Before gathering momentum and rhythm every machine making unpleasant jarring noises, similarly is the start of an industrial venture that gets dogged by errors, slips, ommisions, snags and glitches. When Laxmi Mittal joined steel works he was talented but lacked maturity and polish. He needed tips and guidance from his father. As time passed Laxmi Mittal gained self confidence and his potential plus ambitiousness made the venture of his father feel too small and cramping. The young blood of Laxmi Mittal wanted his father’s steel ventures to go global and spread wings. The industrial environment in the country was not encouraging for an entrepreneur who had limitless dreams.
In 1970 a small opportunity to go global came in the way of Mohanlal in the form of an export of rolled steel to Indonesia. Laxmi Mittal urged his father to go for it. Laxmi Mittal himself undertook a journey to that country and deeply studied the state of steel industry there. An Indian expatriate S.P. Lohia was one of the leading industrialists of Indonasia and he happened to be the husband of the sister of Laxmi Mittal. These connections made the export deal possible. Mittals began to exprot steel to Indonesia. The country was facing foreign exchange crunch and the exporters were given various kinds of sops which included use of some percentage of export earnings of foreign exchange for the exporter’s own enterprise. Using that window Mittals set up steel rolling plants in Indonesia. By producing steel in Indonesia Mittals made a lot of money.
Meanwhile, their Vishakhapatnam based plants had got firmly based in ribbed steel bar production business. Laxmi Mittal inspired his father Mohanlal replicate that business in Bangaluru and Kolkata. Thus, Mittals set up middle scale units in those centres too. The decacde of 70s made pots of gold for Mittals through steel production business. They were now real capitalists and needed new ventures to invest their accumulating capital. At the behest of Laxmi Mittal the father agreed to set up steel venture in Indonesia called ET Steel Indo with a capital of 15 million. Thus Mittals had started real production of steel in Indonesia. Then the situation for steel production in India by a new entrepreneur was not conducive as liberalisation process was yet to begin about 15 years later.
Bsides Laxmi Mittal Mohanlal was being assisted in by his younger brother. The time arrived for parting of ways between the brothers. Mohanlal gave away the small scale mills to his younger brother in the division and discharged the duty of a elder brother. These was no bickering. Now the entire remaining business belonged to Mohanlal and his three sons. It was a nice set up. Mohanlal was no more under pressure for any more division of assets or business. The father and sons could concentrate on expansion of their steel works at home and abroad. He no more had to hesistate in exporting or starting new ventures.
The father and son decided to pay more attention to their foreign ventures. 1991 was a dream year for the private industry. Dr. Manmohan Singh became the finance minister and he ushered in the liberalisation process. Under the new industrial policy steel industry was freed of all controls. Mittals began expanding their steel ventrues set up earlier under their ‘Mittal Steel Group’. In the next four years by 1995 Mittals had set up steel mill in Egypt and Mexico as well. The Steel India’s annual turnover had reached Rs. 5000 crores with 100 crores as net profit. By now younger Mittals Pramod and Vinod had also joined the family business.
Mittal’s ‘Steel India’ was now running the domestinc steel mills and ‘Steel International’ was taking care of business abroad. Pramod and Vinod had also began to take independent charges of the domestic ventures. They had matured fast and could hold on their own. It led to the situation where the industrial assets of the family were required to be divided amongst the brothers for the peace of the family, smooth running of the ventures and opportunity to everyone to progress independently according to one’s ambitions and capabilities. Proposals reached the second stage of divisions but it was not based on bickerings and rivalries. The exercise was totally amicable.
Before analysing the division it would be appropriate to know the members who were likely to gain from this exercise.
When the print and electronic media got wind of the division it jumped to the conclusion that family feud and jealousy wad behind this development and situation. The media people foraged for lead clues but they found no molehill to make a mountain out of. Senior Mittal told media that the division was being worked out amicably in family spirit to enable the each young Mittal to prepare his own path of progress and industrially evolve independently. But scandal mongering media was not satisfed with it. It kept sniffing and snooping. Some even interviewed the Mittal brothers who merely repeated the words of their father amnably. There was nothing that could be sensationalised. Then, media got down to assess the losses or gains of the brothers. It was merely a guess work. Some thought the seniors would short change the young ones. When the details of the division came out they were in for a big surprise. Many commented that the elder brother Lamxi Mittal had received wrong end of the stick. Then, they appeared to be right at first glance but the later developments were to prove them wrong.
Division—die truth
It can be honestly stated that the proposal of the division was worked out by Laxmi Mittal himself. He had done it when he had strongly established, ‘Steel International’ aborad. The success had filled him with great confidence and enthusiasm. The domestic ventures under ‘Steel India’ were set up with blood sweet by the senior Mittal Mohanlal and Laxmi Niwas when the junior ones were still in schools or colleges. By 1995 the working capital of ‘Steel India’ had risen to Rs. 20,000 crore. In comparison ‘Steel International’ had only Rs. 6,000 crores.
Laxmi Niwas Mittal had worked out the proposal of division in the following manner:
❑ Laxmi had proposed to leave the 20,000 crore ‘Steel India’ business to his younger brothers Pramod and Vinod. He made it clear that he would not take any share out of it.
❑ For himself Laxmi only wanted the ventures under the ‘Steel International’ situated abroad which infact were the fruits of his own exclusive labour.
❑ He promised that he would not set up any competitive new business in India against his brothers. Laxmi made it clear that professionally he would live aborad as a NRI.
❑ He did not put any condition or bar on his brothers in their setting up industries abroad.
The four point division formula was so easy, clear cut and generous that it readily evoked the assent of the father and his sons. Promod and Vinod at once accepted the proposal thankully without any hesitation. Apparently as media had remarked Laxmi Niwas himself appeared to be the loser or he chose to be one. The assets of ‘Steel International’ worked out to be only 23% of ‘Steal India.’ For 23% Laxmi Mittal had surrendered 77% of the share. Berofe making any opinion on this division some facts need to be kept in view for fair judgement:
❑ In setting up ‘Steel International’ entire physical and visualisation efforts were put in by Laxmi Mittal. The venture was his brain child.
❑ Laxmi Niwas had been assisting his father in business since his college days when Promod and Vinod were limited to school text books only.
❑ The division formula worked out by Laxmi Mittal transparently favoured his younger brothers in repsect of the arithmatic of capital.
❑ Keeping up the Indian family values Laxmi Mittal had sacrificed his own interest for his younger brothers.
❑ Like an ideal elder brother promised his younger siblings that he won’t do business in India in competition against them. He had opted to live aborad and run his works there as an non-resident Indian.
❑ There was no bad feeling in the family about the division.
❑ Laxmi Niwas had shown his farsightedness. During his tours and stay abroad Laxmi had made a deep study of the international steel works and world. He had come to the conclusion that doing steel manufacturing business abroad had bright future compared to India.
❑ Laxmi Niwas wanted to establish himself as a steel industrialist at international level. For this it was imperative that he took big risks and plyaed for high stakes. It would have been impossible if he had remained part of the family business. He needed to be indendent.
❑ Laxmi Niwas was pretty sure of himself that the grand plan he had for steel business at international level could be executed successfully.
❑ No one can make progress in business or industry without taking calculated risks. He wanted to make an independed effort without any doubts and opposition coming from the family.
❑ The demand for steel was rising at the international level. After the birth of multinational company culture the steel had become the most sought after metal that every project required.
❑ He had gained success in importing steel billets from Australia and Taiwan and converting them into bars in his Indonesian rolling mill.
❑ His plants were now producing high quality basic steel and selling it to US based ventures of Honda and Toyota, but for this he was using Japanese supply firms. He wanted to export it independently and directly.
❑ Laxmi Mittal had gained the experience of dealing in steel at international level and his sale supply policies had worked successfully. He wanted to test all his talents at international level and do justice to his capabilities.
❑ Laxmi Mittal had not passed any MBA course but he had gained the pratical experience of bussiness managemant. That had given him a great confidence and self belief. He was sure of his success.
❑ He had chalked out a plan to raise a team that could gain him success at the international level.
❑ Laxmi Mittal had grown a distaste and allergy for Indian red tape, rules, regulations, licence, permits, babus prevarications, corruption and political chicanery. He would not waste his time and energy dealing with them. Laxmi Mittal admired Aditya Birla who had set up a textile mill in Thailand to become multinational industrialist.
❑ Deep down inside Laxmi Mittal had a desire to prove to the world that Indian enterprise could compete at international level and outdo others. He wanted to achieve a big industrial success internationally to make India proud.
It may be proper and in context to use some words about the younger brothers of Laxmi Mittal for who he had surrendered his claim on share in 20,000 crore ‘Steel India’ enterprises. Pramod and Vinod are also very talented youngmen and they will do well according to their own capability. If they fail to match the achievements of Laxmi Niwas Mittal it won’t be their fault. We may say Laxmi Niwas has extraordinary telent and is industrial genius, the rarest of the rare.
Promod Kumar Mittal
Pramod is the second son of Mohanlal Mittal. He is better known today as the brother of Steel King of the world. He too is explosive talent and eager to make his mark to prove himself. He has great reverence for his brother Laxmi Niwas. Promod is also expanding the legacy of the family. At present he is CEO of ‘Golden Steel Holdings Limited’. He has built up his own image in the steel industry. His capabilities have begun to be recognised in the industry and has gained his own identity. He may be yet to earn a success like his elder brother but the day is not far when Pramod Mittal will also become one of the prominert steelmakers of the world. He has required protential and drive to make the grade. Like his brother he too gradutated from St. Xaviers, Kolkata. Pramod has a diploma in business management.
Promod is of philanthropic nature and is connected with several welfare organisations. He is vintage car enthusiast and plays golf and squash. Pramod has contracted CSKA Dixin Footbal Club by paying 14 million Euros. He is the first Indian industrialist to get linked to an European football club.
He had entered the steel industry 15 years ago and his enterprieses have expanded 15 times over. The business he had gained in division and legacy has spread to Bosnia, Nigeria, Phillipines and Libya. Meteoric rise like Laxmi Mittal has not come but he has not disappointed either. His progress is impressive. He keeps morning hour reserved for yoga. The industrial observers predict confidently with his dedication, industry and farsitedness Pramod is sure to become a leading player in the steel manufacturing world.
He was born in 1956 and is married to Sangeeta. They have three children. Pramod loves them and steals time from his busy schedule to be with the family.
Vinod Kumar Mittal
Vinod was born in 1957, one year after Promod arrived. He is the youngest son of Mohanlal. Vinod assists his brother Pramod in running ‘Global Steel Holdings Limited’. As already written the brothers have expanded there works by times of what they had got fifteen years ago. Archana is his wife and he is father of a boy and a girl. With Pramod he makes a perfect team. He is soft spoken and is a man of few words. Vinod is very efficient and well mannered. Being the younger brother of Laxmi Mittal is a matter of pride for Vinod Mittal.
Mohanlal Mittal is now 82 years old and offers his advice in business matters if required. He has full faith on his two younger sons and is sure that with little bit of luck they too will rise to heights like Laxmi.
