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Ambarish Mukherjee

Merger will cut short required groundwork to sign MoU

New Delhi , June 26

The mega merger of Arcelor and Mittal Steel will cut short Arcelor's wait to enter India by cutting down the time taken in the ground work required prior to signing a formal memorandum of understanding with the Government.

This is because post-merger the new company Arcelor-Mittal Steel will be able to take advantage of the MoU already signed by the NRI steel tycoon, Mr Lakshmi Nivas Mittal, with the Jharkhand Government.

Entering Indian market

Both the companies had shown keen interest in India. Arcelor had announced its plans to enter India in October last year, the same month when Mittal Steel signed an MoU with the Jharkhand Government for its proposed 12 million tonnes steel project in the State, with an estimated investment of Rs 40,000 crore.

Arcelor had then said that it had taken an in-principle decision to come to India and that it was in the process of evaluating how to go about it. Three months later, Mittal Steel made its bid for Arcelor, following which all the latter's plans got suspended.

Steel Ministry officials said that last year Arcelor officials, who were on a visit to India, had discussed putting up a plant here and were asked to submit a formal proposal. However, the proposal was not pursued by the company.

Better expertise

Now, Arcelor-Mittal Steel will take over the Jharkhand project and thus the combined technical and management expertise of the world's largest and second largest steel producers would be available for the Indian plant.

The Mittal Steel CEO, for its Jharkhand operations, Dr Sanak Mishra, told Business Line that the MoU giving the rights for the Jharkhand steel project would now get transferred to the new entity along with other assets, and the new company will take up the responsibilities.

Market analysts pointed out that Arcelor's specialised technologies for special steels could help rework the planned production combination of the Indian plant.

However, going by the present situation, the Jharkhand project has not made much progress and the Central Government has not yet received any communication regarding mining leases for Mittal Steel from the State Government, officials said.

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