|Rediff India Abroad Home | All the sections|
Aditya Mittal: The father, son and the great steel titan
Peter Marsh | May 01, 2008
One of the youngest - and most enigmatic - executives in any large company is Aditya Mittal, the 32-year-old chief financial officer of ArcelorMittal, the world's biggest steelmaker.
In conversation, Aditya Mittal - the son of Lakshmi Mittal, the Indian entrepreneur who is the chief executive and main owner of the company - comes across as slightly shy, with a trace of awkwardness.
Yet the boyish-looking former investment banker is also credited with many of the initiatives for turning ArcelorMittal into one of the most successful global companies over the past decade.
The puzzle about the role of Aditya in building up ArcelorMittal - a giant business of 310,000 employees and sales last year of $105bn - has been difficult to resolve, particularly with most of the attention being focused on Lakshmi, one of the world's richest men with a fortune estimated at $45bn.
Wilbur Ross is a veteran US investor who met both the Mittals for the first time in 2004 when selling his US-based International Steel Group company to them in a $21bn deal.
Now on the ArcelorMittal board, Mr Ross says that a few months after the ISG transaction he was initially somewhat unsure about the younger Mr Mittal, wondering if he had secured his position in the company only because of his father's influence.
But then, Mr Ross goes on to say, he became "seriously impressed" by Aditya's detailed knowledge not just of steel but wider business issues. "He was able to tell me the tax rates in the countries where the company has steel assets, details of the tax holidays (in different countries) and also the nature of the (thermal) linings inside specific steel furnaces," he says.
The issue of whether Mr Mittal Jnr owes his job purely to family connections is one Aditya is happy to discuss.
Prior to the creation of ArcelorMittal in 2006 as a result of Mittal Steel's highly contentious euro 26.9bn ($42.11bn) takeover of Luxembourg-based Arcelor, Aditya Mittal was the chief financial officer of Mittal Steel, which had grown steadily since the 1970s on the back of ever more sizeable and complex acquisitions and plant investments.
Thanks to these moves, which have continued in a smaller way since the Arcelor takeover - including important moves to further the group's interests in China and Russia through an industry takeover and a big plant investment respectively - the company is particularly widespread, with 27 steel plants on six continents.
Today, with the takeover of Arcelor safely behind it, and with the integration of the two former adversaries having gone a lot more smoothly than many expected at the time, most observers are prepared to concede that Aditya has played a huge supporting role to his father, who often seems to rely on his son for guidance on significant decisions.
The younger Mr Mittal describes his job as CFO - although he also has overall responsibility at the company for mergers and acquisitions, and for the strategic aspects to running its flat steel operations in North and South America - as being "as simple and as complicated as we (the company) want to make it". By this he means that he has to swap continually between considering the broad policies essential to keep ArcelorMittal in its leading position, and homing in on the financial minutiae linked to the operations of individual plants and market sectors.
"My task is to make it as easy as possible to come up with the financial-based knowledge that will lead the group to make the most sensible decisions," he says.
Inevitably, the job of CFO in such a large organisation involves a lot of structural processes, based around meetings and conference calls, designed to feed financial and marketing data in the most timely way between different parts of the group.
The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused.
"But I've also got to have enough flexibility in what I do to react to opportunities. If I read a news article talking about a development [in the steel industry] in Tajikistan, and think: 'Oh God, this is really interesting', I need to be able to get on a plane quickly and go there. If the company organises itself in an over-structured way, then we run the risk of failing to capture the growth possibilities."
Aditya, like his father, is keen to show that the company is committed to the entrepreneurial edge that has been a driver of the group's expansion since the 1970s when Lakshmi evolved it from a small steelmaking operation in Indonesia.
Aditya's first visit to a steelmaking plant was to those same family works when he was eight. After completing an economics degree at the Wharton School in Pennsylvania, he joined CSFB as an investment banker, a job he had for less than a year before joining his father in early 1997 to work in M&A at Ispat, one of two companies run by Lakshmi that eventually became Mittal Steel.
Since then, Aditya has been a formidable influence, sometimes pushing his father towards more radical strategies than those favoured by the elder Mittal.
For instance, Lakshmi has in the past always based his M&A policies on gaining stakes of more than 51 per cent in the companies in which he has an interest.
Initially, in the battle to acquire Arcelor, Mr Mittal Snr was reluctant to let his stake in the newly-created merged business fall below this figure. At Mittal Steel, the vehicle formed after the ISG takeover, Lakshmi's shareholding was 88 per cent.
It was Aditya who did more than anyone to persuade his father to accept a 45 per cent shareholding in the newly formed ArcelorMittal, as part of the effort to win over international investors by giving them a more sizable slice of the enlarged company.
In the past, Lakshmi's instincts have pushed him in the direction of running his companies in as private a way as possible, with most of the decision-making shielded from the public gaze. Aditya, however, seems to be more firmly wedded to the idea that public companies with a certain amount of scrutiny from the outside world are more sustainable in the long run; he has been a key architect of improved standards of corporate governance at ArcelorMittal.
As for the direction of the steel industry, the younger Mr Mittal shrugs off any worries triggered by the signs of a slowdown in the global economy triggered by the credit squeeze, with its main impact in the US. He says growth in China, India, Brazil and other emerging economies is likely to take much of the strain.
"Whatever is happening in the US economy, we are seeing a lot of growth elsewhere (in steel consumption)."
"The world now has 2bn people who are going through a new stage of industrialisation, when in the past it was no more than about 200m at a time. In the next six to nine months we are bound to see a few tremors from the global slowdown affecting steel. But I think the overall impact will be limited."