Pramod and Vinod Mittal, the younger sons of Mohan Lal Mittal, have for years lived in the shadow of their illustrious elder brother, Lakshmi Mittal. It seems things will remain that way, going by the loss of their crown jewel, Ispat Industries.
Yet, there is a common thread that runs through the stories of the three brothers: all they dreamt big. Not many know that the Mittal family’s undivided business foray into the international arena was spearheaded by Pramod. Setting up PT Ispat Indo in Indonesia and the acquisition of Iron & Steel Company of Trinidad and Tobago were his brainchild.
“People talk about big power plants, but Pramod wanted to set up a 3,000 Mw power plant under the Narasimha Rao government,” an industry representative said. Through Hughes Ispat, he had a presence in the telecom space way back in 1995 (the company later went on to become Tata Teleservices-Maharashtra).
“The problem is Pramod and Vinod wanted to grow too fast,” said a source close to the family. Global Steel Holdings, Pramod and Vinod’s offshore investment arm based in the UK’s Isle of Man, had operations in five countries across Europe, Africa and Asia Pacific. The company operated and managed about 14 million tonnes of steelmaking and associated businesses in mining, energy and logistics. But, the company went a little haywire.
Ajaokouta Steel Company in Nigeria and Kremikovtzi in Bulgaria ran into trouble. The operations were reduced in size and spread over Libya, Nigeria, Philippines and Bosnia. “They were just unlucky. Whichever country they chose, the environment was not conducive. They couldn’t manage it,” a steel producer said.
Clearly, the younger Mittal brothers played their cards wrong. JSW Steel, which acquired a controlling interest in Ispat Industries earlier this week, chose to focus on the domestic market. “The domestic market is growing, and JSW is the largest private sector steelmaker in the country today. Where was the need to venture out with a vengeance?” asked peers.
Lack of foresight, some say. But the brothers had a shining example in the family. Elder brother Lakshmi had made it big in all the countries he set foot in.
Despite the failures, Pramod and Vinod’s worst critics admit that Ispat is still one of the best plants in the country. “If Pramod is the visionary, Vinod is the executor.” That certificate came from a strange quarter: Someone close to Lakshmi. “Vinod is very systems-driven. He has implemented all possible quality management programmes in the plant,” said an old associate.
So, what went wrong? Structural issues like raw materials probably formed the starting point. Moreover, Pramod’s remote-control style of management from the UK hasn’t quite helped.
Analysts are baffled that the company couldn’t bag raw material resources for so many years. Neither are they convinced that their 26 per cent stake with veto rights will help JSW Ispat. This speaks volumes about their management. And, of course, the debts have been piling up for a while now.
Pramod had once famously said: “I am an entrepreneur and will take risks.”
But lenders would hasten to add: “Not with our money”.
