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> Brother Lakshmi to the rescue |
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Brother Lakshmi to the rescue
posted by
Vivek Sharma
22 May 2008, 21:13
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labels: companies, corporate restructuring, mergers/acquisitions
Recently, this blog had detailed how the fortunes of the Mittal brothers of Ispat group have been so divergent. While elder brother Lakshmi became the unrivalled global steel czar and one of the richest men on the planet after the acquisition of Arcelor, younger brothers Pramod and Vinod have struggled to pull off even a single successful venture. Unperturbed by the disastrous performance of their flagship Indian venture, Ispat Industries, the brothers went ahead and acquired steel plants abroad – apparently to emulate the success of elder brother Lakshmi. Steel prices have increased sharply over the last year; most steel companies have never had it better and are posting record profits. In such a scenario, it takes special talent to run your steel businesses into trouble. That is exactly what Global Steel, the company owned by the younger Mittal brothers, is now going through. The company, which has plants in Bulgaria and Nigeria, has been facing a severe cash crunch and workers have reportedly not been paid for a long time. The Nigerian government is said to be planning to take back the steel mill sold to Global Steel, while many Indian workers and managers in that plant have been demanding unpaid wages for many months. Now, it seems, elder brother is trying to bail out the younger ones. Arcelor Mittal is reportedly in discussions to acquire the Bulgarian operations of Global Steel for over $1 billion. This plant with a potential output of over 2 million tonnes per annum is currently operating at less than half its capacity, because of financial constraints. To keep the plant going until the deal is signed, Arcelor Mittal has even extended a short term loan of nearly $50 million – mostly to pay overdue wages. Maybe, the younger brothers will now curb their global ambitions and focus on building their businesses in India.
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