Posco has been in the limelight this week after announcing it has forged a Memorandum of Understanding with Shree Uttam Steel and Power to set up a plant in Maharashtra.
The plant will produce three million tonnes of steel a year and will need an investment of $3 billion.
The attention on the South Korean steelmaker is obvious, coming after the failure of its big-ticket project in Odisha. It has been 10 years since the company announced the project, which would have been the biggest infusion of FDI into the country. Posco tried everything to make a success of the project, its first outside the home market. The company repeatedly changed its leadership team in India, cut down the size of its plant and knocked on every door, including those of Chief Ministers and Prime Ministers. But the Odisha project has ended up as a failure.
The company, keen to have a presence in iron ore-rich India, will now find some consolation in the planned project in Maharashtra.
For the Miglani family, which owns Shree Uttam Steel and Power, this is more than a consolation prize. The proposed plant in Satarda, in Maharashtra, has been a long-cherished dream for Rajinder Miglani, the head of the family. He is also the Chairman of Uttam Galva Steels, the family flagship that is now co-owned with LN Mittal (the owner of ArcelorMittal, like Posco, has also had a bitter experience in India, but for his investment in Uttam Galva in 2010).
Just after London-based billionaire Mittal invested in Uttam Galva in 2010, there were reports that he might partner Miglani to build a one-million-tonne plant in Satarda. But that didn’t materialise, probably because Mittal, weighed down by the debts taken to acquire Arcelor, was forced to cut down on his investment plans.
Later in 2013, another report said the Miglanis were now in talks with Posco for the same project. The report even mentioned that a meeting between Rajinder Miglani and the then Posco India head YW Yoon was also attended by unnamed officials from ArcelorMittal. The report quotes Yoon saying, “Uttam Galva is keen to set up a steel project with us in the Konkan region. They have clear possession of the land and the site is close to port facilities and iron-ore mines in Goa. They have offered us about 1,700 acres, which can accommodate a steel plant of three-million-tonne capacity.” He then adds: “We are considering the proposal. But our priority is the Odisha project. If it does not happen, we will take a call on it.”
Surely, the call has been made.
The family
The public face of the Miglani family is Ankit Miglani, the younger son of Rajinder. I first met him in 2006. He was just three years into the family business but was already making a mark for his communication skills as the commercial head of the company. His brother Anuj headed the plant's operations.
The two are now Joint Managing Directors. In the first meeting, I could see that Ankit was charming, but at the same time aggressive in his words and attitude. In an interview to a business channel, Anuj had this to say about his younger brother: “Ankit brings the aggression and spark into the company.”
And so has been the case. After the deal with Mittal, the Miglanis partnered a venture in Ghana, bought Lloyds Steel in 2013 and have now signed the pact with Posco. In these five years, Uttam Galva's revenues have grown from Rs 4,495 crore to Rs 6,952 crore in fiscal 2015. While its thin margin could be a cause for concern, analysts agree that Uttam Galva is in a better condition than many of its peers in the steel industry.
Now, after partnering LN Mittal and Posco, can the Miglanis actually bring the two steel industry heavyweights together for the project?
That will be the first of its kind.