Industry Analysis Case Study

L.N. Mittal: Consolidating Presence Globally

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Abstract:
Lakshmi Niwas Mittal (popularly known as LNM), also called the ''Carnegie of Steel'', built his steel empire by aggressively acquiring poorly performing steel plants at low prices in 14 countries across the globe, like Trinidad and Tobago, Kazakhstan, Romania, Germany, Poland, Canada and America, and turning them into money - making ventures. He is considered to be industry visionary, spotting trends much before his contemporaries and investing accordingly. In October 2004, Mittal acquired International Steel Group of the US for $4.5 billion and became the largest steel producer in the world, surpassing the world leader, Arcelor. The case study offers scope for discussion about the acquisition strategy, adopted by Mittal and how it helped him to become the market leader. It also provides information regarding the current and future levels of consolidation in the global steel industries, consolidation as a major strategy in the steel industry, steel industry value chain and the risks that companies like Mittal Steel, would encounter.

Pedagogical Objectives:

• To understand the trends, dynamics of global steel industry
• To understand how consolidation act as growth strategy in global steel industry
• To understand how consolidation transform the globally fragmented steel industry into a consolidated one
• To understand how to make consolidation successful one, problems associated with successful making of a consolidation
• Acquisition as a key growth driver in global steel industry.

Keywords : Mittal Steel; Arcelor; Global steel industry; High carbon steel; Backward integration; Electronic arc furnace; Basic oxide furnace; Industry Analysis Case Study; Capacity augmentation; Greenfield projects; Acquisition; Consolidation; Strategic planning; Economies of scale; Direct reduced iron; Business environment