Lakshmi Mittal, 54 year old transplanted Indian whose deal making and steelmaking in the past 12 months have made him FORTUNE's Europe Businessman of the Year for 2004. What makes Mittal so unusual in the steel business is his ability to combine managerial savvy with superb acquisitive instincts. Forget about luck: Mittal is the king of global steel because he spotted potential riches where his rival saw only dross.

Mittal's has taken over this $ 4.5 billion takeover of International Steel Group a US company which was controlled by investor Wilbur Ross. Mittal Steel, the company created by the deal will become the world's largest producer with shipments last year of 57 million tons, revenues of $ 31.5 billion, and Luxembourg-based Arcelor, the second largest steel firm, which produced 47.2 million tons in 2003. With 165,000 employees, Mittal Steel is also the world's most geographically diverse steel giant, stretching from central Asia through Africa and Europe to Central and North America.

Mittal's thoughts on management-by-imitation come down to three key tenets. First, there's no substitute for detailed, hand-on control. Second, Mittal believes that profit, not output, should be the benchmark for an industry traditionally run by volume junkies. Third, Mittal is convinced that the 21st-century steel industry, like the 20th-century auto industry, will consolidate around three or four super efficient heavy-weights, with his own group in the vanguard.

ISG delivers 23 million tons in additional capacity and a strategic position at the heart of America's huge market. Some observers think Mittal could finally have overreached by expanding just as the global steel industry hits a downturn, after several years of sharply rising prices. The slowing demand in China, which consumes nearly 30% of global steel shipments, combined with increasing Chinese production, will create a glut and drive down prices.

Mittal has always provided plenty of ammunition for his critics. His personal fortune is worth about $ 20 billion. In 1998, Mittal's eldest son, Aditya, was married in a four-day extravaganza in Calcutta that provoked a left-wing protest. Last year Mittal spent a reported $ 60 million on the nuptials of his daughter Vanisha, including a party at Versailles and a concert by Australian pop star Kylie Minogue.

His father, now retired, was an Indian steel tycoon who sent Mittal to Indonesia in 1976 to supervise the family firm's first overseas venture. Mittal used the Indonesian plant, subsequently sold to him by his father, as the platform to build his own company, which has been independent since 1995. Mittal has come under fire for making risky but subsequently lucrative acquisitions in Africa and Eastern Europe through his private company, rather than through Ispat International, his publicly listed arm. His ability to transform ailing, state-owned steel mills into money spinners is a result of an operating efficiency that his rivals struggle to match. In the first nine months of 2004, Mittal's Ispat and LNM assets had a combined pretax profit margin or 26%, compared with 15% at Nucor, one of the most efficient US producers and 9% at Arcelor.

His secret is knowing when to hunt down acquisition targets. "His timing was immaculate," says Peter Hickson an analyst at UBS in London. "He went out and bought what everybody thought was the dregs of the industry and proved everybody wrong." What Mittal acquired, in Kazakhstan, Romania, the Czech Republic, and Poland were overmanned and underinvested plants with second-rate technology. In some of those countries he has been branded a crude job slasher by unions for imposing inevitable workforce cuts. Much less attention has been paid by Mittal's detractors to his introduction of sound management principles, including strict safety rules, rigorous quality control, and an end to the murky barter deals with suppliers.

Mittal Steel will be the biggest supplier of flat rolled steel to US auto manufacturers, with about 40% of all sales. Mittal's move up the steel food chain makes sound business sense, but he is aware that he needs to build trust with America's powerful United Steel workers union in order to meld ISG successfully into his global operation. Mittal also has to prove that he can manage the world's biggest steel group through the coming downturn. But from his perspective, it is smaller competitors that face a tougher challenge. What Mittal won't do is stop hunting for acquisition targets.

The biggest remaining prize for Mittal is China. He knows from numerous visits how jealously central and local government officials protect the nation's state-run steel sector. His only reward so far is a minority stake in a steel plant in northeastern Liaoning province. In January, Mittal made another minority investment in a steel firm in central China. But as far as Mittal is concerned, such exploratory moves fall well control of a major Chinese player. The country appears to baffle him, but if anyone has the stamina and patience to pry open China's steel market, it's Mittal.

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