Acquisitions to drive ArcelorMittal’s growth

Acquisitions to drive ArcelorMittal’s growth

New Delhi: Global steel firm ArcelorMittal NV has said that it is likely to continue to expand its base by acquiring companies worldwide, even though it maintains that an inorganic growth route could harm its financials.

“ArcelorMittal has grown through acquisitions and will likely continue to do so. Failure to manage external growth and difficulties integrating acquired companies could harm ArcelorMittal’s future results of operations, financial conditions and prospects," the firm said in a regulatory filing to the US Securities and Exchange Commission.

The world’s largest steel maker, formed after the merger of Mittal Steel and Arcelor in 2006, has been growing mainly through acquisitions.

The company, however, said it was also banking on the organic route for capacity expansion, which also suffers from operational risks.

“...its growth strategy includes greenfield and brownfield projects that are inherently subject to completion and financing risks, which, if realized, could adversely affect ArcelorMittal’s results of operations and financial condition," it said under “risk factors" in the filing.

“As a part of its growth strategy, the company plans to expand its steel-making capacity and raw material self-sufficiency through a combination of brownfield growth, greenfield projects and acquisition opportunities, mainly by entering markets such as India, Africa and Brazil", it added.

ArcelorMittal chairman L.N. Mittal had last month criticized the country’s investment climate and rued the delays of his proposed projects—one each in Jharkhand and Orissa, which are yet to take off even after four years—entailing an estimated investment of around 1 trillion.

The company is also considering setting up a 6 mtpa integrated steel plant in Karnataka along with a 750MW power plant.

The steel company marked its first operational presence in the country by entering into a joint venture with domestic steel maker Uttam Galva Steels Ltd

. ArcelorMittal acquired 28.8% stake in the company and is in the process of buying an additional 4.9% stake in this Mumbai-based steel producer.