India today has a lot to offer to those who dare to dream.

If I were asked whether

I would start in India of today, the answer would be yes, steel L N Mittal,
Chairman and CEO, ArcelorMittal

czar L N Mittal tells ET in an interview at ArcelorMittal�s London office. Edited

excerpts: ( Watch )

The first and the most important question: economists have started talking about
�green shoots� appearing in some economies. So, would you say the worst is behind
us?

If I talk to bankers, investors, or even business people, almost everyone believes

that the worst is behind us. The confidence is coming back, and the crisis we have
gone through in the last eight-nine months is at least slowing down and is on the
decline... (This) in itself is a big comfort. But we have to continue to monitor
and wait because there are still a few segments like consumer credit and the real
estate market...(which) are still to completely flush out their toxic assets.

When do you think the developed economies could start showing signs of revival?
Any time frame?

The emerging economies will definitely recover earlier; we are beginning to see
that. For example, China has announced an 8% GDP growth. My people have visited
China and they say they can see the effects of the stimulus package kicking in. In
India there are two factors: first, it is a developing economy where you can see
things are much more positive. (Second)...the Congress winning the election has
given so much confidence that you see a lot of exuberance.

With the UPA coming to power with a larger mandate, what are the boosters needed
to restore investor confidence?

There is already a lot of confidence in the emerging markets, especially India.

India is a great country for foreign investors. I can see that a lot of foreign
investors are very interested in investing in India. They see the market, the
population; they see the people. There is an interest. What we need is speedy
execution. People should not get stuck in approvals and bureaucracy. It is a great
reform if we can implement all the initiatives.

Are you saying it�s more to do with governance? To see that the policies framed by
the government can play out?

Government can speedily approve the projects. It should start educating states
that these investments are good for them. For example, Jharkhand & Orissa, where
we are keen to invest in the steel industry. We read everyday that there is a
protest or violence. We need to avoid this, and educate the people that it is not
a land-grabbing scheme. It�s is a scheme for the future, for the next generation.
And this kind of education is really important.
There has been some resistance to these two projects at the local level. What are
you doing to mitigate this? L N Mittal, Chairman and CEO, ArcelorMittal
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We have a limited role to play. What we are doing is part of our CSR (corporate
social responsibility) programme. We are starting some education and health
programmes. We have started consultations with local authorities and are educating
them about the benefits of such projects. It is helping a little. But I think it
requires much more intensity.
There was a sharp fall in commodity prices after the economic recession struck.
Now we see an upturn again. What is happening in commodities? Is it just cyclical
or something else?

You have to go back five years. I think that at that time, everybody thought there
will only be growth. There was so much of excitement over the demand in
commodities and there was assured supply as well. Prices went up. All emerging
markets had started showing a lot of growth potential. But this did not last. It
was not a sustainable growth pattern. And this wasn�t a sector crisis...it was
global and every sector was impacted. Now we are starting from a new base; slowly
the demand will improve in the emerging economies and prices will start to
stabilise. They would not go back to the levels of 2007-08. (Those price levels)
were irrational.

This would be a learning point...that you won�t expect a boom of that sort, or, as
some people would say, �irrational exuberance�?

There are two points: one, that there is a lot of overcapacity which has been
built and is being built. And the demand is not going to come back to the pre-
crisis levels immediately. I think we are looking at another four-five years. So
during this time, I do not believe we will see such a high growth in prices.

You have gone in for production cuts at ArcelorMittal. How does it look going
forward?

Today, we are operating at 50-55% capacity, which is not a real demand situation.
This is based on apparent steel demand. Today, there is a destocking taking place
in the system. Inventory levels are coming down to a much more reasonable level.
During the pre-crisis levels the inventories were supposed to last for four
months. Now they last for six to seven. So there is plenty of inventory which is
getting reduced. So, once this destocking is complete, there will be a realignment
between apparent and real demand, which will allow us to increase our capacity
utilisation to, maybe, 70% or 75%.

The Lehman Brothers crisis came as a huge wake-up call for most people. Were you
in any state of preparedness for a huge crisis like that? How did you face the
consequences?

The world was not ready, why ask me? No one in the world expected the Lehman
crisis to bring such a big global crisis. Everyone, even the regulators and the
governments, were expecting that this is a temporary crisis which will be overcome
very soon. Everyone was expecting this crisis to be of short-term nature. Clearly,
that was not the case. It blew up into a much larger shape. We were having our
management conference (in Delhi) in September when we realised that things were
not looking good. We got some alert from our own management that we had to do
something. We were mentally prepared to look into the crisis from a longer
perspective.

You definitely had an advantage as you were at least mentally prepared for
something major like this? L N Mittal, Chairman and CEO, ArcelorMittal
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You may say that. That is one reason why we announced the production cuts. We went
on reducing our inventory levels. And we succeeded. Today the result is that we
have become a much more flexible and agile company.

In a crisis, big companies resort to cutting down wasteful expenditure, (possibly)

on R&D, and things they haven�t been able to do earlier. What strategies did you
evolve?

We initiated 3Cs in our company � cash, cost and customers. On the cash front, we
have tried to generate more liquidity. In the last eight weeks, for example,
ArcelorMittal has raised $11.5 billion. At one point we had $23.5 billion of
liquidity. So we succeeded in having enough liquidity. On the cost side, we cut
our fixed cost, and worked on shortening our supply chain. On the customer side,
we relooked at their demands. How could we supply them on a shorter notice;
whether there is a change in demand pattern; and how we could improve our services
to our customers, whether we could supply much more on just-in-time kind of model.
We have not reduced our budget for R&D. In fact, we maintain our budget. And we
have also added some new projects to our R&D.

How do you see the future of the automobile industry, which is a big customer for
any big steel company like yours? And, second, you just talked about raising debt.
How does it work out for a company as big as yours? You think bankers are still
risk averse at this point?

I�ll answer your second question first. Clearly, the bankers are more risk averse.
The banking industry has suffered a lot of losses. They want to have better
capital adequacy ratio. They want better liquidity. They have become much more
selective. They want to look at all the projects and financing from a different
angle. The easy money era is gone. Now it is selective money era, where the
projects will be evaluated with different angles and criteria. And that is a good
thing.

On the auto sector, if you look at US today the demand is down to 9-10 million
units. But these are not sustainable levels. Every year, US scarps about 12
million units. You are scrapping 12 million units and you are buying only 9
million units. So there is a gap. I think once the consumer confidence comes back,
the American economy, which is based on the car industry, consumers must have cars
and slowly the demand will come back. But about restructuring the auto industry,
whether it is General Motors, Chrysler, Honda, Nissan, Renault... Any car, any
model, ArcelorMittal Steel is in every fifth car in the world. We are a large
supplier, so whether GM or Chrysler or Toyota. I mean if GM & Chrysler do not want
to produce and if Toyota wants to take over the market share, we will supply more
to Toyota. For us, our supply to the auto industry is critical.
There is a question put to every big company like yours which has done such deals
like ArcelorMittal. Do you feel doing the ArcelorMittal deal at L N Mittal,
Chairman and CEO, ArcelorMittal
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the time of the boom was wrongly timed?

I think it is a very natural question to ask. We have become such a large company,
and questions like �should we have done or should we have not done� do come to
mind. But I am very pleased...The ArcelorMittal merger was the right thing to do
and the best thing that could have happened to the industry. Today, if
ArcelorMittal would not have combined, both the companies would have had much more
difficult times than what we are having today. Our strategy, which we outlined
during the merger, has got reinforced. One of our strategies was that we should
continue to grow in the developing countries and the emerging markets. Today we
have 14% of our business in the emerging markets. We want it to grow to 25%. This
too has been reinforced during this crisis. Clearly, the winners are emerging
economies. For example, our India project. We feel now that was the right
decision. Unfortunately, we got delayed in our approvals. But we have to do it and
we will continue to work on this project.
You had started dabbling in another commodity�oil�a few years ago and started a
venture with ONGC in India. You have certain blocks in Nigeria and are now putting
up a refinery in India. So, are you still bullish on the oil sector, is your
interest as much as it was when you started?

No. See, from the beginning our interest in the oil sector had been very limited.
I wanted to help in India�s energy security. The Indian government wanted my
support... So I said fine, I will do whatever I could in my limited way because
this is not my core business. My core business is ArcelorMittal. When HPCL
programme came to me, it was not moving. So, when the Indian government said would
I be interested, I said I will support for the sake of energy security. So, my
interest in the oil business is limited to the extent.

The refinery project is again stuck in procedural issues such as the state
government not giving tax breaks. Does it frustrate you, because it�s something
you were doing only to help India.

These irritants are there in all the countries. So we should not isolate India as
an example when there is a delay in approvals. In the case of Bathinda refinery,
we are in good dialogue with the Punjab government. I was in India a couple of
weeks ago. I met the chief minister (and state officials). They seemed to be very
cooperative. They seemed to understand that they need to do something. So I am
sure we will have very successful negotiations in the next couple of weeks. Work
is going on. We have tens of thousands of people working on the refinery. The
project is on schedule and is likely to be completed in May 2011. So nothing is
stopping as far as the project is concerned. But we definitely need a level
playing field in terms of assistance from the state government, similar to what
the Gujarat government has been providing.

You�ve made headlines each time you bought a new house. This time you have bought
a stake in one of the football clubs in the UK. What are your L N Mittal, Chairman
and CEO, ArcelorMittal
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interests? Are you a sports enthusiast?

Yes! I love football. And I watch cricket also...not just football.

Are you going to be dabbling in IPL as well? Own a team at some point?

There is (already) so much of excitement in IPL that they don�t need any more
interest from outside India.

We consider you as an Indian, not (someone) outside India...

I think we cannot be participating in all kinds of sports... As far as our

programmes are concerned, we have a Mittal Champion Trust that is grooming
athletes. We are working in different areas like health, girls� education and
building and promoting institutes. But whatever we are doing isn�t enough. I
think, as a family, we need to do more.

On a personal note, you�ve been one of India�s biggest brand ambassadors. Yet, you
left India a long time back. What does India mean to you today? What is the India
that you want to talk about?

First of all, I�m very proud to be an Indian. When I left India, opportunities
were not there. And if someone asked me, whether I would start if I was in India
of today, the answer would be yes. Because I can see the strength of our country.
I can see the future and I can see the excitement. So, that is all very important
to be conveyed to the world that we are a country with very strong people, very
strong ambition about the future and we are going to achieve it.

Mr Mittal, you�ve been a great friend of The Economic Times and have been
associated with several of our initiatives; you have been the chairman of the jury
for the prestigious business awards that ET does. We�ve now launched our business
channel. What do you think the channel could bring? What could be our advantage?

I think the print paper will still have value, because not only do you want to
look at television, but you also have to lead in print. The format will have to be
different. Now a days, I find that all international papers are changing their
format to suit customer needs. So whether it is a TV channel or a print media, all
have to continue to evolve with customers� tastes.