REVENUE STRATEGY - BLUESCOPE STEEL

1. BlueScope Steel Ltd., Australia's largest steelmaker, agreed to buy four U.S. building material businesses for $730 million, betting commercial construction demand will defy a worsening homebuilding slump.
The acquisition will double BlueScope's sales in the U.S. commercial and industrial building market, adding 23 plants from California to North Carolina.
2. It will fund the acquisition with a 364-day loan.
3. It will study further acquisitions in the North American building products market.

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REVENUE STRATEGY - GERDAU

1. Gerdau SA, the largest Brazilian steelmaker, agreed to acquire Quanex Corp.'s vehicular metals unit which makes special bar quality, or SBQ, steel used to make axels and other critical parts of cars, trucks and other vehicles, to secure North American production of steel used in automobile parts and consolidate Gerdau as a global supplier and open new possibilities for growth in the global market.
2. It will pay $1.67 billion at $39.20 a share in cash for the unit after the spinoff of the company's building-products division exceeding the Nov. 16 closing price of $36.74 for Houston-based Quanex.
3. It will expand outside Brazil and target higher-value specialty products. It is expanding operations in the Americas, Asia and Europe to reduce costs and gain leverage with suppliers of scrap metal and energy.
4. It agreed to buy a 49 percent stake in the owner of Mexico's Aceros Corsa SA
5. Its Ameristeel unit in the U.S. acquired Midlothian, Texas-based Chaparrel Steel Co. for $4.22 billion.

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REVENUE STRATEGY - SUMITOMO FORESTRY

1. Sumitomo Forestry Co., a Japanese homebuilder and timber producer, plans to spend 360 billion yen ($2.9 billion) in 10 years to buy local real estate and foreign forests
2. It plans to reduce its reliance on home building (because Japan's population expected to shrink) by investing in foreign timber plantations and in Japan's real estate market as land prices rose for the first time in 16 years.
3. It will spend 160 billion yen overseas over a decade to secure timber supplies.
4. It will invest 50 billion yen over the next five years and 150 billion yen in the following five years to acquire land and develop residential properties and nursing homes in Japan.
5. It plans to buy 80 billion yen worth of assets in Oceania and North America over the next five years.
6. It plans to finance investments using cash generated each year and by borrowings from banks, as well as possibly through bond sales.

Real-time adjustments to changing demand patterns = more sustained revenue

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REVENUE STRATEGY - NIPPON MINING HOLDINGS

1. Nippon Mining Holdings Inc., Japan's biggest copper smelter and an oil refiner, may build a petrochemical plant in the country to produce the raw material used to make polyester for export to China. (China's economy expanded 11.1 percent in the first quarter of this year, spurring demand for plastics and polyester.)
2. It aims to increase investments in petrochemicals to offset slower gains in oil refining profits.
3. It plans to spend about 180 billion yen in the three years through March 2010, expanding chemicals and copper production.
4. It is conducting a feasibility study for a 100 billion yen production facility with an output about 150,000 metric tons of copper for the Caserones copper deposit in northern Chile
5. It will not bid at auctions for Peruvian copper deposits, citing several uncertainties

Revenue comes from growing markets and growing sectors, not from realms of uncertainties.

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REVENUE STRATEGY - TATA POWER

1. Tata Power Co., India's second-biggest utility, will borrow $950 million to fund its purchase of stakes in two Indonesian coal mines to secure supplies.
2. It has hired Calyon to arrange a $600 million loan secured by the coal mines and a $350 million loan guaranteed by Tata Power. Calyon is marketing the loans to other banks.

[Coal is the world's fastest-growing energy source as rising oil prices prompt users to switch fuels.
Indian power companies must look overseas to secure coal supply, as local supply is largely government-controlled.]

To sell more you need to ensure that you can buy more.

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REVENUE STRATEGY - ALCOA

1. Alcoa Inc. plans to make an unsolicited $26.9 billion cash and stock takeover offer for Alcan Inc. to create the world's largest aluminum producer as metal prices rally. That values Alcan at $73.25, or 20 percent more than its closing price on May 4. Including debt, the deal would be valued at $33 billion.
2. Alcoa and Alcan have been losing market share to producers in Russia and China as aluminum prices doubled the past four years.
3. Alcoa wants to increase focus on aluminum production, its most profitable business.
4. Alcan has more of its earnings and sales from primary metals and alumina and Alcoa does not, so putting the two together emphasizes a broader plate of products.
5. Alcoa and Alcan combination would create a company with 7.8 million tons of production capacity and $54 billion in sales.
6. Alcoa forecast $1 billion in savings within three years of acquiring Alcan.
7. Alcoa plans to resolve antitrust concerns by selling some assets. (Alcan was created from Alcoa-owned assets when the company was ordered by U.S. regulators in 1928 to break up its Canadian and foreign assets into a separate company.)

Inorganic growth - yes.
Cost synergies - yes (despite dual HQs at New York and Montreal?).
But organic growth?

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REVENUE STRATEGY - HINDALCO

1. Hindalco Industries Ltd., bought Novelis Inc. for $3.4 billion, to gain a fifth of the high-end aluminum market and access to U.S. customers including Coca-Cola Co. and General Motors Corp. The purchase wiped out $770 million of Hindalco's market value on concern the Mumbai-based group may take on too much debt.
2. It will borrow $3.1 billion, boosting the debt-equity ratio to 1.4 from 0.1 increasing annual funding cost by $248 million
3. It is tripling aluminum production to 1.5 million tons by 2012 to become one of the world's five largest producers
4. It is competing with Glencore International AG, the world's biggest commodities trader, Vedanta Resources Plc and six others for a 76.8 million euro ($104 million) smelter in Bosnia.
5. The acquisition by Hindalco gives Novelis access to a low-cost base to buy semi-finished aluminum and raises Hindalco’s revenue.

What makes for an industrial fairy tale?
Vertical and horizontal integrations that create:
Inorganic growth into great new markets
Organic growth in old and new markets
Cost synergies
Conviction to brave the wounds of debt

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REVENUE STRATEGY - CHALCO

Aluminum Corp. of China Ltd., China's biggest aluminum maker, known as Chalco, issued 1.24 billion yuan- denominated shares to buy out shareholders of Shandong Aluminium Industry Co. and Lanzhou Aluminum Co.

Biggest, biggester, biggestest?
But lesser companies that get absorbed into the big or biggest perhaps escape from the “hole in the middle” twilight zone of companies that attain neither the profitability from scale, learning and bargaining power of the large companies nor the profitability from niche playing of skills of the small companies.

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REVENUE STRATEGY – CIA VALE DO RIO DOCE

1. Cia. Vale do Rio Doce, the Rio de Janeiro-based world's largest producer of iron ore and nickel, increased this year's spending plan by more than $1 billion to speed expansion of metals production and make up for a weaker dollar.
2. More than half of the increase, or $575 million, will go to nickel and copper mines in Brazil and on the Pacific island of New Caledonia. (Vale's planned nickel investments include $938 million at the Goro mine in New Caledonia and $658 million for Onca Puma in Brazil.)
3. It will increase iron-ore investments by 14 percent to help meet strong demand. (Iron-ore investments of $1.87 billion include $417 million for its Itabaritos mine and $111 million for the Fazendao mine in Brazil's central highland state of Minas Gerais. Vale is also studying the possibility of building an iron-ore mine in Brazil's Carajas region)
4. It will spend $115 million expanding its Paragominas bauxite mine and $520 million at the Barcarena alumina refinery.
5. The company may build a 600-megawatt coal-fired power plant to serve the operations.
6. Vale is moving to increase output as metal prices soar. (Iron ore has more than doubled in two years and nickel reached a record high on April 24).
7. It plans to accelerate its efforts to expand
8. Construction at the Moatize coal mine in Mozambique is set to start this year after Vale negotiates a rail contract
9. Vale and Boasteel Group Corp. also may build a $4 billion steel-slab mill in Rio de Janeiro or Espirito Santo states

To sell more you need to produce more. What is a carbon footprint? What is resource depletion? What is sustainable development?

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REVENUE STRATEGY – JSW STEEL

JSW Steel Ltd., India's fourth- biggest steelmaker, plans to raise as much as $321 million in a combination of syndicated rupee and dollar loans to fund a new hot strip steel mill in the southern state of Karnataka with a capacity of two million tons per annum.
It has hired Citigroup Inc., Standard Chartered Plc, ABN Amro Holding NV and State Bank of India to borrow as much as $125 million overseas over six years. The loan may be increased by $50 million if there's sufficient demand.
It will also borrow six billion rupees ($146 million) from domestic banks.

Indian steel and aluminum producers need to increase production capacity as the world's second-fastest pace of economic growth stokes demand from construction and auto companies.

Whoever knows the calculus of over-investment is not welcome to the Dreamers’ Ball, for now.

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REVENUE STRATEGY – WUHAN STEEL

1. Wuhan Iron & Steel Co., China's third-biggest steelmaker by market value, and rivals in China are shifting production to higher grades, including cold-rolled sheets used in automobiles, as the nation has overcapacity in lower grades.
2. Wuhan Steel, China's only mill capable of making oriented silicon steel used in power transformers, will boost output by 40 percent to 280,000 tons this year after it started operations at a new plant in September. Cold-rolled silicon steel output would rise to 1.62 million tons by 2010
3. Cold-rolled sheet output may rise 76 percent to 3 million tons this year. Production of the sheet will rise to at least 20 million tons by 2010.

And whoever knows the calculus of over-investment is not welcome to the Dreamers’ Ball, for now.

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REVENUE STRATEGY - ESSAR GLOBAL

1) Essar Global agreed to buy Canada’s Algoma Steel Inc. for $1.63 billion to gain sheet mills that supply carmakers in North America including General Motors Corp. and Ford Motor Co.
2) The price is 48 percent more than the 20-day average ending Feb. 14 - seven times Algoma's earnings before interest, taxes, depreciation and amortization, or ebitda.
3) The rationale is to move closer to markets for higher-end products while continuing to tap cheaper raw materials such as iron ore in India.
4) The steel cycle is up so making acquisitions at this time becomes easier. Higher prices reduce the payback time for companies.
5) Essar hasn't said how it will finance the Algoma purchase. The Essar Group will get upto $5 billion from selling its stake in Vodafone Essar in the future but it is using it as a stepping stone to get loans to fund expansion of their other businesses

General Electric’s famous Profit Impact of Marketing Strategies suggested that a higher market share translated into higher rate of profit. But with a slowdown and cost cutting among US automakers will Essar’s increased market share increase its rate of profit?

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EXPENDITURE STRATEGY - XSTRATA

Swiss-based Xstrata, one of the world's largest coal miners, has sold its aluminium operations, under the cash deal, to New York-based Apollo Management for $1.15bn (£580.8m) after an in-depth review of the business it began after it took control of Canadian-based mining group Falconbridge in 2006.

When in doubt, stick to your knitting!

[Click here for full story at: BBCNEWS.COM]