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Local listing on Mittal agenda

Luxembourg, Nov. 16: Calcutta-born steel tycoon Lakshmi Niwas Mittal wants to list ArcelorMittal — the world’s largest steel company — on the Indian bourses.

Speaking to The Telegraph at the company’s Luxembourg headquarters, Mittal, with son Aditya by his side, said he hoped to list the steel behemoth in India when government regulation permitted it.

Mittal’s startling reply came in response to a question on whether he wanted to list his Indian entity which is planning to establish two steel plants in the country.

“Why the Indian subsidiary' We want to list ArcelorMittal itself on the Indian stock exchanges,” Aditya Mittal said.

The Mittals are betting big on India: they plan to build two 12mt steel plants in Orissa and Jharkhand at an investment of $20 billion, making it the largest foreign direct investment in the country.

“If ArcelorMittal can be listed on Paris and New York, why not Mumbai'” Laxmi Mittal asked.

Media reports have suggested that the Mittals could offer shares as compensation to villagers for land acquisition in the two eastern states, fuelling speculation that the Indian subsidiary might eventually be listed.

But the Mittals want Indians to participate in the growth story of the parent company which plans to add another 20 million tonnes of steel capacity in other parts of the world at a cost of $28.5 billion. This is over and above the 24mt of steelmaking capacity it wants to create in India.

Current regulations of the Securities and Exchange Board of India do not allow a company incorporated abroad to list on the domestic bourses. They can, however, list their Indian subsidiaries.

The Securities Contract Regulation Act bars any such possibility.

Moreover, the partial convertibility of the rupee also acts as a hindrance to the repatriation of profits.

But the Mittals are hoping that the situation will change.

Technically, however, domestic investors can still buy the ArcelorMittal stock on the overseas bourses. The Reserve Bank of India recently permitted residents to invest up to $200,000 a year to purchase property, invest in stocks and carry out other capital account transactions. But this is a window that can be accessed by very few — and it doesn’t provide any hedge against exchange risks.

Overseas companies are allowed to float Indian depositary receipts which mirror the American depositary receipts and the global depositary receipts but there are few takers for this instrument.

Observers believe that a move to list the company is not unusual from a family which is proud of its Indian roots, testified by the fact that the Mittals still hold Indian passports.

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