Financial crisis: Mittal to create wealth for shareholders

Steel tycoon Lakshmi Mittal today asked investors not to be perturbed by the fall in valuation of ArcelorMittal saying he is the large

Modern Moguls
st stakeholder and is interested in creating more wealth for shareholders.

"I am the largest shareholder and I am interested in creating more wealth for shareholders," India born Mittal told reporters over phone from Luxembourg when asked if he was worried about the shareholders as market capitalisation of the conglomerate had come down from $150 billion five month ago to $30 billion now.

In the process, Mittal's own wealth has come down by over $50 billion to less than $15 billion.

"Today the world is in a very difficult financial crisis. We are facing challenges... Our focus today is to look after the company, to look after the shareholders. We are taking lot of initiatives within the organisation (including related to cutting production)," he said elaborating on the reasons for the decline in valuation of the company.

However, he was confident of regaining the pristine glory and capture the valuation that the company lost during the year and said, "I think whole of my management team would have that in mind and they are working towards creating more value."

Mittal said the company had reported strong quarterly results and the focus was on the fourth quarter but conceded that net profit was hit by some accounting related one-time items such as provisions for pensions.

During the third quarter ending September, 2008, the company announced a higher sale of 35.2 billion dollars and net income of 3.8 billion dollars.

On net profit, Mittal said, "There are some one-time items because of the accounting that is bringing down our net profits. For example, we provided for pension, liability for which did not come under the US GAAP (accounting norms)... we are within the guidance."

Mittal clarified that the EBITDA (operational earnings) for the quarter was in line with the guidance for 8.5 billion dollars.

"We are in line with the guidance which we gave... we are very happy about our this quarter results... Due to the financial crisis, we are experiencing bad economic time. The demands are soft. All the economies whether developed or developing are getting affected by the financial crisis," he said.

On the course ahead, he said, "We remain optimistic about the industry's medium-term growth prospects but it is appropriate to pause our growth strategy until we have a more settled economic outlook."

At the same time, he said the company has taken measures to ensure that it was well adapted to the current environment.

"Our focus remains on cost leadership and service to customers. The current period of de-stocking requires that we made appropriate production cuts to rebalance supply and demand. We are also accelerating efforts to pay down the debt," he said.

With a diversified business model, strong cash-flow and cost leadership position, ArcelorMittal was well placed to weather the current economic challenges.

Source: EconomicTimes