'The worst thing to happen to the steel and mining sector was the boom,' Malay Mukherjee, Director of Zamin Group
Mar 18 2013, 14:30 | By Forbes India
Prince Mathews Thomas/Forbes India
After successful stints at India's leading steel firms, Malay Mukherjee speaks to Fobes India about the mistakes large companies tend to make
Q. After the boom years, the global mining and metal sectors are now going through a doom period. What went wrong?
Q. In early January, mining major Rio Tinto announced a record $14 billion write-down of some of its assets. How could experienced players make such mistakes?
I'm very surprised that many companies don't even do the basic due diligence. They have financial analysts in their mergers and acquisitions team. That has to change. If it is resources that you are buying then you need to have geologists in the team.
Entrepreneurs should understand that it is better to spend $10 million or $11 million in accessing the mine. If it is an operating mine then you have the balance sheet to look at. But if it's a greenfield [operation], then you should focus on due diligence. If money has to be lost, it is better lost while checking the resource rather than after buying it, which is a disaster.
Q. In the steel sector, going global was the favourite approach in the last five years. Was that a mistake?
Q. Will these setbacks change the way strategies are set?
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