1,169 39,881 72,090 9,269 (1,552) 20,309 23,552 5,107 56,685 4,850 61,535 133,625

2006 4,922 10,717 569 2,238 284 3,038 501 893 625 7,579 534 239 24,560 21,645 7,274 5,285 1,880 1,331 37,415 61,975 (84) 25,566 14,974 1,654 42,127 8,064 50,191 112,166

Retained earnings 31,647 Reserves 1,062 Equity attributable to the equity 62,430 holders of the parent Non-controlling interests 3,670 Total equity 66,100 Total liabilities and equity 130,904
(Source: www.arcelormittal.com) Page 6 of 16

A Brief of the financial position, liabilities and stockholders equity statement:The statement of financial position provides creditors, investors, and analysts with information on company's resources (assets) and its sources of capital (its equity and liabilities). It normally also provides information about the future earnings capacity of a company's assets as well as an indication of cash flows that may come from receivables and inventories. Liabilities represent obligations of a company arising from past events, the settlement of which is expected to result in an outflow of economic benefits from the entity. Following points were noticed in case of ArcelorMittals : ArcelorMittal's trade accounts payable and other increased from 2008 to 2009 and from 2009 to 2010. ArcelorMittal's current liabilities and total liabilities declined from 2008 to 2009 but then increased from 2009 to 2010 not reaching 2008 level. ArcelorMittal's total equity increased remarkably from 2008 to 2009 and slightly from 2009 to 2010.

(Source: www.arcelormittal.com)

The above graph shows the steep rise in the total sales and the net income after the merger but at the same time, a slowdown has been observed in the percentage of profit margin but the margin has increased significantly.

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PRODUCTS and SERVICES: ArcelorMittal is the only producer offering the full range of steel products and services. From commodity steel to value-added products, from long products to flat, from standard to specialty products, from carbon steel to stainless steel and alloys, ArcelorMittal offers a complete spectrum of steel products - and supports it with continuous investment in process and product research. Its products are: Automotive Products: It serves automotive manufacturers, sub-contractors and equipment suppliers. ArcelorMittal has a recognized global technological edge in galvanized steels for exposed parts and coated steels for hot stamping. Mining: ArcelorMittal is focusing on its mining activities, in accordance with its integrated business model. This is part of a strategy to actively develop the raw material base, thereby raising the level of iron ore self-sufficiency to 75%. Tubular Products: The Tubular Products Division of ArcelorMittal is one of the world's largest and most diversified producers of pipe and tube products, servicing markets around the world from 24 different operating locations in 13 countries. Distribution Solutions: It handles processing, finishing and distribution of steel mainly made by the ArcelorMittal Group and serves customers from a variety of other industries. Shared Service Centres: The Shared Service Centres (or more specifically Finance or Accounting Shared Service Centres) are a network of entities worldwide, which operations are to provide financial services for its controlled companies, at a support 'shared service' platform. Flat Steel: -Hot Rolled -Cold Rolled -Electrical Steel Other Activities: ArcelorMittal Logistics offers quality door-to-door services throughout the entire logistic chain. Its continuously expanding network is already present in three continents. -Real Estate France -Circuit Foil -Industeel

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R&D: The important technologies proprietary/patented technologies used by ArcelorMittal: -Method for coating a substrate, Equipment for implementing said method and metal supply device for such equipment. (European Patent EP 2 111 477 2009) -Rolling mill with cooling device and rolling process. (European Patent EP 2 164 651 2010) -Low density steel with good stamping capability. (European Patent EP 2 155 916 2010) -Method for rolling metal strip with adjustment of the side position of the strip and adapted rolling mill. (European Patent EP 2 167 2010) -Steel plate for producing light structures and method for producing said plate. (European Patent EP 2 064 360 2009) -Process for manufacturing cold rolled and annealed steel sheets with very high strength and sheets thus produced. (European Patent EP 2 155 915 2010) -Method for coating a substrate and metal alloy vacuum deposition facility. (European Patent EP 2 129 810 2009 )

OPERATIONAL STRATEGY OF MITTAL STEEL: Mittal Steel is among the most efficient steel producers in the world. They encompass all aspects of modern steelmaking, combining both integrated and mini-mill facilities and producing much of the iron ore and coking coal used in their furnaces. They are also among the most advanced steel makers, operating a range of modern technologies. They have pioneered the use of direct reduced iron (DRI) as a raw material source and are now the worlds biggest producer of DRI. With two technical research facilities, their product development teams are ready to meet the needs of the most demanding customers. Mittal steels strategy formulation begins with an analysis of the forces that shape competition in the industry in which a company is based. The factors creating very high entry barrier for new entrants are:

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Huge capital investment: Huge capital investment is required for establishing steel manufacturing facility and Mittal steel has been making investments in many parts of the world in the last few decades, including Indonesia, Trinidad and Tobago, Kazakhstan, Poland, Czech Republic, Romania and Canada to name a few. Economies of scale: In case of steel industry economies of scale is achieved at very large scale. Due to its large size Mittal steel enjoys high magnitude of economies of scale. It has ownership on factories in many countries (by acquisition) and thus, it has the advantage of using the technology and knowledge knowhow across the borders. So it becomes very difficult for new entrants to enter into the market and compete with an already established large company. Absolute cost advantage: Established companies such as Mittal Steel has absolute cost advantage over new entrants because of its: -Superior production operations and processes because of accumulated experience, patents and secret processes. -By vertical backward integration Mittal steel acquired coal and iron mines. It gave lower cost for input materials. -Going for low labor cost regions allowed Mittal Steel to have more cost advantage which is very difficult for a new entrant. Customer switching cost: Steel is a product for which buyer industries have to establish very well structured transportation facility with the producers. It becomes difficult for a buyer to establish a new transportation channel when it wants to switch the seller. Government regulation: In some countries Mittal Steel enjoyed very low tax rate or zero tax for few initial years after it bought the loss making government units. All these factors conclude that the entry barrier plays an important role in strategizing i.e., Entry by potential competitors is enormous. Mittal Steel also survived stiff rivalry among established competitors like Nippon Steel, JFE Japan, Posco, US Steel, Corus, etc. By acquiring large number of steel companies Mittal steel became behemoth and gained the more control on price. Because of this, the management of large number of steel companies which were in government hands found it difficult to compete with Mittal steel. Since Mittal was ready to acquire the sick government units it gave an easy exit barrier to these industries and weakened the competition. Other big players were present in the market, but Mittal Steel
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concentrated on its low price strategy (mostly in Asia and Africa) while many of its competitors competed for higher quality (mostly in Europe) and better distribution channel. Since coal and iron mines are large in size and few in number and controlled by large players, their bargaining power can significantly affect the steel industry business. But Mittal Steel adopted the strategy of backward vertical integration. Before acquiring any industries, they first ensured the iron ore and coal supply from mines. Mittal Steel buys a large chunk of supply from its suppliers and retains the bargaining power to itself. Opportunities arise when a company can take advantage of conditions in its environment to formulate and implement strategy that enable it to become more profitable. Some opportunities for Mittal steel were: After its merger with Arcelor it could use its low cost technology in the countries of Europe and South America where Arcelor was operating. After its merger with Arcelor it could use Arcelors good distribution channel and high quality product technology in Asia, Africa and North America. Many new emerging markets are following policy of globalization, privatization and liberalization. These countries are primarily focusing on infrastructure development. These will lead to significant growth in the steel demand. In many developing countries resources and raw material are available in good amount which can be exploited for further growth. Cheap labor in developing countries can give absolute cost advantage to Mittal Steel.

Threats arise when conditions in the external environment endangers the integrity and profitability of the company business. Threats for Mittal Steel were: Anti globalization protest in many countries. Mittal Steel, which had headquarters in Rotterdam, had met ferocious opposition in France and Luxembourg, where Arcelor was based and was the biggest private employer of some 5,900 people. Before the merger of Arcelor and Mittal steel, the Arcelor management was extremely hostile to Mittal Steels bid. The French Government and the government of Luxembourg were against the deal. Recession and falling demand in developing countries. Unstable political condition in many developing countries.

Core business strategy: Mittal Steel acts as a consolidator in the global steel industry, focusing on growth through acquisitions, and has a successful acquisition and integration track record.
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Operationally, Mittal Steel has a highly diversified asset base, with plants of different types, including both integrated and minimills. Mittal Steels base capital-expenditure requirements are lower compared with those of peers, because of its lower cost base in emerging markets (for example, Romania and Kazakhstan), where comparable types of work can be performed at a lower cost. Mittal Steel also invested in new projects to strengthen its upstream integration. The considerations before Mittal Steels acquisition of Arcelor:When Mittal Steel considers an acquisition, it seeks not only low-cost inputs and an expanding market, but also inexpensive labor. But it will bend its criteria if an opportunity looks promising enough. Its Algerian plant, for example, had no obvious source of iron ore. When Mittal staffers discovered that the country had ore deposits, the company secured a license to open a mine. Similarly, its purchase of International Steel Group did not seem to fit its requirement for lowcost labor; US wages are among the highest in the world. Acquisitions introduce risks, but the group has a good track record of turning around underperforming steel acquisitions, particularly in less-developing countries, through LNM Holdings, which implemented this strategy since 1995. The advantages of Mittals strategy of expanding into emerging markets include low cost bases for steel production and capital construction. In most cases, assets the group acquired in emerging markets like Romania or Kazakhstan were low priced, and the plants enjoyed sizable, albeit temporary, tax breaks. The key risks of Mittals emerging-market expansion strategy include exposure to those countries weak legal and regulatory systems, as well as the integration of new assets into the group structure (for example, establishing appropriate control procedures, achieving operational synergies, and turning around former state-owned and often inefficient plants). But Mittal has a track record of successfully integrating and restructuring previously underperforming stateowned assets. Vast geographical diversification also mitigates risk in each particular emerging market, as the group is no longer markedly dependent on any single asset or market. In the medium to long term, the main issue for the group is its success in integrating recently acquired assets and maintaining long-term, stable relationships with the governments of host countries. But the main reason for merging Mittals operations with Arcelor was that there were more synergies expected on the sales side, that were not quantified yet. More than immediate synergies, Mittal perhaps wanted to merge because he, as had others in the steel business, had sensed the underlying consolidation phase of the industry and did not want to lose the position of control he enjoyed as the biggest steel manufacturer. By merging with the
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second biggest he was ensuring that the new second biggest will be less than a third of the size of the new biggest (Arcelor, Mittal combine). Bid for Arcelor: Mittal Steel & Arcelor complemented each other in terms of geographical coverage and product mix, as there is no significant overlap. Mittal Steel had strong positions in the U.S. markets; lowcost operations in Central and Eastern Europe, Asia and Africa; and vertical raw-material integration whereas, Arcelor was the leader in higher value-added products in Western Europe, low-cost slab manufacturing in Brazil, and had a successful distribution system. Arcelor was the world's largest steel producer in terms of turnover and the second largest in terms of steel output, with a turnover of 30.2 billion and shipments of 45 million metric tons of steel in 2004. The company was created by a merger of the former companies Aceralia (Spain), Usinor (France) and Arbed (Luxembourg) in 2002. Employing 310,000 employees in over 60 countries, it was a major player in all its main markets: automotive, construction, metal processing, primary transformation, household appliances, and packaging, as well as general industry. With total sales of over 30 billion, Arcelor was the world's largest steel manufacturer in terms of turnover. It produced long steel products, flat steel products and inox-steel. In January 2006 Arcelor announced the acquisition of Dofasco, Canada's largest steel producer with an annual output of 4.4 million tons. After an intense bidding war against the German ThyssenKrupp, Arcelor had finally bid 5.6 billion Canadian dollars. The high bid proved the importance of Arcelor's improving presence in the North American market. On January 27, 2006, Mittal Steel unveiled an unsolicited $22.7 billion bid for Luxembourg based Arcelor. This step was the benchmark for Mittal steel. As the largest player in the steel industry - globally and in the key markets - the combined group enjoys significant bargaining power. The merger was expected to yield synergies in the procurement, marketing, and optimization of production processes and capital expenditures. On 25th June 2006 the deal finally clinched when the shareholders of Arcelor agreed to Mittal Steels offer. The bid significantly increased Mittals leverage. Mittal had to considerably elevate the initial offer by raising its valuation of Arcelor to $32.9 billion. The Mittal family holds 43 percent of the combined group. The combined company holds 10 percent of the global market for steel. The Mittal group has a complex structure and has only majority control, but not full control, over some of its cash-generative and cash-rich subsidiaries. For example, Mittal owns 51% of the South African plant, 70% of the Algerian plants (30% is state-owned), and 76% of the Czech
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plant. This constraints cash flow circulation within the group and may lead to significant spending to buy out minority interests (although no such requirements are currently effective). Consequences of the merger on Mittal steel:According to the research, it was observed that the deal has been in favor of both the companies. This can be suggested by the following observations about the deal Increase in revenue of the company from $28.123 billion to $105.2 billion and operating income from $4.746 billion to $14.83 billion Venture into new businesses and market like Luxembourg, Senegal, Liberia and looking to develop positions in the high-growth Chinese and Indian markets Profit of the company has risen from $3.36 billion to $10.36 billion Decreased competition and increased market share Enlarged brand portfolio Increase in economies of scale and share value

But it also has a negative aspect to it which was the high monetary cost of the target company (Arcelor) which is $32.9 billion. As the pros of the deal completely outweigh the cons involved, it is finally concluded that the deal has been a successful one for both the companies, its people and the world. AMERICA ARCELOR
2004 2005 6.6 12.5 9.9 7.7 7.6 9.8 24.1 30.0

EUROPE

RoW

TOTAL

MITTAL STEEL
2004 2005 4.4 6.5 23.4 23.2 2.4 2.9 30.2 32.6

ARCELOR MITTAL 2005 19.0 30.9 12.7 62.6

(All figures in $ Billion) (Source: www.arcelormittal.com)

The Table shows that the merger made the new entity the biggest player in Americas.

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HIGHLIGHTS OF ITS OPERATION: The groups vertical integration in mining and low cost position in emerging market operations support profitability through the cycle and help reduce capital-expenditure needs. These factors are tempered by the groups ambitious plans to grow through acquisitions; Institutional risks associated with emerging markets; and uncertainties regarding the integration of newly acquired assets, although Mittals integration record has been successful to date. The companys overall low cost position is buttressed by vertical integration and low wage costs in its Kazakhstan, Romania, Poland, Algeria, and South African locations. The acquisition of U.S.-based International Steel Group Inc. (ISG) in early 2005 moved the group into a high cost-base market, but bettered geographical market diversification. Moreover, Mittals cost advantages are expected to strengthen further since acquiring Mittal Steel Kryvly Rih in late 2005. In cyclical businesses, such as steel, volatile margins depend on changes in raw-material and finished-product prices. Compared with peers, Mittal has higher exposure to spot markets. Most of the shipments outside North America are spot sales. Although a significant part of sales in North America are under long-term contracts, most of these contracts are annual and carry surcharge provisions, and there is significant exposure to automotive customers. Upstream integration into iron ore and coking coal provides Mittal with a competitive advantage throughout the cycle. As one of the largest players in any of its markets, Mittal has major negotiating power. Mittal takes advantage of its diversified asset base to achieve operating synergies.

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CONCLUSION: If we look at the merged entitys operations from L N Mittals past operations, the most striking thing, it seemed, was his willingness to concede more than 50% ownership to others. Mittal had all through ensured that he retained a very clear majority as much as could be had while still keeping the company publicly listed. The company offers its products to a wide range of customers across all steel-consuming industries, which include the automotive, appliance, engineering, construction, energy and machinery industries thus covering the market all over the world which in turn is reflected in the success of the company. The company has reached at this landmark due to the hard work of its workers and the management board; outstanding vision, convincing, motivating and guiding nature of Mr. L N Mittal. He is a transactional leader who guides his followers in the direction of established goals by clarifying role and task requirements. His success has largely been built on buying up loss making steel owned mills and quickly turning them around. Mittal steel started the trend of merger all around the world and thus, is the perfect example of Global Impact of Indian Management.

REFERENCES: Becker.Gary (June 2007) Economic Theory Schaan.Jean-Louis, Chandrasekhar .Ramasastry (Feb 19, 2010) ArcelorMittal case study www.arcelormittal.com www.stock-analysis-on.net www.4-traders.com www.highbeam.com Singh.Sachidanand (March 2008) Birth of ArcelorMittal & After Sukhasare.Vishwanath (April 2010) Arcelor-Mittal Merger Report ArcelorMittal Annual Report 2009 Management Report

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