Making of world’s largest steel company
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Transcript of Making of world’s largest steel company
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THE STEEL HOUSE IN TEXAS
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THE U.S. STEEL TOWER IN PENNSYLVANIA
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THE EYEBROW HOUSE
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THE SHUN HING SQUARE TOWER
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THE BROOKLYN BRIDGE
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These amazing
structures of the world are
built of STEEL.
Not sure if there is any
amazing story of steel.
But definetly it is for Steel
– Makers.
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TOP 5 STEEL COMPANIES OF THE WORLD
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• Employees 2,81,000 over 60 countries
• Annual Sales Value above US $500million
• Revenue $84.2billion
• Production 88.2million tonnes
• Export % 61%-70%
• Type of Business Manufacturer
Mill
Factory
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“ This is not about creating a giant ….its about creating the sustainability of the steel industry..”
-Lakshmi Niwas Mittal
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• Birth Place- Shekhawati,Rajasthan
• On June 15,1950.
• Worked in his father’s steel plant.
• Graduated from,
Mittal SteelsIspat GroupNippon Denro Ispat
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1950: Born in Shekhawati, Rajasthan India.1976: He commenced his career with his father's steel
business.1996: Won the Steel Maker of the Year from New Steel.2003: He established L.N.M. Institute of Information
Technology in Jaipur.2004: Bestowed with the Entrepreneur of the Year and
European Businessman of the Year.2006: He took over Arcelor, one of the largest steel
companies.2007: The Padma Vibhushan was given by the Indian
government and the Grand Cross of Civil Merit by the government of Spain. 2008: Forbes Lifetime Achievement Award was granted to
him.
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PERSONAL QUALITIES OF MITTAL
• Hard Working• Out of Box Thinkinig• Bravery• Capacity to lead• Outstanding Vision• Simplicity
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EQUIPED TWO MAIN TRENDS
• Blast Furnace to Mini-Mills
• Cheaper Substitute for Steel scrap
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INTERNATIONAL EXPANSION • Mittal set up his first international
steel factory in indonesia.• Building a melt shop.• Got a supplier of DRI called Iscott.• Iscott is a $100,000 lose
company.• He contracted iscott for 5 years.• “It was a very big break for me to
win that contract”
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ISCOTT SUCCESS
• Iscott become more profitable within 12 months.• Trinidian government sold plant to Mittal.• Previous failure of iscott is because of they were not
bothered about the company.• This success was the sign of global expansion.
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ISPAT INTERNATIONAL: BECOMING A GLOBAL STEEL COMPANY
His main revitalized into mini mill or DRI plants.Mittal goal is lowest cost and highest quality.Aim is to Buy low-cost steel manufactures that could
be
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SICARTSA2• Purchased sicartsa2 from mexican
government for $220million
• Market was bad ,company production was less than 25%
• Technology adopted was failure and company faced problems
• Before purchasing the plant he stayed on-site for 6monts,with 19people and worked for 9month period.
• Within three years plant produced profit.
• In 1996,it made 37% of the group overall sales and contributed 63% of its operating cost
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• In north america(1992) he signed to purchase the
bethlehem bar,rod and wire division in US.
• In 1993 deal had fallen.
• United steelworkers association decided not to
conclude a labour agreement
• Union maintaining that they had done best to reach an
agreement with ispat.
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ISPAT SIDBEC• In canada he purchases steel mill from quebec government in 1994.
• Renamed as ispat sidbec.
• In two years he established a strong presence in europe.
• Purchased state-run irish steel and forming ispat hamburger stahlwerke in germany.
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• In buying irish steel , ispat took on the factory debts of $51 million and he contributed $8 million capital.
• He made agreement for a further $34 million over next six years.
• Irish government contributed $30 million to the operation.
• Plant made beams for the construction industry from scrap metal.
• 90% of sales was in european union.
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KAZAKHSTAN
Acquisition of karmet
Borrowed money from European bank
Social contribution
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SOCIAL CONTRIBUTION
• Habitat for human
• Mittal champion trust
• Smile foundation
• Support in local social projects
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ISPAT INTERNATIONAL - GOING PUBLIC
Shares on stock(a share, b share)
Retained shares
Ispact’s biggest acquisition
LNM IIT project
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EXPANSION INTO US
Cutout cost
Valuation suffer
Achieve market leadership
KIP - benchmarketing
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GROWING PAINS
Irish International started in 1995
It was a 250,000 ton plant in Ireland
The company saw sales decline in majority of its
division
It faces certain restrictions from EU
2001-toughest year of Ispat International and it
orderly
shutdown
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Tony Blair, Britain’s Prime Minister assisted Mittal a steel plant in Romania.
Mittal donated $1,76,000 to Blair’s governing party.
The british press pounced on both Mittal and Blair.
Letter to Nastase – Romanian Prime Minister-Blaire was criticized strongly.
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1. POLSKIE HUTY STALI IN POLAND IN 2004.
2. INTERNATIONAL STEEL GROUP IN OCT 2004.
3. ISCOR IN SOUTH AFRICA IN 2001.
4. NOVA HUT IN CZECH REPUBLIC IN 2003.
5. ISPAT INTERNATIONAL, LNM HOLDINGS, ISG MERGED TO FORM MITTAL STEEL.
Mittal’s acquisitions
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MITTAL’S APPROACH
Struggling state – owned mills
No bidders
First private enterprises to chase down foreign acquisitions
Key steps - lowering costs, cutting excess staff and new
technology
Worldwide conference call
Manager’s from SAIL .
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MITTAL STEEL’S EVOLUTION
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MAJOR ACQUISITION
• Three way merging – 2004 - Ispat International - LMN’s Holdings - International Steel Group
• Acquisition of Arcelor (2006) - European steel maker
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CORE VALUES
• Leadership - Product diversity
- Geographic reach
- Diversification
• Sustainability
• Quality
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GLOBAL COMPETITIVE ADVANTAGE
• Creating global customer base and being better able to
predict market trends
• Strong manager integration program
• Global purchasing power
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STEEL AUTHORITY OF INDIA LIMITED-SAIL
• Top five highest profit earning corporate of the country. • Annual production -13.5 million metric tons• 14th largest steel producer in the world.• Major plants owned by SAIL are located at
ᵴHilaiᵴBokBaroᵴDurgapurᵴRourkela, ᵴBurnpurandᵴ Salem.
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STEEL AUTHORITY OF INDIA LIMITED-SAIL
. Founded 1954
Headquarters New Delhi
Chairman Chandra Shekhar Verma
ProductsSteel, flat steel products, long steel products, wire products plates
Revenue48681 crores (US$7.4 billion) (2012)
Net income3542 crores(US$540 million) (2012)
Total assets20425 crores (US$3.1 billion) (2011)
Employees 99360 (2013)
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ORE BATTLE WITH MITTAL (STEEL MILL)
• SAIL plans to build a 10-million-tonne steel mill in expectation of beating Arcelor Mittal for the rights to control the nation’s biggest iron ore reserves.
• Steel Authority of India Limited (SAIL) registered a 16% growth in sales during the month of August ’13.
• It has recorded its sales as 10.86 lakh tonnes of steel products recently, which was 9.38 lakh tonnes in corresponding period last year (CPLY).
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COST OPTIMIZATION INITIATIVES
• COIS was launched outlining the road map for achieving an overall saving target of around Rs 5000 crores during the next three years.
• Under this special initiative, following thrust areas have been identified for continual cost reduction:ᵴ Input optimizationᵴ Improving the operational efficiency by optimally
utilizing the available assetsᵴ Quick stabilization of the newly commissioned units ᵴ Reducing overhead costs and enhancing employee
productivity
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CURRENT PLANS OF SAIL
SAIL has planned to,
ᵴ Have synergy with the natural resources endowments of the company.
ᵴ Minimize damage to environment.ᵴ Optimize resources utilization.ᵴ Facilitate modern techniques in productivity.ᵴ Undertake R&D activities to introduce new
technologies.ᵴ Sustainable development.
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TISCO• Headquarters : Mumbai,Maharashtra,India.
• Marketing Headquarters : Tata Centre in Kolkata,West Bengal.
• Established by ‘Dorabji Tata’ in 1907.
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EXPANSION PLANS AND ACQUISITIONS
• Annual Production Capacity by 100 million tons by 2015.
• Plans to add 29 million tonnes of capacity through acquisition.
• 31st March,2013-31.35% shares in Tata Steel.
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AWARDS AND RECOGNITION
• Ranked India’s 7th by “Fortune Magazine”.
• 7th Most Valuable Indian brand of 2013.
• Received “MAKE Award” for 2012.
Major competitors:ArcelorMittal SAILVISA STEELEssarSteelJSW Steel.
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THE WORLDWIDE STEEL INDUSTRY
•Production(as of 2012) - 1.5b tonnes /year.
•ArcelorMittal – Largest steel company.•2 main customers
• Automotive manufacturers.• Domestic appliance manufactures.
•The World Steel Association has indicated that global steel demand will increase to 2.9% when compared to 1.2 percent last year.
•Demand for steel in other countries:• INDIA - rise by 5.9 percent in 2013.• US - rise by 8.4 percent in 2012.• CHINA - rise by 3.1 percent in 2013.
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WORLDWIDE STEEL INDUSTRIES
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MITTAL INDUSTRIES
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STEEL PRODUCER’S RANK
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CONCLUSION• In 35years, the growth of the industry is tremendous.• ArcelorMittal is the world’s largest.• Production of 97.2 millions.• International Iron and Steel Institute (IISI) forecasted increment
in demand for steel from 1.32 billion tones (in 2010) to 1.62 billion tones (in 2015)
• Consumption is highly cyclical.• Competition from substitute materials
AluminumPlastics
• Major away or commodity value added productionSpecialization Higher value added advantagesNew technologies
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• Changing mind sets from regional to global.
• To maintain position in lowest cost quartile.
• Aiming at cost reduction, through.
Operating efficiency improvements.
Raw material and procurement initiatives.
Increase labor productivity.
• Creating an high performance curtain.
• Focus in global market efforts.
• After 80s, demand for steel increased continually.
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