The Grey Chronicles

2009.July.27

The Steely Dreams of Pramod Mittal



In 2008, India Inc (2008) stated that Pramod Mittal is “beating industry expectation”:

“But there is one dream he still cherishes and has kept it close to his heart: a dream to join the league of bigwigs of the global steel powers. … Known for his sharp intelligence, Pramod has been successfully steering the company and his steel empire grew 15 times since he got into business 15 years ago. … he is sure to reach his steely resolve – sooner than corporate pundits think.”

GSHL Steel Investments, 2003-2009

The Grey Chronicles, however, revealed in a series of posts starting 09 July and concluded yesterday that unfortunately, there is a great disconnect between the dream and the reality. Shown in the figure above is a plot of GSHL investments from 2003 to July 2009. GSHL’s total steel producing capacity from about 2.7-million metric tons per year (mtpy) in 2003 grew to as high as 16.4-mtpy in March 2006. This capacity only lasted six months! IISI (2008) reported for the first time that Global Steel Holdings ranked 86th with 2.9-million metric tons (mmt) in 2005. By 2006, it was ranked 65th among the top 80 producers of crude steel output with 4.2mmt and settled for 67th the next year, produced 4.4 mmt (IISI, 2007). Thus, although GSHL held about 14.4-mtpy capacity between 2005-07, only about 18% of which were producing crude steel.

After almost six months operation, the termination of ZISCO’s management contract became like an omen for events to come: acquisition of Rudnik Uglja Berane, in Montenegro, was declared void in June 2007 (Platts, 2007). In November 2007, GSHL lost direct control of Ispat Industries Ltd. [IIL] after holding 52.68% majority since September 2005 (The Economic Times, 2009). The Serbian Privatisation Agency [SPA] terminated in December 2007 the sale agreement for Magnohrom (New Balkan, 2007). A triple wallop, as bad things come in threes, all the Nigerian management concessions in Ajaokuta, Delta and NIOMCO were cancelled on 01 April 2008. To punctuate all these, Kosovo’s Llamkos was re-tendered in May 2008 (Financial Times, 2009).

Ironically in June 2007, Zee News (2007) quoted the Economic Times newspaper that GSHL was in talks with the Tunisian government to buy a strategic stake in steelmaker El Fouladh. State-owned El Fouladh is one of the four steel companies in Tunisia and produces 100,000 tons of billets. Tunisia planned to raise resources for funding the company’s expansion. Earlier that week, GSHL said it planned to invest $2.9 billion in Bangladesh for mine development, oil exploration and production, power plants, petrochemicals and related projects.

Furthermore, GSHL faced various very public difficulties in succession, such as: On February 2009, IIL asked creditors to restructure the interest it owes on Rs586 crore [about $112M] of debt into another loan with promoters pledging entire stakes with financial institutions. (The Economic Times, 2009). Kremikovtzi steel workers staged multiple strikes for much of 2008, and only on 21 April 2009 that Pramod Mittal told the Bulgarian Cabinet his interest of turning Kremikovtzi around (The Sofia Echo, 2009). Two open letters published in Consumer Complaints, India from Libya-based GSHL employees—the so-called Camp Libya—surfaced on the Web beginning May 2009, which added to the fire created by the LiveMint exposé of non-payment of salaries in Bulgaria and Nigeria a year before (LiveMint, 2008).

In spite of these developments, GSHL still managed to hold on to 10.6-mtpy steel-producing capacity by June 2008 to the present. Recent report, however, from World Steel Association (2009), ertswhile IISI, shown that GSHL is no longer among its top 80 companies of crude steel producers in 2008. A presage that Pramod Mittal’s steel empire is crumbling like sand castles?

In the same India Inc. article:

“Pramod is indeed in high spirits after having acquired CSKA Sofia, a premier division of Bulgarian football club in a deal estimated at 14 million Euros. Obviously, the acquisition made a splash in the international media. … The Mittal sobriquet and the fact that he is the first Indian to own a top flight European club has given him the profile of a successful international tycoon.” (India Inc., 2008)

IndusView reported that Pramod Mittal bought CSKA Sofia for an undisclosed amount; media reports suggested $20 million. Bulgarian businessman Vasil Bozhkov, the seller, confirmed the acquisition of 100% stake in the club (IndusView, 2006). The club sold several players in 2007 in a bid to cushion debts. In June 2008, UEFA refused to renew CSKA’s license due to unpaid fees thus eliminating the club from participation in the Champions League. CSKA, the 31-time Bulgarian champions, faced series of financial problems after Pramod bought the club in 2006. CSKA president Alexander Tomov was then forced into resignation by angry football fans threatening revenge (Rediff, 2008). In September 2008, Bulgaria indicted the GSHL-appointed CEO of Kremikovtzi, Alexander Tomov, formerly CSKA President, on embezzlement charges regarding the transfer of over millions of euros from cash-starved Kremikovtzi to CSKA Sofia, and then to offshore companies Tomov controlled. He claimed his asset sales were authorized by the Kremikovtzi’s supervisory board, chaired by Pramod Mittal (Wall Street Journal, 2008). By Christmas 2008, Pramod Mittal sold CSKA Sofia to Bulgarian company Titan (Rediff, 2008).

At least, Pramod Mittal still has a £12 million (over Rs 67 crores or $17 million) house near London. “Is it part of the cost overrun?” asked Suchet Adalal years ago (Indian Express, 1999). Or, as Financial Express wrote in 2003, “His relatively more humble flat at Carmichael Road in Mumbai boasts a fleet of expensive cars, including a Lexus, a couple of Mercedes, a Pajero and a clutch of smaller ones parked outside. And in between haggling with lending banks and institutions to restructure his loans, he zipped off to Tokyo earlier this year [2003] in a chartered flight to watch the World Cup final live!” (Financial Express, 2003).

Pundit or not, The Grey Chronicles believes that Pramod Mittal, who is turning into a non-resident Indian [NRI], is probably laughing all the way to banks!


Notes:

Adalal, Suchet (1999). Extravagant ways, poor industrialists. Bombay: Indian Express Newspapers (Bombay) Ltd, 21 February 1999. back to text

Bivol, Alex (2009). Full circle — Pramod Mittal not giving up on Kremikovtzi. Sofia: Sofia Echo Media Ltd., 21 April 2009. back to text

Chatterjee, Dev (2009). Ispat promoters pledge entire stake with lenders. New Delhi: The Economic Times, 01 June 2009. back to text.

Financial Express (2003). Why Pramod Mittal Gets Angry. Mumbai: Financial Express, 05 January 2003. back to text

Handique, Maitreyee (2008). Global Steel owes salaries, answers. New Delhi: LiveMint, The Wall Street Journal, 02 April 2008. back to text

IndusView (2006). Mega Deals. The IndusView, Vol. 12, Issue. 16, 26 December 2006. p. 3. back to text

India Inc (2008). Pramod Mittal: Beating industry expectation. Resurgent India Inc, 2008. back to text

International Iron and Steel Institute [IISI] (2007). Steel in Figures: Top steel producers 2007. Brussels: International Iron and Steel Institute, 2007. Online. back to text

International Iron and Steel Institute [IISI] (2008). Past Top Producers. Brussels: International Iron and Steel Institute, December 2008. pp. 1-8. back to text

MacDonald, Neil (2009). Privatisation: Transfer of power sees legal tangles proliferate. Kosovo: Special Report. London: The Financial Times, 05 June 2009. p. 3. back to text

Nair, Suresh (2005). Global Steel takes control of Ispat Industries. New Delhi: The Economic Times, 09 September 2005. back to text.

Platts (2007). Balkan Energy to buy Berane mine, Platts Energy in East Europe. Issue 121. Platts, McGraw Hill. 31 August 2007. p. 18. back to text

Rediff (2008). Pramod Mittal sells CSKA Sofia. Place: Rediff. PTI, 25 December 2008. back to text : 1 | 2

Government of Serbia (2007). Privatisation Agency breaks Magnohrom sale contract. Belgrade: New Balkan, 19 December 2007. back to text

Walker, Marcus (2008). Bulgarian Steel Battle Heats Up. New York: The Wall Street Journal, Dow Jones & Company, 04 August 2008. p. A1. back to text.

World Steel Association (2009). World Steel in Figures 2009. Brussels: World Steel Association, July 2009. p. 8. back to text

Zee News (2007). Global Steel eying stake in Tunisia plant. Mumbai: Zee News India Edition, 15 June 2007. back to text

Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 LicenseDisclaimer: The posts on this site do not necessarily represent any organization’s positions, strategies or opinions; and unless otherwise expressly stated, are licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License.

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4 Comments »

  1. We, the 117 Indian expatriate staff of Delta Steel Company PLC, Warri, Delta State, Nigeria request for your attention on following points:

    1) We have been recruited by M/s Global Steel Holding Limited in India and posted in Delta steel company, Nigeria. We have an outstanding of 11 months’ salary and allowances.
    2) We are kept here like bonded laborer, no proper food, no Electricity & water in township and no medical facility as well. There are also security threats. The company is taking advantage of our patience and our repeated requests made from time to time to the competent authorities are never heeded.
    3) We are starving here and our families are starving in India. All our savings are depleted in maintaining our family in India.
    4) Even as we suffer such persecution at the hands of an insensitive management, the chairman Mr. P. K. Mittal (Brother of Steel tycoon Mr. L. N. Mittal ) refuses to lend an ear to our state, though he is fully aware of it, and continues to concentrate on his 3 companies in India-

    (i) Gontermann Peipers (India),
    PO – Pailan, Diamond Harbour Road
    24 Parganas (S), West Bengal

    (ii) Balasore Alloys
    Bal Gopalpur – Orissa

    (iii) PSSPL,
    Casablanca Bldg. Sec – 11
    CBD Belapur – Navi Mumbai

    We have been recruited in India through PSSPL, Navi Mumbai (Corporate Office in India)
    headed by Mr.Vipul Saxena – VP (HR) which has now turned out into a fraud as we have been deprived of our salaries for the period which we served for the company. The actual conditions of Delta Steel Company, Nigeria were never been informed to the people joining their organization. During the span of our protest regarding disbursement of our salaries, Mr. Saxena had visited the company in Nigeria several times and promised to solve all our issues which gradually turned into false commitments.

    We have approached our Indian high Commission at Abuja, Ministry of Indian Overseas Affairs, Prime Minister office, H.E. President of India, Member of Parliaments, National Human Rights Commission, Protector General of Immigration and other concerned agencies in India for justice. But we are feeling very helpless as no action has been taken so far.

    We have even personally approached & submitted our petitions to the following offices in Nigeria and India :
    i) H.E.President of Federal Republic of Nigeria
    ii) Indian High Commission, Nigeria
    iii) Secretary to Federal Government, Nigeria
    iv) Ministry of External Affairs, India
    v) Senate President, National Assembly, Nigeria
    vi) Public Complaints Commission (PCC/HQ/2012/N.1/1)
    vii) Comptroller General of Immigration, Nigeria
    viii) Economic & Financial Crimes Commission (EFCC), Nigeria
    ix) International Labor Organization
    x) British High Commission, Nigeria
    xi) National Human Rights Commission (C/2011/2428/HQ)
    xii) Press Trust of India (PTI), India
    xiii) News Agency of Nigeria (NAN), Nigeria
    xiv) Electronic Media- TV channels (NTA, AIF, Channel), Nigeria
    We have sent three of our representative to High Commission, Nigeria since 22nd Dec’11 and we are still awaiting for any positive response that could end our problems. What only they have done is to forward our issue to The Ministry of Overseas Indian Affairs.

    The office address of M/S Global Steel Holding Limited is as follows.

    Ist Floor,Murdoch House,North Shore Road,Ramsey,Isle of Man,IM8 3DY.
    Our Company’s Chairman is Mr.Pramod Kumar Mittal and He is a British Citizen and staying in London and he is brother of steel tycoon Mr.L.N.Mittal and his contact details are : –
    E-mail:pkmlondon@yahoo.com; mittalpk@yahoo.com.Phone no:+447768444999.

    Following are details of Delta Steel Co Plc – Management Personnels:

    1) Mr. P K Mittal, Chairman & Managing Director,
    Global Steel Holding Ltd (Delta Steel Plc, Nigeria)

    2) Dr. Samuel Nwabuokei, Joint Managing Director, Delta Steel Plc

    3) Mr. Sunil Bhandari, Executive Director (Operations), Delta Steel Plc.- Eloped to India

    4) Mr. Vipul Saxena, Vice President (Corporate HR), Global Steel Holdings Ltd – Heading Corporate Office, India
    5) Mr. Rajib Das – Corporate Office – Dubai

    6) Mr. Sudhir Barve, President (Finance), Delta Steel Plc

    7) Mr. Mukesh Agarwal, GM (Finance), Delta Steel PLC – left for India

    8) Mr. C,Pattnaik, Executive Director (Iron making,Rolling Mill & HR)

    The top management of the Company as failed to give us any fruitful outcome regarding our concern, turning out to be directly responsible for our present situation.
    (Most of the above mentioned Top executives left for India and we are in deep trouble now.)

    The story has been covered by many news papers & web portals in Nigeria as well as India as mentioned below.

    http://zeenews.india.com/news/world/nigeria-117-indian-workers-denied-salary-by-firm_749267.html
    http://www.pravasitoday.com/117-indian-workers-in-nigeria-denied-salary-by-firm

    http://news.in.msn.com/international/article.aspx?cp-documentid=5712322

    http://premiumtimesng.com/index.php/business/3252-Indian-workers-accuse-Delta-Steel-owing-months-salary.html
    http://www.thenationonlineng.net/2011/index.php/news/23032-efcc-arrests-four-over-ajaokuta-delta-steel-firms.html

    We were struggling for last 4 months from pillar to post without any result. Now the situation has became very critical as we are staying without light & water and other essential services.

    Please aware from this group. All the best…….

    Comment by Delta Steel company (GSHL), Nigeria — 2012.January.16 @ 18:42 | Reply

  2. hi
    It is kind request or infact a warning to all the professionals not to work with GSHL.And the suppliers should see the image of the company before dealing with GSHL.
    PK Mittal took it lightly so far but the he should be waiting for the results in long term when he will be crying for the manpower.
    thanks

    Comment by kumar — 2010.September.25 @ 06:32 | Reply

  3. Well written artcile exposing Pramod Mittal. Some more projects also should be added to this list like Moazmbique, Brazil and Columbia. GSHL swindles lot of money by nonpayment of wages , non payment to suppliers and also not paying the tax dues to the concerned governments. Please probe these projects also and publish this along with the failures you have listed. I am ashamed to think that Pramod Mittal is an “Indian” by birth. Every patriotic Indian will feel ashamed of his activities.

    Comment by Ravi — 2009.September.5 @ 15:43 | Reply

    • See this: Understanding GSHL: The Lesser-Known Deals parts I and II.

      Comment by reyadel — 2009.September.6 @ 03:36 | Reply


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