Mittal set to home in on India

LONDON-BASED steel baron Lakshmi Mittal once disingenuously claimed he was 'a steelmaker, not a dealmaker'. But the truth about the driving force behind the world's largest steel group is that he is equally good at both.

News that Mittal Steel is eyeing a first foray into India - Lakshmi Mittal's home country - has stoked talk the billionaire is set to drive rapid consolidation of the subcontinent's still-fragmented industry.

It has also ignited speculation the two arms of the powerful Mittal clan may have a gentleman's understanding that the country is big enough - and now growing fast enough - for both of them.

'There is plenty of scope for this and very much more without anyone treading on toes,' says Steven Burchell at London-based analysts CRU.

Lakshmi, who appropriately was named after the Hindu goddess of wealth, was handed the international portions of the sprawling Mittal empire in 1994 in a family deal. He headed to Britain soon afterwards.

Younger siblings Vinod and Pramod were left with the family's Indian operations, Ispat Industries. Their company is now one of four large groups that account for about half the country's steel business.

The two entities have not competed directly since the division although recent European moves by Ispat have raised that prospect. Vinod and Pramod now have plants in Turkey and Bulgaria, near some of Lakshmi's assets in Romania.

'There's enough scope [in India] for a lot of players, for business growth here, where a minimum economic size may be 5m tons of steel, plus access to reserves of iron ore and coal,' says Kshitiz Prasad, a steel analyst at Anand Rathi Securities in Mumbai (Bombay).

'They will have been some way to sort this issue, that there should not be a clash of business interests between the two arms of the family,' he adds.

Mittal Steel appears to be thinking big in India, a country CRU's Burchell says could be poised for rapid expansion of its steel business as it hits a high-growth path.

The company is evaluating a steel plant and iron ore mine in Jharkhand state but has yet to commit to a project. It has also poured cold water on suggestions its investment could approach £4bn. 'No decision has been taken,' it says.

If Lakshmi returns to India for business, such a move would appear to satisfy a long-held desire to play a greater role in a country he reveres. He regrets not yet having made a commercial mark there: 'As an Indian, I feel I really ought to be doing something for my country.'

It now appears he is poised to.