Re-examining M&A avenues; to expand in India: ArcelorMittal

NRI billionaire Lakshmi Mittal, who has created the world's largest steel empire through a slew of takeovers, is gearing up to restart doing what it is best at — that is mergers and acquisitions.     

"We are beginning to re-examine selected M&A opportunities," said a spokesperson from ArcelorMittal, which had last year decided to apply breaks on its merger and acquisition spree owing to the global economic downturn and its impact on the steel industry.     

At the same time, Mittal-led world's largest steel maker would look out for opportunities to expand its operational presence in India, the official told reporters.     

In India, the company has a long-standing plans for setting up two greenfield steel plants and recently got a operational start with acquisition of 35 per cent stake in domestic firm Uttam Galva Steel to become a co-promoter.    

Besides, there are speculations that ArcelorMittal, which was created after an over $30-billion merger between erstwhile Mittal Steel and European giant Arcelor in 2006, is looking to increase its stake to become a controlling shareholder in London-listed Coal of Africa that it already holds 16.3 per cent shares.

While a number of smaller M&A deals followed the Arcelor deal, the M&A spree came to a halt last year due to adverse economic conditions, until the Uttam Galva deal last month.     

"In line with our adjusted financial policy and cautious view of the recovery and the assumption that it will be slow and progressive, we are beginning to re-examine selected M&A opportunities," the ArcelorMittal spokesperson said when asked about the steel maker's inorganic growth strategy.     

Regarding the company's plans for the Indian market post the announcement of Uttam Galva deal, the spokesperson asserted that India is a very exciting country for ArcelorMittal.     

"There is considerable potential for demand growth (in India) in the future. India is a country where we will continue to look into opportunities to build an increased operational presence in the future," the official added.     

ArcelorMittal is already working on two potential greenfield projects in the country including the one to set up a 12mtpa capacity steel plant in Orissa's Keonjhar district with an investment of about Rs 40,000 crore.     

About recent media reports which said that ArcelorMittal is planning to increase its 16.3 per cent stake in Coal of Africa, the spokesperson said the company is currently not interested in hiking the same.     

"There is not enough evidence yet of the quality of coal we are looking for — if high quality ore reserves at CoAL are proven, we might review our stance, but certainly at present there are no plans to raise our stake," the spokesperson said.

Recently, media reports suggested that ArcelorMittal has appointed a team led by investment banking major Goldman to advise the company on potential buyout targets. When asked about it, the spokesperson said, "We don't comment on market rumour and speculation of this type".     

According to the official, even though majority of its growth projects "are now on hold", the developing markets will continue to be the main area of focus for growth going forward".     

The demand for steel is showing signs of improvement in the emerging markets including India and Brazil.     

"Since the beginning of the year, Brazil has increased its production by 20 per cent, Russia by 25 per cent and India is running at full capacity," the spokesperson said.