To invest in a project in Jharkhand: Minister
Successful takeover of Arcelor Steel bodes well for Mittal Steel's plans for IndiaDeal will enthuse Indian corporates to become global brands
NEW DELHI: Mittal Steel may now look to do something "big" in India, after the successful deal to merge with Arcelor. This was stated here by the Minister of State for Industry Ashwani Kumar who noted that during discussions some time ago, the steel tycoon, Lakshmi Mittal had expressed a desire to make some large scale investments in this country.
Mittal Steel has already decided to make a green field investment in a steel project in Jharkhand, but is clearly looking forward to more ventures in India, judging by his comments at the press conference on Monday.
Mr. Kumar told The Hindu that the takeover of Arcelor Steel by Lakshmi Mittal bodes well for the company's plans for India. Describing the merger as a "win-win" situation for the steel industry and consumers, he said it would enthuse Indian corporates to become global brands.
He felt the financial muscle which the deal will give to Mittal-Arcelor can be used to put up green field projects in countries such as India where the steel industry has yet to be optimally exploited. He pointed out that the current domestic steel capacity was pegged at 37 million tonnes per annum, about one fourth of the merged company's production of 116 million tonnes per annum. Besides, he said the Indian steel industry must explore all options for a substantial expansion in capacity to reach the target of 100 million tonnes per annum by 2010. By then, he estimated that Mittal Steel would have achieved an output of about 300 million tonnes per annum.
He said the deal would have an inevitable fallout on the global steel industry since with the economies of scale, the new enterprise would have a considerable advantage over its competitors. It would put them in "considerable disorder" both in terms of price, product mix and geographical reach of marketing. He felt its "distant" competitors like Nippon Steel would necessarily have to look to mergers and acquisitions to scale up their size.
Commenting on the attitude of European governments to the deal, he said their ultimate acceptance of the merger was consistent with the principles of free trade championed by the U.S. and Europe. There was no way, he felt that Luxembourg or France could have effectively intervened to stall the shareholders' decision in favour of the takeover by Lakshmi Mittal who stood his ground throughout the controversy.