PROFILE
LNM

Aggressive moves and a big appetite

Of the world's biggest 10 steelmakers, only three have names that include any references to people.

By some way the most enigmatic of this top tier is LNM, whose initials are those of Lakshmi Mittal, its founder and chairman and which has grown considerably in recent years to become the world's second largest steel company.

LNM was started in 1976 by the 52-year-old Mr.Mittal, who used funds provided by his father, who also owned a steel business, to buy a steelmaker in Indonesia.

From this has developed a global group which this year will make about 34m tones of steel, providing sales of $11bn and earnings before the interest,tax, amortisation and depreciation of $2bn, according to projections by Mr Mittal.

The other member of the top 10 steelmakeers with a family connection is Italy's Riva, started by the brothers Emilio and Adriano riva in 1954 and whose family still owns the company.

The Indian entrepreneur rarely gives interviews. The accounts of LNM are hard to come by and the company does not have a website. Even so, Mr. Mittal knows the advantages of publicity.

As the official sponsor of the West Indies team in the recent cricket world cup in South Africa, the company's name has become somewhat better known by sports fans , even though many of them must have wondered about the link with the cricket.The explanation is that one of LNM's 25 production sites is in Trinidad.

The company is by far the most global steelmaker, being the only business that makes steel on four continents.

It has about 10m tones of annual production in North America , a similar amount in Europe, together with operations in Kazakhstan, Indonesia, South Africa and Algeria. In Europe it has sites in France, Germany, Luxembourg, the Czech Republic and Romania, and is negotiating to take over a further steelworks in Poland . Just under half LNM's production is accounted for by Ispat, a publicly quoted company whose shares are traded on the Amsterdam stock exchange but where Mr. Mittal controls 82 percent of the stake.

The steel magnate, who has his family home in London but main office in the Netherlands, has always cut a controversial figure in the steel industry. He has a voracious appetite for deals, as aresult of which production controlled by LNM has expanded 50 percent since 2000, when the company was the fifth biggest steekmaker.

Mr. Mittal's aggressive instincts in such manoeuvrings have sometimes caused irritations among other steel group targeting the same acquisitions.

His most recent move was to build up a 47 percent stake in Iscor, South Africa's biggest steelmaker while taking management control. He has also made a speciality out of taking over formerly state-owned steel assets in eastern European countries that were once part of the Soviet bloc.

The company is the only business that makes steel on four continents

It was during one such deal , in 2002 , that Mr Mittal hit the headlines in the UK , for reasons little do with the steel.

He gave 125,000 pounds to Labour, the political party headed by Prime Minister Tony Blair, at about the same time that the UK government lobbied on his behalf in Romania, apparently helping himto clinch the acquistion of this country's Sidex stel works. In the face of claims that Mr. Mittal was giving cash in exchange for favourable intervention by Mr. Blair's government, Mr. Mittal has always maintained that there no connection between the two events.

At the core of LNM's operating philosophy is that the disparate parts of the group share ideas and information - about technology, operating processes and markets- so that individual units can learn from each other.

In this way , so Mr.Mittal believes, the company can gain tangible advantages from the far-flung parts of the business, which employ 120,000 people , 55,000 of these in Kazakhstan.

The main event in these discouses is a four-hour telephone conference, presided over by Mr. Mittal every Monday, which connects up to 60 people from different LNM units scattered globally.

Mr. Mittal tries to act as a human link between much of the group, traveling 350,000 miles a year to visit plants and customers in his company's Gulf Stream business jet.

While the business has expanded rapidly in recent years, Mr Mittal says he is continually examining new potential deals that might provide fresh advantages.

"Ten years back I thought 20m tones a year was a good size for a steel company, today we are making 35-40m tones [a year] and in three or four years time we could find [the optimum size ] 70-80m tones, " says Mr.Mittal.

"but size is not what's important; the key is finding operating synergies [between different parts of the group] and product leadership" .

Peter Marsh

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