##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 FORM 20-F
 (Mark One)
 o
    
    Registration statement pursuant to section 12(b) or 12(g) of the Securities Exchange Act of 1934
 or
 þ
    
    Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended March 31, 2008
 or
 o
    
    Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 or
 o
    
    Shell company report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 Date of event requiring this shell company report
 Commission file number 001-33175
 Sterlite Industries (India) Limited
 (Exact Name of Registrant as specified in its charter)
 Vedanta, 75 Nehru RoadVile Parle (East)Mumbai, Maharashtra 400-099Republic of India
    
    India(Jurisdiction of incorporation or organization)
    
    (Address of principal executive offices)
  American Depositary Shares, each represented byone equity share, par value Rs. 2 per equity share
    
    New York Stock Exchange(Title of Class)
    
    (Name of Exchange on which registered)
 None
 None
    o þ
  o þ
  þ o
  o o þ
  o þ
  o þ
   o o




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##### 



TABLE OF CONTENTS
 PAGEPART IITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
    
    
    2ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
    
    
    2ITEM 3. KEY INFORMATION
    
    
    2ITEM 4. INFORMATION ON THE COMPANY
    
    
    25ITEM 4A. UNRESOLVED STAFF COMMENTS
    
    
    106ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    
    
    106ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
    
    
    136ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
    
    
    144ITEM 8. FINANCIAL INFORMATION
    
    
    150ITEM 9. THE OFFER AND LISTING
    
    
    155ITEM 10. ADDITIONAL INFORMATION
    
    
    156ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    192ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
    
    
    194PART IIITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
    
    
    194ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
    
    
    194ITEM 15. CONTROLS AND PROCEDURES
    
    
    195ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
    
    
    196ITEM 16B. CODE OF ETHICS
    
    
    196ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    196ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
    
    
    196ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
    
    
    197PART IIIITEM 17. FINANCIAL STATEMENTS
    
    
    197ITEM 18. FINANCIAL STATEMENTS
    
    
    197ITEM 19. EXHIBITS
    
    
    197SIGNATURES
    
    
    201INDEX TO FINANCIAL STATEMENTS
    
    
    F-1EX-1.2 Memorandum of Association of Sterlite Industries (India) Limited, as amended.EX-4.3 Deed of Adherence dated December 11, 2007 among Vedanta Resources plc, Volcan Investments Limited, Onclave PTC Limited and Anil Agarwal.EX-4.28 Letter issued by Sterlite Industries (India) Limited to Kuldip Kumar Kaura dated March 27, 2008.EX-4.38 Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated August 29, 2007.EX-4.39 Addendum dated March 17, 2008 to the Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated August 29, 2007.EX-4.40 Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated December 23, 2007.EX-4.41 Addendum dated March 17, 2008 to the Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated December 23, 2007.EX-4.42 Purchase and Sale Agreement between Sterlite Industries (India) Limited and ASARCO LLC dated May 30, 2008.EX-4.43 Rs. 10,000 million Loan Agreement between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated February 4, 2008.EX-8.1 List of subsidiaries of Sterlite Industries (India) Limited.EX-12.1 Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.EX-12.2 Certification by the Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.Ex-13.1 Certification by the Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.Ex-13.2 Certification by the Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  i




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CONVENTIONS USED IN THIS ANNUAL REPORT
      SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    a decline or volatility in the prices of or demand for copper, zinc or aluminum;
    
    events that could cause a decrease in our production of copper, zinc or aluminum;
 1




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##### Table of Contents




    
    unavailability or increased costs of raw materials for our products;
    
    our actual economically recoverable copper ore, lead-zinc ore or bauxite reserves being
lower than we have estimated;
    
    our ability to expand our business, effectively manage our growth or implement our
strategy, including our planned entry into the commercial power business;
    
    our ability to retain our senior management team and hire and retain sufficiently skilled
labor to support our operations;
    
    regulatory, legislative and judicial developments and future regulatory actions and
conditions in our operating areas;
    
    increasing competition in the copper, zinc or aluminum industry;
    
    political or economic instability in India or around the region;
    
    worldwide economic and business conditions;
    
    our ability to successfully consummate strategic acquisitions;
    
    the outcome of outstanding litigation in which we are involved;
    
    our ability to maintain good relations with our trade unions and avoid strikes and
lock-outs;
    
    any actions of our controlling shareholder, Vedanta;
    
    our business future capital requirements and the availability of financing on favorable
terms;
    
    the continuation of tax holidays, exemptions and deferred tax schemes we enjoy;
    
    changes in tariffs, royalties, customs duties and government assistance; and
    
    terrorist attacks and other acts of violence, natural disasters and other environmental
conditions and outbreaks of infectious diseases and other public health concerns in India,
Asia and elsewhere.
  
 PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 A. Selected Consolidated Financial Data
  2




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##### Table of Contents



Year Ended March 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008(in millions)Consolidated Statement of Operations
Data:Net sales
    
    Rs.
    53,476
    
    
    Rs.
    66,643
    
    
    Rs.
    122,791
    
    
    Rs.
    241,246
    
    
    Rs.
    246,414
    
    
    $
    6,157.2Other operating revenues
    
    
    679
    
    
    
    628
    
    
    
    1,334
    
    
    
    2,251
    
    
    
    2,616
    
    
    
    65.4Total revenue
    
    
    54,155
    
    
    
    67,271
    
    
    
    124,125
    
    
    
    243,497
    
    
    
    249,030
    
    
    
    6,222.6Cost of sales
    
    
    (39,194
    )
    
    
    (50,615
    )
    
    
    (86,981
    )
    
    
    (144,798
    )
    
    
    (164,869
    )
    
    
    (4,119.6
    )Selling and distribution expenses
    
    
    (1,392
    )
    
    
    (1,428
    )
    
    
    (2,117
    )
    
    
    (3,444
    )
    
    
    (3,808
    )
    
    
    (95.2
    )General and administration expenses
    
    
    (2,457
    )
    
    
    (2,370
    )
    
    
    (2,596
    )
    
    
    (2,633
    )
    
    
    (4,572
    )
    
    
    (114.2
    )Other income/(expenses):Gain on sale of real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    986
    
    
    
    
    
    
    
    Impairment of assets
    
    
    
    
    
    
    (1,276
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Voluntary retirement scheme expenses
    
    
    (611
    )
    
    
    (186
    )
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    Guarantees, impairment of
investments and loans
    
    
    
    
    
    
    
    
    
    
    (1,300
    )
    
    
    
    
    
    
    (628
    )
    
    
    (15.7
    )Operating income
    
    
    10,501
    
    
    
    11,396
    
    
    
    31,131
    
    
    
    93,511
    
    
    
    75,153
    
    
    
    1,877.9Interest and dividend income
    
    
    1,515
    
    
    
    1,780
    
    
    
    1,873
    
    
    
    2,072
    
    
    
    6,548
    
    
    
    163.6Interest expense
    
    
    (1,969
    )
    
    
    (1,962
    )
    
    
    (3,238
    )
    
    
    (4,329
    )
    
    
    (3,386
    )
    
    
    (84.6
    )Net realized and unrealized
investment gains
    
    
    94
    
    
    
    399
    
    
    
    541
    
    
    
    2,280
    
    
    
    4,511
    
    
    
    112.8Income before income taxes, minority
interests and equity in net
(loss)/income of associate
    
    
    10,141
    
    
    
    11,613
    
    
    
    30,307
    
    
    
    93,534
    
    
    
    82,826
    
    
    
    2,069.7Income taxes:Current
    
    
    (2,624
    )
    
    
    (2,674
    )
    
    
    (7,894
    )
    
    
    (23,192
    )
    
    
    (18,410
    )
    
    
    (460.0
    )Deferred
    
    
    (350
    )
    
    
    (831
    )
    
    
    (1,111
    )
    
    
    (1,967
    )
    
    
    (3,214
    )
    
    
    (80.3
    )Income after income taxes, before
minority interests and equity in net
(loss)/income of associate
    
    
    7,167
    
    
    
    8,108
    
    
    
    21,302
    
    
    
    68,375
    
    
    
    61,202
    
    
    
    1,529.4Minority interests
    
    
    (2,349
    )
    
    
    (2,764
    )
    
    
    (6,073
    )
    
    
    (21,053
    )
    
    
    (19,093
    )
    
    
    (477.1
    )Equity in net (loss)/income of
associate, net of taxes
    
    
    
    
    
    
    
    
    
    
    (99
    )
    
    
    24
    
    
    
    491
    
    
    
    12.3Net income from continuing operations
    
    
    4,818
    
    
    
    5,344
    
    
    
    15,130
    
    
    
    47,346
    
    
    
    42,600
    
    
    
    1,064.6Discontinued operations:Income from divested business, net
of tax
    
    
    203
    
    
    
    222
    
    
    
    369
    
    
    
    86
    
    
    
    
    
    
    
    Net Income
    
    Rs.
    5,021
    
    
    Rs.
    5,566
    
    
    Rs.
    15,499
    
    
    Rs.
    47,432
    
    
    Rs.
    42,600
    
    
    $
    1,064.6
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Year Ended March 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008Basic earnings per share:(1)Income from continuing operations
    
    Rs.
    13.42
    
    
    Rs.
    11.74
    
    
    Rs.
    27.35
    
    
    Rs.
    84.78
    
    
    Rs.
    63.16
    
    
    $
    1.58Income from discontinued operations
    
    
    0.57
    
    
    
    0.48
    
    
    
    0.67
    
    
    
    0.15
    
    
    
    
    
    
    
    Basic earnings per share
    
    Rs.
    13.99
    
    
    Rs.
    12.22
    
    
    Rs.
    28.02
    
    
    Rs.
    84.93
    
    
    Rs.
    63.16
    
    
    $
    1.58Diluted earnings per share:(1)Income from continuing operations
    
    Rs.
    13.13
    
    
    Rs.
    11.57
    
    
    Rs.
    27.35
    
    
    Rs.
    84.78
    
    
    Rs.
    63.16
    
    
    $
    1.58Income from discontinued operations
    
    
    0.55
    
    
    
    0.48
    
    
    
    0.67
    
    
    
    0.15
    
    
    
    
    
    
    
    Diluted earnings per share
    
    Rs.
    13.68
    
    
    Rs.
    12.05
    
    
    Rs.
    28.02
    
    
    Rs.
    84.93
    
    
    Rs.
    63.16
    
    
    $
    1.58Weighted average number of equity shares
used in computing earnings per share:(1)Basic
    
    
    359,007,797
    
    
    
    455,343,743
    
    
    
    553,216,634
    
    
    
    558,494,411
    
    
    
    674,478,018
    
    
    
    674,478,018Diluted
    
    
    367,697,507
    
    
    
    465,108,143
    
    
    
    553,216,634
    
    
    
    558,494,411
    
    
    
    674,478,018
    
    
    
    674,478,018Dividend declared per share(2)
    
    Rs.
    3.00
    
    
    Rs.
    3.00
    
    
    Rs.
    1.25
    
    
    Rs.
    4.00
    
    
    Rs.
    4.00
    
    
    $
    0.10
 
 Notes:(1)
    
    Earnings per share and weighted average number of equity shares used in computing earnings
per share have been adjusted for the five-for-two stock split and one-for-one bonus issue
effective May 12, 2006.(2)
    
    The dividend for fiscal 2006 was recommended by our board of directors on May 30, 2006 and
approved by our shareholders at the general meeting held on September 20, 2006. The dividend
paid for fiscal 2006 was paid after the five-for-two stock split and one-for-one bonus issue
effective May 12, 2006. The interim dividend for fiscal 2007 was declared by our board of
directors on November 15, 2006 and paid on December 11, 2006 to holders of record of our
equity shares on December 7, 2006. On May 3, 2007, our board of directors recommended that the
interim dividend should be considered as the final dividend for fiscal 2007. On April 26,
2008, our board of directors recommended a final dividend of Rs. 4.00 ($0.10) per equity share
for fiscal 2008, subject to shareholders approval at the next general
meeting to be held before
September 2008. As of March 31,2005
    
    2006
    
    2007
    
    2008
    
    2008(in millions)Consolidated Balance Sheet Data:Cash and cash equivalents
    
    Rs.
    5,909
    
    
    Rs.
    9,258
    
    
    Rs.
    9,436
    
    
    Rs.
    12,363
    
    
    $
    308.9Total assets
    
    
    133,197
    
    
    
    167,539
    
    
    
    225,881
    
    
    
    376,179
    
    
    
    9,399.7Long-term debt, net of current portion
    
    
    28,794
    
    
    
    30,237
    
    
    
    13,128
    
    
    
    9,949
    
    
    
    248.6Short term and current portion of long-term debt
    
    
    8,663
    
    
    
    4,390
    
    
    
    8,353
    
    
    
    10,190
    
    
    
    254.6Total shareholders equity
    
    
    37,388
    
    
    
    53,498
    
    
    
    96,960
    
    
    
    221,123
    
    
    
    5,525.3
 Year Ended March 31,2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2008(in millions)Cash Flow Data:Net cash provided by (used in):Operating activities
    
    Rs.
    6,205
    
    
    Rs.
    6,075
    
    
    Rs.
    19,595
    
    
    Rs.
    40,418
    
    
    Rs.
    (17,594
    )
    
    $
    (439.6
    )Investing activities
    
    
    (18,356
    )
    
    
    (21,391
    )
    
    
    (16,676
    )
    
    
    (24,006
    )
    
    
    (56,404
    )
    
    
    (1,409.4
    )Financing activities
    
    
    13,084
    
    
    
    17,321
    
    
    
    375
    
    
    
    (15,910
    )
    
    
    76,582
    
    
    
    1,913.6
 4




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Year Ended March 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008(in millions)Other Consolidated Financial Data:Net sales:Copper
    
    Rs.
    27,046
    
    
    Rs.
    34,508
    
    
    Rs.
    67,921
    
    
    Rs.
    115,192
    
    
    Rs.
    126,276
    
    
    $
    3,155.3Zinc
    
    
    18,213
    
    
    
    21,967
    
    
    
    38,573
    
    
    
    85,963
    
    
    
    78,222
    
    
    
    1,954.6Aluminum
    
    
    8,217
    
    
    
    10,168
    
    
    
    16,297
    
    
    
    40,091
    
    
    
    41,596
    
    
    
    1,039.4Corporate and others
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320
    
    
    
    7.9Total
    
    Rs.
    53,476
    
    
    Rs.
    66,643
    
    
    Rs.
    122,791
    
    
    Rs.
    241,246
    
    
    Rs.
    246,414
    
    
    $
    6,157.2Operating income:Copper
    
    Rs.
    2,853
    
    
    Rs.
    2,440
    
    
    Rs.
    7,659
    
    
    Rs.
    17,235
    
    
    Rs.
    11,037
    
    
    $
    275.8Zinc
    
    
    7,097
    
    
    
    8,309
    
    
    
    21,287
    
    
    
    62,908
    
    
    
    53,192
    
    
    
    1,329.1Aluminum
    
    
    591
    
    
    
    1,824
    
    
    
    3,496
    
    
    
    13,371
    
    
    
    11,581
    
    
    
    289.4Corporate and others
    
    
    (40
    )
    
    
    (1,177
    )
    
    
    (1,311
    )
    
    
    (3
    )
    
    
    (657
    )
    
    
    (16.4
    )Total
    
    Rs.
    10,501
    
    
    Rs.
    11,396
    
    
    Rs.
    31,131
    
    
    Rs.
    93,511
    
    
    Rs.
    75,153
    
    
    $
    1,877.9Segment profit(1):Copper
    
    Rs.
    4,114
    
    
    Rs.
    3,899
    
    
    Rs.
    8,982
    
    
    Rs.
    17,689
    
    
    Rs.
    12,650
    
    
    $
    316.1Zinc
    
    
    8,237
    
    
    
    9,785
    
    
    
    23,216
    
    
    
    65,129
    
    
    
    55,563
    
    
    
    1,388.4Aluminum
    
    
    1,818
    
    
    
    2,504
    
    
    
    4,752
    
    
    
    15,765
    
    
    
    14,244
    
    
    
    355.9Corporate and others
    
    
    (25
    )
    
    
    (100
    )
    
    
    (8
    )
    
    
    (2
    )
    
    
    384
    
    
    
    9.6Total
    
    Rs.
    14,144
    
    
    Rs.
    16,088
    
    
    Rs.
    36,942
    
    
    Rs.
    98,581
    
    
    Rs.
    82,841
    
    
    $
    2,070.0
 
 Note:(1)
    
    Segment profit is calculated by adjusting operating income for depreciation, depletion and
amortization, voluntary retirement scheme expenses, impairment of assets and guarantees,
impairment of investments and loans and gain on sale of real estate, as applicable. Segment
profit is not a recognized measurement under US GAAP. Our segment profit may not be comparable
to similarly titled measures reported by other companies due to potential inconsistencies in
the method of calculation. We have included our segment profit because we believe it is an
indicative measure of our operating performance and is used by investors and analysts to
evaluate companies in our industry. Our segment profit should be considered in addition to,
and not as a substitute for, other measures of financial performance and liquidity reported in
accordance with US GAAP. We believe that the inclusion of supplementary adjustments applied in
our presentation of segment profit are appropriate because we believe it is a more indicative
measure of our baseline performance as it excludes certain charges that our management
considers to be outside of our core operating results. In addition, our segment profit is
among the primary indicators that our management uses as a basis for planning and forecasting
of future periods. The following table reconciles operating income to segment profit for the
periods presented: Year Ended March 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008(in millions)Copper:Operating income
    
    Rs.
    2,853
    
    
    Rs.
    2,440
    
    
    Rs.
    7,659
    
    
    Rs.
    17,235
    
    
    Rs.
    11,037
    
    
    $
    275.8Plus:Depreciation, depletion and amortization
    
    
    1,261
    
    
    
    1,239
    
    
    
    1,323
    
    
    
    1,440
    
    
    
    1,613
    
    
    
    40.3Gain on sale of real estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (986
    )
    
    
    
    
    
    
    Impairment of assets
    
    
    
    
    
    
    220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Segment profit
    
    Rs.
    4,114
    
    
    Rs.
    3,899
    
    
    Rs.
    8,982
    
    
    Rs.
    17,689
    
    
    Rs.
    12,650
    
    
    $
    316.1Zinc:Operating income
    
    Rs.
    7,097
    
    
    Rs.
    8,309
    
    
    Rs.
    21,287
    
    
    Rs.
    62,908
    
    
    Rs.
    53,192
    
    
    $
    1,329.1Plus:Depreciation, depletion and amortization
    
    
    1,112
    
    
    
    1,290
    
    
    
    1,929
    
    
    
    2,124
    
    
    
    2,371
    
    
    
    59.3Voluntary retirement scheme expenses
    
    
    28
    
    
    
    186
    
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    Segment profit
    
    Rs.
    8,237
    
    
    Rs.
    9,785
    
    
    Rs.
    23,216
    
    
    Rs.
    65,129
    
    
    Rs.
    55,563
    
    
    $
    1,388.4Aluminum:Operating income
    
    Rs.
    591
    
    
    Rs.
    1,824
    
    
    Rs.
    3,496
    
    
    Rs.
    13,371
    
    
    Rs.
    11,581
    
    
    $
    289.4
 5




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##### Table of Contents



Year Ended March 31,2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2008(in millions)Plus:Depreciation, depletion and amortization
    
    
    644
    
    
    
    680
    
    
    
    1,256
    
    
    
    2,394
    
    
    
    2,663
    
    
    
    66.5Voluntary retirement scheme expenses
    
    
    583
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Segment profit
    
    Rs.
    1,818
    
    
    Rs.
    2,504
    
    
    Rs.
    4,752
    
    
    Rs.
    15,765
    
    
    Rs.
    14,244
    
    
    $
    355.9Corporate and others:Operating income
    
    Rs.
    (40
    )
    
    Rs.
    (1,177
    )
    
    Rs.
    (1,311
    )
    
    Rs.
    (3
    )
    
    Rs.
    (657
    )
    
    $
    (16.4
    )Plus:Depreciation, depletion and amortization
    
    
    15
    
    
    
    21
    
    
    
    3
    
    
    
    1
    
    
    
    413
    
    
    
    10.3Impairment of assets
    
    
    
    
    
    
    1,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Guarantees, impairment of investments
and loan
    
    
    
    
    
    
    
    
    
    
    1,300
    
    
    
    
    
    
    
    628
    
    
    
    15.7Segment profit
    
    Rs.
    (25
    )
    
    Rs.
    (100
    )
    
    Rs.
    (8
    )
    
    Rs.
    (2
    )
    
    Rs.
    384
    
    
    $
    9.6
 Year Ended March 31,2006
    
    2007
    
    2008(in US dollars per ton, except as indicated)Market and Cost Data:London Metal Exchange (LME) price(1):Copper
    
    $
    4,099
    
    
    $
    6,984
    
    
    $
    7,588Zinc
    
    
    1,614
    
    
    
    3,581
    
    
    
    2,992Aluminum
    
    
    2,028
    
    
    
    2,663
    
    
    
    2,620Treatment charge and refining charge (TcRc)(2):Copper
    
    23.1
    ¢/lb
    
    31.1
    ¢/lb
    
    15.7
    ¢/lbCost of production(3):Copper smelting and refining(4)
    
    6.1
    ¢/lb
    
    6.1
    ¢/lb
    
    1.8
    ¢/lbZinc(5)
    
    $
    691
    
    
    $
    862
    
    
    $
    884Aluminum(6)
    
    
    1,497
    
    
    
    1,510
    
    
    
    1,823
 
 Notes:(1)
    
    Calculated as the daily average cash seller settlement price for the period.(2)
    
    Represents our average realized TcRc for the period.(3)
    
    Cost of production is not a recognized measure under US GAAP. We have included cost of
production as a measure of effectiveness because we believe it is an indicative measure of our
operating performance and is used by investors and analysts to evaluate companies in our
industry. Our computation of cost of production should be considered in addition to, and not
as a substitute for, other measures of financial performance and liquidity reported in
accordance with US GAAP. We believe that the cost of production measure is a meaningful
measure of our production cost efficiency as it is more indicative of our production or
conversion costs and is a measure that our management considers to be controllable. Cost of
production is a measure intended for monitoring the operating performance of our operations.
This measure is presented by other non-ferrous metal companies, though our measure may not be
comparable to similarly titled measures reported by other companies. Cost of production as
reported for our metal products consists of direct cash cost of production and excludes
non-cash cost and indirect cost (such as depreciation and interest payments), and are offset
for any amounts we receive upon the sale of the by-products from the refining or smelting
process. In the case of copper, where cost of production relates only to our custom smelting
and refining operations, cost of production is the cost of converting copper concentrate into
copper cathodes. In the case of zinc, where we have integrated operations from production of
zinc ore to zinc metal, cost of production is the cost of extracting ore and conversion of the
ore into zinc metal. In the case of aluminum, where cost of production relates only to BALCOs
old Korba smelter, which has integrated operations from production of bauxite to aluminum
metal, cost of production is the cost of producing bauxite and conversion of bauxite into
aluminum metal. Cost of production is divided by the daily average exchange rate for the year
to calculate US dollar cost of production per lb or per ton of metal as reported. The
following table reconciles segment cost, calculated as segment sales less segment profit, to
cost of production for the periods presented: Year Ended March 31,2006
    
    
    2007
    
    
    2008(in millions, except Production output and Cost of production)Copper:Segment sales
    
    Rs.
    67,921
    
    
    Rs.
    115,192
    
    
    Rs.
    126,276
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Year Ended March 31,2006
    
    
    2007
    
    
    2008(in millions, except Production output and Cost of production)Less:Segment profit
    
    
    (8,982
    )
    
    
    (17,689
    )
    
    
    (12,650
    )Segment cost
    
    
    58,939
    
    
    
    97,503
    
    
    
    113,626Less:Purchased concentrate/rock
    
    
    (55,132
    )
    
    
    (91,489
    )
    
    
    (107,422
    )By-product/free copper net sales
    
    
    (1,520
    )
    
    
    (1,935
    )
    
    
    (4,283
    )Cost for downstream products
    
    
    (722
    )
    
    
    (938
    )
    
    
    (1,197
    )Others, net
    
    
    62
    
    
    
    (1,236
    )
    
    
    (195
    )Total expenses
    
    Rs.
    1,627
    
    
    Rs.
    1,905
    
    
    Rs.
    529Production output (in tons)
    
    
    273,048
    
    
    
    312,720
    
    
    
    339,294Cost of production(a)
    
    6.1
    ¢/lb
    
    6.1
    ¢/lb
    
    1.8
    ¢/lbZinc:Segment sales
    
    Rs.
    38,573
    
    
    Rs.
    85,963
    
    
    Rs.
    78,222Less:Segment profit
    
    
    (23,216
    )
    
    
    (65,129
    )
    
    
    (55,563
    )Segment cost
    
    
    15,357
    
    
    
    20,834
    
    
    
    22,659Less:Purchased metal
    
    
    (539
    )
    
    
    
    
    
    
    Cost of tolling including raw material cost
    
    
    (1,502
    )
    
    
    (14
    )
    
    
    Cost of intermediary product sold
    
    
    (1,188
    )
    
    
    (2,487
    )
    
    
    (2,944
    )By-product net sales
    
    
    (1,253
    )
    
    
    (1,223
    )
    
    
    (2,637
    )Cost of lead metal sold
    
    
    (690
    )
    
    
    (1,463
    )
    
    
    (1,787
    )Others, net
    
    
    (1,536
    )
    
    
    (2,050
    )
    
    
    (118
    )Total expenses
    
    Rs.
    8,649
    
    
    Rs.
    13,598
    
    
    Rs.
    15,173Production output (in tons)
    
    
    283,698
    
    
    
    348,316
    
    
    
    426,323Cost of production (per ton)(a)
    
    $
    691
    
    
    $
    862
    
    
    $
    884Aluminum:Segment sales
    
    Rs.
    17,721
    
    
    Rs.
    41,002
    
    
    Rs.
    41,695Less:Segment profit
    
    
    (4,752
    )
    
    
    (15,765
    )
    
    
    (14,244
    )Segment cost
    
    
    12,969
    
    
    
    25,237
    
    
    
    27,451Less:Cost of intermediary product sold
    
    
    (154
    )
    
    
    (177
    )
    
    
    (118
    )By-product net sales
    
    
    (408
    )
    
    
    (312
    )
    
    
    (367
    )Cost for downstream products
    
    
    (822
    )
    
    
    (983
    )
    
    
    (1,236
    )Cost for new Korba plant
    
    
    (4,773
    )
    
    
    (16,371
    )
    
    
    (17,292
    )Others, net
    
    
    186
    
    
    
    10
    
    
    
    (251
    )Total expenses
    
    Rs.
    6,998
    
    
    Rs.
    7,403
    
    
    Rs.
    8,187Production output (hot metal) (in tons)
    
    
    105,593
    
    
    
    108,244
    
    
    
    111,594Cost of production (per ton)(a)
    
    $
    1,497
    
    
    $
    1,510
    
    
    $
    1,823
 
 (a)
    
    Exchange rates used in calculating cost of production were based on the daily Reserve
Bank of India, or RBI, reference rates for the years ended March 31, 2006, 2007 and 2008
of Rs. 44.28 per $1.00, Rs. 45.29 per $1.00 and Rs. 40.24 per $1.00, respectively. (4)
    
    Cost of copper smelting and refining includes cost of freight of copper anodes from Tuticorin
to Silvassa and excludes the benefit of the phosphoric acid plant. Revenues earned from the
sale of sulphuric acid and copper metal recovered in excess of paid copper metal are deducted
from the cash costs. The total cash costs are divided by the total number of pounds of copper
metal produced to calculate the cost of production per pound of copper metal produced.
 (5)
    
    Cost of production of zinc consists of total direct cost of producing zinc from the mines and
smelters. Revenue earned from the sale of sulphuric acid is deducted from the total costs to
calculate the total cash costs to HZL of producing zinc metal. Royalties paid are included in
the cost of production of zinc. The total cash cost is divided by the total number of tons of
zinc metal produced to calculate the cost of production per ton of zinc metal produced.
 (6)
    
    Cost of production of aluminum as presented, including in Note (3), above relates to cost of production for BALCOs old
Korba smelter and excludes cost of production for BALCOs new Korba smelter. Cost of
production of aluminum consists of total direct cash costs. Revenue earned from the sale of
by-products, such as vanadium, reduces the total cash costs. The total cost is divided by the
total quantity of hot metal produced at the old Korba smelter to calculate the cost of
production per ton of aluminum hot metal produced. Hot metal production output is used instead
of the cast metal production output disclosed elsewhere in this annual report in calculating
cost of production as the hot metal production, which excludes the value-added cost of
casting, is the measure generally used in the aluminum metal industry for calculating cost of
production.Cost of production of aluminum for BALCO including all of its smelters, calculated by dividing
the total cost by the total quantity of hot metal produced at all of
BALCOs smelters, was $1,691 per ton, $1,626 per ton and $1,720 per ton for the years ended March 31, 2006, 2007 and
2008.(a)
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(a)
    
    Cost of production is not a recognized measure under US GAAP. See Note (3) above for
further discussion regarding cost of production. Cost of production of aluminum for BALCO
including all of its smelters includes the cost of producing bauxite and conversion of
bauxite into aluminum metal, for the portion of BALCOs operations that are integrated from
production of bauxite to aluminum metal, and the cost of conversion of alumina into
aluminum metal, for the portion of BALCOs operations where alumina is sourced from third
parties. The following table reconciles segment cost, calculated as segment sales less
segment profit, to cost of production of aluminum for BALCO, including all of its smelters,
for the periods presented and using the exchange rates set forth in
Note (3)(a) above:
 Year Ended March 31,2006
    
    
    2007
    
    
    2008(in millions, except Production output and Cost of production)Aluminum:Segment sales
    
    Rs.
    17,721
    
    
    Rs.
    41,002
    
    
    Rs.
    41,695Less:Segment profit
    
    
    (4,752
    )
    
    
    (15,765
    )
    
    
    (14,244
    )Segment cost
    
    
    12,969
    
    
    
    25,237
    
    
    
    27,451Less:Cost of intermediary product sold
    
    
    (154
    )
    
    
    (177
    )
    
    
    (118
    )By-product net sales
    
    
    (408
    )
    
    
    (312
    )
    
    
    (367
    )Cost for downstream products
    
    
    (997
    )
    
    
    (1,323
    )
    
    
    (1,709
    )Others, net
    
    
    772
    
    
    
    (322
    )
    
    
    (181
    )Total expenses
    
    Rs.
    12,182
    
    
    Rs.
    23,103
    
    
    Rs.
    25,076Production output (hot metal) (in tons)
    
    
    162,728
    
    
    
    313,817
    
    
    
    362,296Cost of production (per ton)
    
    $
    1,691
    
    
    $
    1,626
    
    
    $
    1,720
 B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
  D. Risk Factors
 This annual report contains forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from those anticipated in these forward-looking
statements as a result of a number of factors, including those described in the following risk
factors and elsewhere in this annual report. If any of the following risks actually occur, our
business, financial condition and results of operations could suffer and the trading price of our
ADSs could decline.
 Risks Relating to Our Business
 Our copper and aluminum businesses depend upon third party suppliers for a substantial portion of
their copper concentrate and alumina requirements, and their profitability and operating margins
depend upon the market prices for those raw materials.
   8




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Our operations are subject to operating risks that could result in decreased production, increased
cost of production and increased cost of or disruptions in transportation, which could adversely
affect our revenue, results of operations and financial condition.
  
    
    Disruptions in mining and production due to equipment failures, unexpected maintenance
problems and other interruptions.All of our operations are vulnerable to disruptions. Our
aluminum smelters are particularly vulnerable to disruptions in the supply of power which,
even if lasting only a few hours, can cause the contents of the furnaces or cells to
solidify, which would necessitate a plant closure and a shutdown in operations for a
significant period, as well as involve expensive repairs. For example, power interruptions
caused BALCO to partially suspend operations at its new 245,000 tons per annum, or tpa,
aluminum smelter at Korba in May 2006, and as a result of this interruption the smelter did
not become fully operational again until November 2006. The loss from this interruption
includes lost production, repair costs and other expenses.
    
    Availability of raw materials for energy requirements.Any shortage of or increase in
the prices of any of the raw materials needed to satisfy our businesses energy requirements
may interrupt our operations or increase our cost of production. We are particularly
dependent on coal, which is used in many of our captive power plants. Our aluminum business,
which has high energy consumption due to the energy-intensive nature of aluminum smelting,
is significantly dependent on receiving allocations from Coal India Limited, or Coal India,
the government-owned coal monopoly in India and its subsidiaries. A shortage of coal from
April 2005 led Coal India to reduce the amount of coal supplied to all of its non-utility
customers, including BALCO. As a result, BALCO was forced to utilise higher-priced imported
coal, which resulted in higher power generation costs.
    
    Availability of water.The mining operations of our zinc and aluminum businesses and our
captive power plants depend upon the supply of a significant amount of water. There is no
assurance that the water required will continue to be available in sufficient quantities or
that the cost of water will not increase. For example, BALCO is currently in a dispute with
the National Thermal Power Corporation Limited, or NTPC, regarding the right of way for a
water pipeline that provides one of BALCOs captive power plants access to a body of water
adjacent to NTPC premises. Arbitration proceedings are scheduled to commence on July 25,
2008 to resolve the dispute. An unfavorable resolution to this dispute may significantly
increase BALCOs costs of obtaining water for that power plant.
    
    Disruptions to or increased costs of transport services.We depend upon seaborne
freight, rail, trucking, overland conveyor and other systems to deliver bauxite, alumina,
zinc concentrate, copper concentrate, coal and other supplies to our operations and to
deliver our products to customers. Any disruption to or increase in the cost of these
transport services, including as a result of interruptions that decrease the availability of
these transport services or as a result of increases in demand for transport services from
our competitors or from other businesses, or any failure of these transport services to be
expanded in a timely manner to support an expansion of our operations, could have a material
adverse effect on our operations and operating results.
    
    Accidents at mines, smelters, refineries, cargo terminals and related facilities.Any
accidents or explosions causing personal injury, property damage or environmental damage at
or to our mines, smelters, refineries, cargo terminals and related facilities may result in
expensive litigation, imposition of penalties and sanctions or suspension or revocation of
permits and licenses. Risks associated with our open-pit mining operations include flooding
of the open-pit, collapses of the open-pit wall and operation of large open-pit mining and
rock transportation equipment. Risks associated with our underground mining
 9




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operations include underground fires and explosions (including those caused by flammable gas),
cave-ins or ground falls, discharges of gases or toxic chemicals, flooding, sinkhole formation
and ground subsidence and underground drilling, blasting and removal and processing of ore.
Injuries to and deaths of workers at our mines and facilities have occurred in the past and
may occur in the future. We are required by law to compensate employees for work-related
injuries. Failure to make adequate provisions for our workers compensation liabilities could
harm our future operating results.
    
    Strikes and industrial actions or disputes.The majority of the total workforce of our
consolidated group of companies is unionized. Strikes and industrial actions or disputes
have in the past and may in the future lead to business interruptions and halts in
production. For example, the trade unions of BALCO initiated a 67-day-long strike in May
2001 in opposition to the divestment of equity shares of BALCO by the Government of India.
We also experienced short strikes and work stoppages in 2005 and 2006. In addition, we may
be subject to union demands and litigation for pay raises and increased benefits, and our
existing arrangements with trade unions may not be renewed on terms favorable to us, or at
all. The current wage settlement agreement entered into by HZL with its unions expired on
July 1, 2007. We are currently in negotiations with these unions to renew the wage
settlement agreement and work is therefore ongoing at HZL without a collective agreement.
The current wage settlement agreement entered into by BALCO with its unions will be up for
renewal on April 1, 2009. Other work stoppages or other labor-related developments,
including the introduction of new labor regulations in India or Australia, may occur in the
future.
  We are substantially dependent upon our Rampura Agucha zinc mine, and any interruption in our
operations at that mine could have a material adverse effect on our results of operations and
financial condition.
  If we are unable to secure additional reserves of copper, zinc and bauxite that can be mined at
competitive costs or cannot mine existing reserves at competitive costs, our profitability and
operating margins could decline.
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Our business requires substantial capital expenditures and the dedication of management and other
resources to maintain ongoing operations and to grow our business through projects, expansions and
acquisitions, which projects, expansions and acquisitions are subject to additional risks that
could adversely affect our business, financial condition and results of operations.
 Capital requirements.
  Cost overruns and delays.
 Demands on management.
 Acquisition risks.
 If we do not continue to invest in new technologies and equipment, our technologies and equipment
may become obsolete and our cost of production may increase relative to our competitors, which
would have a material adverse effect on our ability to compete, results of operations, financial
condition and prospects.
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##### Table of Contents



We intend to develop a commercial power generation business, a line of business in which we have
limited experience, from which we may never recover our investment or realize a profit and which
may result in our managements focus being diverted from our core copper, zinc and aluminum
businesses.
      
    
    We may face many uncertainties, including regulatory requirements and restrictions which
may change by the time our planned power facility is completed. These may include a change
in the tariff policy, which may have an adverse impact on our revenues and reduce our
margins. We may also face delays in the development of our power plants and any coal mines
we may seek to develop, as other coal and power companies in India and Southeast Asia
recently have, as a result of protests or other obstructive or delaying activities by
displaced persons and others who may oppose such developments.
    
    We must obtain the consent of certain of our lenders to commence a new business, and
there can be no assurance that we will obtain such consents.
 12




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##### Table of Contents




    
    We will be dependent upon third parties for the construction, delivery and commissioning
of the power facilities, the supply and testing of equipment and transmission and
distribution of any power we produce.
    
    We do not have our own coal mines, and given recent shortages in coal supplies in India,
we may also not be successful at procuring an adequate supply of coal at sufficiently
attractive prices, or at all, for our power plant to operate and generate a return on our
investment.
    
    We may face opposition to our projects by local communities where these projects are
located or from special interest groups, including as a result of the perceived negative
impact of coal mines and coal-based power plants to the environment or any required
displacement and resettlement of individuals and families in the area of a project.
    
    The commercial power generation business is highly competitive and we will be competing
with established commercial power generation companies, including NTPC, Tata Power Limited
and Reliance Energy Limited, with significant resources and many years of experience in the
commercial power generation business. Our parent company, Vedanta, has also announced plans
to enter the commercial power generation business and we may compete with them.
  If any power facilities we build and operate as part of our future commercial power generation
business do not meet operating performance requirements and agreed norms as may be set out in our
agreements, or otherwise do not operate as planned, we may incur increased costs and penalties and
our revenues may be adversely affected.
  The Government of India may allege a breach of a covenant by our subsidiary SOVL and seek to
exercise a put or call right with respect to shares of HZL, which may result in substantial
litigation and serious financial harm to our business, results of operations, financial condition
and prospects.
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##### Table of Contents



The validity of the Government of Indias divestment of 64.9% of HZL to us is currently pending
adjudication and our option to purchase the Government of Indias remaining shares in HZL may be
challenged.
    14




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The Government of India has disputed our exercise of the call option to purchase its remaining
49.0% ownership interest in BALCO.
   Appeal proceedings in the High Court of Bombay have been brought by the Securities and Exchange
Board of India, or SEBI, to overrule a decision by the Securities Appellate Tribunal, or SAT, that
we have not violated regulations prohibiting fraudulent and unfair trading practices.
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We are involved in a number of litigation matters, both civil and criminal in nature, and any final
judgments against us could have a material adverse effect on our business, results of operations,
financial condition and prospects.
  Defects in title or loss of any leasehold interests in our properties could limit our ability to
conduct operations on our properties or result in significant unanticipated costs.
    Our operations are subject to extensive governmental and environmental regulations which have in
the past and could in the future cause us to incur significant costs or liabilities or interrupt or
close our operations, any of which events may adversely affect our results of operations.
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Any increase in competition in our target markets could result in lower prices or sales volumes of
the copper, zinc and aluminum products we produce, which may cause our profitability to suffer.
    Our insurance coverage may prove inadequate to satisfy future claims against us.
  Third party interests in our subsidiary companies and restrictions due to stock exchange listings
of our subsidiary companies will restrict our ability to deal freely with our subsidiaries, which
may have a material adverse effect on our operations.
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We may be liable for additional taxes if the tax holidays, exemptions and tax deferral schemes
which we currently benefit from expire without renewal, and the benefits of the tax holidays,
exemptions and tax deferral schemes are limited by the minimum
alternative tax, or MAT.
   Shortage of skilled labor in the metals and mining industry could increase our costs and limit our
ability to maintain or expand our operations, which could adversely affect our results of
operations.
  Risks Relating to Our Industry
 Commodity prices and the copper TcRc may be volatile, which would affect our revenue, results of
operations and financial condition.
  Our ore reserves are estimates based on a number of assumptions, any changes to which may require
us to lower our estimated reserves.
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Changes in tariffs, royalties, customs duties and government assistance may reduce our domestic
premium, which would adversely affect our profitability and results of operations.
     Risks Relating to Our Relationship with Vedanta
 We are controlled by Vedanta and your ability to influence matters requiring shareholder approval
will be extremely limited.
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Vedanta may decide to allocate business opportunities to other members of the Vedanta group instead
of to us, which may have a material adverse effect on our business, results of operations,
financial condition and prospects.
  We have issued several guarantees and a put option as security for the obligations of certain of
our subsidiaries and other companies within the Vedanta group and we will have liability under
these guarantees and put option in the event of any failure by such entities to perform their
obligations, which could have a material adverse effect on our results of operations and financial
condition.
  Any disputes that arise between us and Vedanta or other companies in the Vedanta group could harm
our business operations.
  
    
    intercompany agreements setting forth services and prices for services between us and
Vedanta or other companies in the Vedanta group;
    
    business combinations involving us;
    
    sales or distributions by Vedanta of all or any portion of its ownership interest in us;
or
    
    business opportunities that may be attractive to us and Vedanta, or other companies in
the Vedanta group.
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Some of our directors and executive officers may have conflicts of interest because of their
ownership of Vedanta shares, options to acquire Vedanta shares and positions with Vedanta.
   Risks Relating to Investments in Indian Companies and International Operations Generally
 A substantial portion of our assets and operations are located in India and we are subject to
regulatory, economic, social and political uncertainties in India.
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As the domestic Indian market constitutes the major source of our revenue, a downturn in the rate
of economic growth in India will be detrimental to our results of operations.
  Terrorist attacks and other acts of violence involving India or other neighboring countries could
adversely affect our operations directly, or may result in a more general loss of customer
confidence and reduced investment in these countries that reduces the demand for our products,
which would have a material adverse effect on our business, results of operations, financial
condition and cash flows.
   If natural disasters or environmental conditions in India, including floods and earthquakes, affect
our mining and production facilities, our revenues could decline.
  Currency fluctuations among the Indian Rupee, the Australian dollar and the US dollar could have a
material adverse effect on our results of operations.
  22




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If financial instability occurs in other countries, particularly emerging market countries in Asia,
our business could be disrupted and the price of our equity shares and ADSs could go down.
  If Indias inflation worsens or the prices of oil or other raw materials continue to rise, we may
not be able to pass the resulting increased costs to our customers and this may adversely affect
our profitability or cause us to suffer operating losses.
  Stringent labor laws in India may adversely affect our profitability.
  As a foreign private issuer and a controlled company within the meaning of the New York Stock
Exchange, or NYSE, rules, we are subject to different NYSE rules than non-controlled domestic US
issuers. Consequently, the corporate governance standards which we are required to adhere to are
different than those applicable to such companies, which may limit the information available to,
and the shareholder rights of, holders of our ADSs.
   23




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There are certain differences in shareholder rights and protections between the laws of India and
the United States and between governance standards for a US public company and a foreign private
issuer such as us.
    Risks Relating to our ADSs
 Substantial future sales of our equity shares or ADSs in the public market, or the perception of
such sales, could cause the market price of our ADSs to fall.
   Fluctuations in the exchange rate between the Indian Rupee and the US dollar could have a material
adverse effect on the value of our ADSs, independent of our actual operating results.
   Transfers of the underlying shares by persons resident outside India to residents of India are
subject to certain pricing norms.
  24




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Holders of ADSs may be restricted in their ability to exercise preemptive rights under Indian law
and thereby may suffer future dilution of their ownership positions.
  We may be classified as a passive foreign investment company, which could result in adverse United
States federal income tax consequences to US Holders.
  
 ITEM 4. INFORMATION ON THE COMPANY
 A. History and Development of our Company
   25




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26




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27




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B.
Business Overview
 OUR INDUSTRY
 Unless otherwise indicated, all data relating to the copper, zinc and aluminum industries
contained in this annual report is primarily derived from Brook
Hunt, CRISIL Research & Information Services Ltd., or CRISIL Research, Credit Rating Information
Services of India Limited, or CRISIL, and other industry sources.
 Unless otherwise indicated, all financial and statistical data relating to the power industry
in India in the following discussion is derived from the Ministry of Powers Annual Report (2005-06
and 2006-07), the Central Electricity Authority of Indias General Review (2004-05), and the
Ministry of Power website. The data may have been re-classified for the purpose of presentation.
Unless
 28




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otherwise indicated, the data presented excludes captive power generation capacity and captive
power generation. The term units as used herein refers to kilowatt-hours (kWh).


Copper


Global Copper Market


Background











    
    Miners, which mine the copper ore and produce copper concentrate;
    
    Custom smelters, which smelt and refine copper concentrate to produce copper metal; and
    
    Integrated producers, which mine copper ore from captive mines and produce copper metal
either through smelting and refining or through leaching.


Refined Copper Consumption
 
  29




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Year Ended December 31,2004
    
    2005
    
    2006
    
    2007Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Rest of Asia(1)
    
    
    4,310
    
    
    
    25.3
    %
    
    
    4,236
    
    
    
    24.9
    %
    
    
    4,288
    
    
    
    24.6
    %
    
    
    4,267
    
    
    
    23.7
    %Western Europe
    
    
    3,797
    
    
    
    22.5
    
    
    
    3,565
    
    
    
    21.0
    
    
    
    3,907
    
    
    
    22.4
    
    
    
    3,661
    
    
    
    20.4China
    
    
    3,565
    
    
    
    20.9
    
    
    
    3,815
    
    
    
    22.5
    
    
    
    3,967
    
    
    
    22.7
    
    
    
    4,600
    
    
    
    25.6North America
    
    
    2,712
    
    
    
    15.9
    
    
    
    2,549
    
    
    
    15.0
    
    
    
    2,408
    
    
    
    13.8
    
    
    
    2,406
    
    
    
    13.4CEE(2) and CIS
    
    
    1,001
    
    
    
    5.9
    
    
    
    1,066
    
    
    
    6.3
    
    
    
    1,169
    
    
    
    6.7
    
    
    
    1,216
    
    
    
    6.8Latin America
    
    
    932
    
    
    
    5.5
    
    
    
    918
    
    
    
    5.6
    
    
    
    864
    
    
    
    5.0
    
    
    
    864
    
    
    
    4.8India
    
    
    350
    
    
    
    2.1
    
    
    
    415
    
    
    
    2.4
    
    
    
    458
    
    
    
    2.6
    
    
    
    540
    
    
    
    3.0Africa
    
    
    207
    
    
    
    1.2
    
    
    
    234
    
    
    
    1.4
    
    
    
    242
    
    
    
    1.4
    
    
    
    276
    
    
    
    1.5Oceania
    
    
    168
    
    
    
    0.9
    
    
    
    155
    
    
    
    0.9
    
    
    
    143
    
    
    
    0.8
    
    
    
    143
    
    
    
    0.8Total
    
    
    17,042
    
    
    
    100.0
    %
    
    
    16,983
    
    
    
    100.0
    %
    
    
    17,446
    
    
    
    100.0
    %
    
    
    17,973
    
    
    
    100.0
    %
 
 Notes:(1)
    
    Rest of Asia is Asia excluding China and India but including the Middle East.(2)
    
    Central and Eastern Europe. Source: Brook Hunt Copper Metal Service Report, March 2008.
 Copper Supply
     Year Ended December 31,2004
    
    2005
    
    2006
    
    2007Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Latin America
    
    
    3,964
    
    
    
    24.9
    %
    
    
    3,986
    
    
    
    24.0
    %
    
    
    3,901
    
    
    
    22.5
    %
    
    
    3,958
    
    
    
    21.8
    %Rest of Asia(1)
    
    
    2,570
    
    
    
    16.1
    
    
    
    2,769
    
    
    
    16.7
    
    
    
    2,991
    
    
    
    17.3
    
    
    
    3,095
    
    
    
    17.0China
    
    
    2,199
    
    
    
    13.8
    
    
    
    2,600
    
    
    
    15.7
    
    
    
    3,003
    
    
    
    17.4
    
    
    
    3,500
    
    
    
    19.2CEE(2) and CIS
    
    
    2,098
    
    
    
    13.2
    
    
    
    2,134
    
    
    
    12.9
    
    
    
    2,149
    
    
    
    12.4
    
    
    
    2,111
    
    
    
    11.6North America
    
    
    1,845
    
    
    
    11.6
    
    
    
    1,775
    
    
    
    10.7
    
    
    
    1,758
    
    
    
    10.2
    
    
    
    1,849
    
    
    
    10.2Western Europe
    
    
    1,817
    
    
    
    11.4
    
    
    
    1,841
    
    
    
    11.1
    
    
    
    1,877
    
    
    
    10.8
    
    
    
    1,849
    
    
    
    10.2Africa
    
    
    518
    
    
    
    3.2
    
    
    
    528
    
    
    
    3.2
    
    
    
    566
    
    
    
    3.3
    
    
    
    658
    
    
    
    3.6Oceania
    
    
    504
    
    
    
    3.2
    
    
    
    461
    
    
    
    2.8
    
    
    
    430
    
    
    
    2.5
    
    
    
    443
    
    
    
    2.4India
    
    
    420
    
    
    
    2.6
    
    
    
    499
    
    
    
    2.9
    
    
    
    629
    
    
    
    3.6
    
    
    
    722
    
    
    
    4.0Total
    
    
    15,935
    
    
    
    100.0
    %
    
    
    16,594
    
    
    
    100.0
    %
    
    
    17,304
    
    
    
    100.0
    %
    
    
    18,185
    
    
    
    100.0
    %
 
 Notes:(1)
    
    Rest of Asia is Asia excluding China and India, but including the Middle East.(2)
    
    Central and Eastern Europe. Source:
Brook Hunt Copper Metal Service Report, March 2008.
 30




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Pricing
  Year Ended December 31,1998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007($ per ton, except percentages)LME Cash Price($)
    
    
    1,652
    
    
    
    1,573
    
    
    
    1,814
    
    
    
    1,577
    
    
    
    1,557
    
    
    
    1,779
    
    
    
    2,869
    
    
    
    3,683
    
    
    
    6,729
    
    
    
    7,124% Change
    
    
    
    
    
    
    (4.8
    )
    
    
    15.3
    
    
    
    (13.1
    )
    
    
    (1.3
    )
    
    
    14.3
    
    
    
    61.3
    
    
    
    28.4
    
    
    
    82.7
    
    
    
    5.9
 
 Source: LME.    (1)
 Year Ended December 31,1998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007(US cents per lb, except percentages)TcRc
    
    
    23.6
    
    
    
    15.3
    
    
    
    15.9
    
    
    
    17.4
    
    
    
    15.5
    
    
    
    13.9
    
    
    
    13.0
    
    
    
    29.6
    
    
    
    45.9
    
    
    
    15.4% Change
    
    
    
    
    
    
    (35.2
    )
    
    
    3.9
    
    
    
    9.4
    
    
    
    (10.9
    )
    
    
    (10.3
    )
    
    
    (6.5
    )
    
    
    127.7
    
    
    
    55.1
    
    
    
    (66.4
    )
 
 Note:(1)
    
    Includes price participation, if any. Source: Brook Hunt Copper Metal Service Report.
 31




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Indian Copper Market
 Background
  Consumption Pattern
  Pricing and Tariff
  Market Outlook
 Global Copper Outlook
     Indian Copper Outlook
  32




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##### Table of Contents



Zinc
 Global Zinc Market
 Background
    
    
    Miners, which mine the lead-zinc ore and produce zinc concentrate for sale to smelters,
and usually receive payment for 85% of the zinc contained in the concentrate less a Tc;
    
    Smelters, which purchase concentrate and sell refined metal, with some smelters also
having some integrated production downstream; and
    
    Integrated producers, which are involved in both the mining and smelting of zinc.
  Zinc Consumption
   33




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Year Ended 31 December2004
    
    2005
    
    2006
    
    2007Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Europe
    
    
    2,846
    
    
    
    27.6
    %
    
    
    2,716
    
    
    
    25.6
    %
    
    
    2,843
    
    
    
    25.5
    %
    
    
    2,894
    
    
    
    25.2
    %China
    
    
    2,417
    
    
    
    23.5
    
    
    
    2,853
    
    
    
    26.9
    
    
    
    3,166
    
    
    
    28.4
    
    
    
    3,531
    
    
    
    30.8Rest of Asia(1)
    
    
    2,190
    
    
    
    21.3
    
    
    
    2,219
    
    
    
    20.9
    
    
    
    2,190
    
    
    
    19.6
    
    
    
    2,149
    
    
    
    18.7North America
    
    
    1,435
    
    
    
    13.9
    
    
    
    1,365
    
    
    
    12.9
    
    
    
    1,409
    
    
    
    12.6
    
    
    
    1,275
    
    
    
    11.1Latin America
    
    
    615
    
    
    
    6.0
    
    
    
    623
    
    
    
    5.9
    
    
    
    647
    
    
    
    5.8
    
    
    
    673
    
    
    
    5.9India
    
    
    347
    
    
    
    3.4
    
    
    
    388
    
    
    
    3.7
    
    
    
    428
    
    
    
    3.8
    
    
    
    469
    
    
    
    4.1Oceania
    
    
    269
    
    
    
    2.6
    
    
    
    262
    
    
    
    2.5
    
    
    
    273
    
    
    
    2.4
    
    
    
    284
    
    
    
    2.5Africa
    
    
    176
    
    
    
    1.7
    
    
    
    185
    
    
    
    1.7
    
    
    
    193
    
    
    
    1.7
    
    
    
    198
    
    
    
    1.7Total
    
    
    10,295
    
    
    
    100.0
    %
    
    
    10,610
    
    
    
    100.0
    %
    
    
    11,150
    
    
    
    100.0
    %
    
    
    11,474
    
    
    
    100.0
    %





|      |  |                                                                               
|----- |  | ------------------------------------------------------------------------------
|Note: |  |                                                                               
|     
|(1)   |  | Rest of Asia is Asia excluding China and India, but including the Middle East.

Source: Brook Hunt Zinc Metal Services Report, March 2008.


Zinc
Supply












34



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Year Ended December 31,2004
    
    2005
    
    2006
    
    2007Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Europe
    
    
    3,103
    
    
    
    30.6
    %
    
    
    29137
    
    
    
    28.8
    %
    
    
    2,863
    
    
    
    27.2
    %
    
    
    2,958
    
    
    
    26.2
    %China
    
    
    2,522
    
    
    
    24.9
    
    
    
    2,761
    
    
    
    27.3
    
    
    
    3,163
    
    
    
    30.0
    
    
    
    3,716
    
    
    
    32.9Rest of Asia(1)
    
    
    1,548
    
    
    
    15.3
    
    
    
    1,530
    
    
    
    15.2
    
    
    
    1,530
    
    
    
    14.5
    
    
    
    1,507
    
    
    
    13.4North America
    
    
    1,139
    
    
    
    11.2
    
    
    
    1,056
    
    
    
    10.5
    
    
    
    1,079
    
    
    
    10.2
    
    
    
    1,050
    
    
    
    9.3Latin America
    
    
    823
    
    
    
    8.1
    
    
    
    807
    
    
    
    8.0
    
    
    
    766
    
    
    
    7.3
    
    
    
    812
    
    
    
    7.2Australia
    
    
    474
    
    
    
    4.7
    
    
    
    456
    
    
    
    4.5
    
    
    
    461
    
    
    
    4.4
    
    
    
    506
    
    
    
    4.5India
    
    
    272
    
    
    
    2.7
    
    
    
    302
    
    
    
    3.0
    
    
    
    410
    
    
    
    3.9
    
    
    
    448
    
    
    
    4.0Africa
    
    
    259
    
    
    
    2.6
    
    
    
    273
    
    
    
    2.7
    
    
    
    256
    
    
    
    2.4
    
    
    
    286
    
    
    
    2.5Total
    
    
    10,140
    
    
    
    100.0
    %
    
    
    10,097
    
    
    
    100.0
    %
    
    
    10,527
    
    
    
    100.0
    %
    
    
    11,283
    
    
    
    100.0
    %
 
 Note:(1)
    
    Rest of Asia is Asia excluding China and India, but including the Middle East. Source: Brook Hunt Zinc Metal Services Report, March 2008.
 Pricing
   Year Ended December 31,Zinc Prices
    
    1998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007($ per ton, except percentages)LME Cash Price
    
    
    1,024
    
    
    
    1,076
    
    
    
    1,128
    
    
    
    885
    
    
    
    778
    
    
    
    827
    
    
    
    1,047
    
    
    
    1,381
    
    
    
    3,274
    
    
    
    3,240% Change
    
    
    
    
    
    
    5.1
    
    
    
    4.8
    
    
    
    (21.5
    )
    
    
    (12.1
    )
    
    
    6.3
    
    
    
    26.6
    
    
    
    31.9
    
    
    
    137.0
    
    
    
    (1.0
    )
 
 Source: LME.
  Indian Zinc Market
 Background
  Consumption Pattern
  35




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Pricing and Tariff
  Market Outlook
 Global Zinc Outlook
   Indian Zinc Outlook
  Aluminum
 Global Aluminum Market
 Background
   Aluminum Consumption
  36




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##### Table of Contents



Year Ended December 31,2004
    
    2005
    
    2006
    
    2007Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)North America
    
    
    7,011
    
    
    
    23.4
    %
    
    
    7,175
    
    
    
    22.5
    %
    
    
    7,191
    
    
    
    20.9
    %
    
    
    6,629
    
    
    
    17.4
    %Western Europe
    
    
    6,614
    
    
    
    22.1
    
    
    
    6,512
    
    
    
    20.4
    
    
    
    6,801
    
    
    
    19.8
    
    
    
    6,987
    
    
    
    18.4China
    
    
    5,886
    
    
    
    19.6
    %
    
    
    7,083
    
    
    
    22.2
    
    
    
    8,790
    
    
    
    25.6
    
    
    
    12,200
    
    
    
    32.1Rest of Asia(1)
    
    
    5,822
    
    
    
    19.4
    
    
    
    6,174
    
    
    
    19.3
    
    
    
    6,296
    
    
    
    18.3
    
    
    
    6,457
    
    
    
    17.0East/Central Europe
    
    
    1,744
    
    
    
    5.8
    
    
    
    1,802
    
    
    
    5.6
    
    
    
    1,974
    
    
    
    5.7
    
    
    
    2,141
    
    
    
    5.6Latin America
    
    
    1,191
    
    
    
    4.0
    
    
    
    1,341
    
    
    
    4.2
    
    
    
    1,366
    
    
    
    4.0
    
    
    
    1,452
    
    
    
    3.8India
    
    
    860
    
    
    
    2.9
    
    
    
    960
    
    
    
    3.0
    
    
    
    1,080
    
    
    
    3.1
    
    
    
    1,200
    
    
    
    3.2Oceania
    
    
    435
    
    
    
    1.5
    
    
    
    450
    
    
    
    1.4
    
    
    
    425
    
    
    
    1.2
    
    
    
    443
    
    
    
    1.2Africa
    
    
    400
    
    
    
    1.3
    
    
    
    414
    
    
    
    1.3
    
    
    
    460
    
    
    
    1.3
    
    
    
    483
    
    
    
    1.3Total
    
    
    29,964
    
    
    
    100.0
    %
    
    
    31,912
    
    
    
    100.0
    %
    
    
    34,382
    
    
    
    100.0
    %
    
    
    37,992
    
    
    
    100.0
    %
 
 Note:(1)
    
    Rest of Asia is Asia excluding China and India, but including the Middle East. Source: Brook Hunt Aluminium Metal Service Report, March 2008.
 Aluminum Supply
    Year Ended December 31,2004
    
    2005
    
    2006
    
    2007Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)China
    
    
    6,689
    
    
    
    22.4
    %
    
    
    7,806
    
    
    
    24.4
    %
    
    
    9,349
    
    
    
    27.5
    %
    
    
    12,607
    
    
    
    33.0
    %North America
    
    
    5,110
    
    
    
    17.1
    
    
    
    5,382
    
    
    
    16.8
    
    
    
    5,333
    
    
    
    15.7
    
    
    
    5,643
    
    
    
    14.8East/Central Europe
    
    
    4,534
    
    
    
    15.2
    
    
    
    4,627
    
    
    
    14.5
    
    
    
    4,678
    
    
    
    13.8
    
    
    
    4,898
    
    
    
    12.8Western Europe
    
    
    4,294
    
    
    
    14.4
    
    
    
    4,345
    
    
    
    13.6
    
    
    
    4,174
    
    
    
    12.3
    
    
    
    4,321
    
    
    
    11.3Latin America
    
    
    2,356
    
    
    
    7.9
    
    
    
    2,390
    
    
    
    7.5
    
    
    
    2,494
    
    
    
    7.3
    
    
    
    2,559
    
    
    
    6.7Oceania
    
    
    2,245
    
    
    
    7.5
    
    
    
    2,252
    
    
    
    7.0
    
    
    
    2,274
    
    
    
    6.7
    
    
    
    2,320
    
    
    
    6.1Rest of Asia(1)
    
    
    2,128
    
    
    
    7.1
    
    
    
    2,446
    
    
    
    7.7
    
    
    
    2,661
    
    
    
    7.8
    
    
    
    2,775
    
    
    
    7.3Africa
    
    
    1,711
    
    
    
    5.7
    
    
    
    1,753
    
    
    
    5.5
    
    
    
    1,865
    
    
    
    5.5
    
    
    
    1,815
    
    
    
    4.8India
    
    
    851
    
    
    
    2.7
    
    
    
    965
    
    
    
    3.0
    
    
    
    1,115
    
    
    
    3.4
    
    
    
    1,223
    
    
    
    3.2Total
    
    
    29,918
    
    
    
    100.0
    %
    
    
    31,966
    
    
    
    100.0
    %
    
    
    33,943
    
    
    
    100.0
    %
    
    
    38,161
    
    
    
    100.0
    %
 
 Note:(1)
    
    Rest of Asia is Asia excluding China and India, but including the Middle East. Source: Brook Hunt Aluminium Metal Service Report, March 2008.
 37




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Alumina
   Year Ended December 31,2004
    
    2005
    
    2006
    
    2007Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Oceania
    
    
    16,974
    
    
    
    26.8
    %
    
    
    17,918
    
    
    
    26.9
    %
    
    
    18,607
    
    
    
    25.1
    %
    
    
    19,248
    
    
    
    23.7
    %Latin America
    
    
    13,077
    
    
    
    20.7
    
    
    
    13,189
    
    
    
    19.8
    
    
    
    14,872
    
    
    
    20.1
    
    
    
    15,111
    
    
    
    18.6China
    
    
    6,985
    
    
    
    11.0
    
    
    
    8,536
    
    
    
    12.8
    
    
    
    13,740
    
    
    
    18.5
    
    
    
    20,900
    
    
    
    25.8North America
    
    
    6,886
    
    
    
    10.9
    
    
    
    6,929
    
    
    
    10.4
    
    
    
    6,799
    
    
    
    9.2
    
    
    
    6,104
    
    
    
    7.5Western Europe
    
    
    6,376
    
    
    
    10.1
    
    
    
    6,560
    
    
    
    9.8
    
    
    
    6,748
    
    
    
    9.1
    
    
    
    6,809
    
    
    
    8.4East/Central Europe
    
    
    6,355
    
    
    
    10.0
    
    
    
    6,779
    
    
    
    10.2
    
    
    
    6,848
    
    
    
    9.2
    
    
    
    6,128
    
    
    
    7.6India
    
    
    2,973
    
    
    
    4.7
    
    
    
    3,065
    
    
    
    4.6
    
    
    
    2,991
    
    
    
    4.0
    
    
    
    3,134
    
    
    
    3.9Rest of Asia(1)
    
    
    2,908
    
    
    
    4.6
    
    
    
    2,939
    
    
    
    4.4
    
    
    
    3,033
    
    
    
    4.1
    
    
    
    3,120
    
    
    
    3.8Africa
    
    
    779
    
    
    
    1.2
    
    
    
    736
    
    
    
    1.1
    
    
    
    530
    
    
    
    0.7
    
    
    
    526
    
    
    
    0.7Total
    
    
    63,313
    
    
    
    100.0
    %
    
    
    66,651
    
    
    
    100.0
    %
    
    
    74,168
    
    
    
    100.0
    %
    
    
    81,080
    
    
    
    100.0
    %
 
 Note:(1)
    
    Rest of Asia is Asia excluding China and India. Source: Brook Hunt Aluminium Metal Service Report, March 2008.
   Year Ended December 31,2004
    
    2005
    
    2006
    
    2007(thousands of tons)Global Alumina Surplus/(Deficit)
    
    
    (382
    )
    
    
    (1,453
    )
    
    
    1,865
    
    
    
    315
 
 Source: Brook Hunt Aluminium Metal Service Report, March 2008. Bauxite
  38




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##### Table of Contents



Pricing
    Year Ended December 31,1998
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007($ per ton, except percentages)Aluminum(1)LME Cash Price
    
    $
    1,356
    
    
    $
    1,362
    
    
    $
    1,549
    
    
    $
    1,444
    
    
    $
    1,349
    
    
    $
    1,432
    
    
    $
    1,716
    
    
    $
    1,897
    
    
    $
    2,566
    
    
    $
    2,639% Change
    
    
    (15.2
    )
    
    
    0.4
    
    
    
    13.7
    
    
    
    (6.8
    )
    
    
    (6.6
    )
    
    
    6.2
    
    
    
    19.8
    
    
    
    10.5
    
    
    
    35.3
    
    
    
    2.8AluminaSpot Price(2)
    
    $
    185
    
    
    $
    203
    
    
    $
    284
    
    
    $
    149
    
    
    $
    148
    
    
    $
    283
    
    
    $
    420
    
    
    $
    468
    
    
    $
    420
    
    
    $
    353% Change
    
    
    (11.4
    )
    
    
    9.7
    
    
    
    39.9
    
    
    
    (47.5
    )
    
    
    (0.7
    )
    
    
    91.2
    
    
    
    48.4
    
    
    
    11.4
    
    
    
    (10.3
    )
    
    
    (16.0
    )Alumina/Aluminum(%)
    
    
    13.6
    %
    
    
    14.9
    %
    
    
    18.3
    %
    
    
    10.3
    %
    
    
    11.0
    %
    
    
    19.8
    %
    
    
    24.5
    %
    
    
    24.7
    %
    
    
    16.4
    %
    
    
    13.4
    %
 
 (1)
    
    Source: LME.(2)
    
    Source: Bloomberg, Metal Bulletin; alumina metallurgical grade spot Free on Board, or FOB,
average for the year.    Indian Aluminum Market
 Background
   Supply and Demand
   39




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Pricing and Tariff
   Market Outlook
 Global Aluminum Outlook
    Indian Aluminum Outlook
     40




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##### Table of Contents



Commercial Power Generation Business
 Industry Overview
   Installed Capacities
  MW
    
    Central
    
    State
    
    Private
    
    Total
    
    Share of Total(MW)Thermal
    
    
    35,649
    
    
    
    46,486
    
    
    
    9,772
    
    
    
    91,907
    
    
    
    64.2
    %Hydro
    
    
    8,592
    
    
    
    26,087
    
    
    
    1,230
    
    
    
    35,909
    
    
    
    25.1
    %Nuclear
    
    
    4,120
    
    
    
    0
    
    
    
    0
    
    
    
    4,120
    
    
    
    2.9
    %Renewable Energy Source
    
    
    0
    
    
    
    2,116
    
    
    
    9,009
    
    
    
    11,125
    
    
    
    7.8
    %Total
    
    
    48,361
    
    
    
    74,689
    
    
    
    20,011
    
    
    
    143,061
    
    
    
    100.0
    %
 
 Source: Central Electricity Authority of India. Future Capacity Additions
    Transmission and Distribution
  41




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##### Table of Contents



Consumption
  Power: Demand and Supply
  
 Power:
Category-wise Consumption (2005-06
  
 Source: Ministry of Power of the Government of India.
  42




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Power: Category-wise Consumption (2005-06)
 
 
 Source: Central Electricity Authority of India.  
 
 Source: Central Electricity Authority of India (Seventeenth Electric Power Survey).  43




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Per Capita World  Consumption (2005)
  
 
 Note:(1)
    
    Countries that are members of the Organization for Economic Co-operation and Development, or
OECD (http://www.oecd.org). Source: Ministry of Power of the Government of India.
 India  Growth Pattern Over Years
  
 
 Source: Ministry of Power of the Government of India. Power Trading
  44




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##### Table of Contents



Tariff Setting
   
    
    ensuring availability of electricity to consumers at reasonable and competitive rates;
    
    promoting transparency, consistency and predictability in regulatory approvals across
jurisdictions and minimising the perception of regulatory risks; and
    
    promoting competition, efficiency in operations and improvement in quality of supply.
   Government Initiatives
    OUR BUSINESS
 Overview
   45




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Competitive Strengths
  High quality assets and resources making us a low-cost producer in copper and zinc
  
    
    our Tuticorin smelter was one of the top ten custom copper smelters worldwide in 2007,
according to Brook Hunt, and the largest in India by production volume in fiscal 2008. In
2007, our Tuticorin smelter was also in the lowest cost quartile in terms of all copper
smelting operations worldwide and our Tuticorin and Silvassa refineries had the seventh and
eighth lowest costs of production, respectively, of all copper refining operations
worldwide, according to Brook Hunt.
    
    our zinc business operations are fully integrated with its own mining and captive power generation
capacities. HZL was the worlds fifth largest zinc mining company in 2007 based on mine
production and is also one of the top ten lead mining companies by production volume
worldwide, according to Brook Hunt. HZLs largest zinc mine, Rampura Agucha, was ranked
third in the world in 2007 in terms of contained zinc deposits on a production basis and the
fourth largest on a reserve basis, according to Brook Hunt. HZL was in the lowest cost
quartile in terms of all zinc mining operations worldwide in 2007 and the fourth largest
producer of zinc worldwide and HZLs Chanderiya smelter was the third largest smelter on a
production basis worldwide in 2007, according to Brook Hunt.
    
    our aluminum business operations are fully integrated with respect to their power
requirements through their captive power plants. BALCOs 245,000 tpa Korba smelter was in
the lowest quartile in terms of all aluminum smelter operations in 2007, according to Brook
Hunt. BALCO recently received a coal block allocation of 211.0 million tons for use in its
captive power plants. In March 2007, Vedanta Aluminium began the progressive commissioning
of a 1.0 million tpa greenfield alumina refinery project in Lanjigarh and an associated 75
MW captive power plant, expandable to 1.4 mtpa and 90 MW, respectively, subject to
governmental approvals. The Lanjigarh alumina refinery has started production from a single
stream operation and produced 267,000 tons of alumina in fiscal 2008. The Lanjigarh
alumina refinery is undergoing stability trials and is expected to fully stabilize by the
end of fiscal 2009.
  
    
    our focus on continually reducing manufacturing costs and seeking operational efficiency
improvements;
    
    our building and managing our own captive power plants to supply a substantial majority
of the power requirements of our operations; and
    
    the relatively large and inexpensive labor and talent pools in India.
  Leading non-ferrous metals and mining company in India with a diversified product portfolio
  
    
    we are one of two custom copper smelters in India, with a 42.4% primary market share by
volume in India in fiscal 2008, according to ICPCI;
    
    HZL is Indias only integrated zinc producer and had a 79.7% market share by volume in
India in fiscal 2008, according to ILZDA; and
    
    BALCO is one of the four primary producers of aluminum in India and had a 27.0% primary
market share by volume in India in fiscal 2008, according to AAI.
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Ideally positioned to capitalize on Indias growth and resource potential
  
    
    Indias large mineral reserves.According to the Indian Bureau of Mines 2005, the total
copper ore, lead-zinc ore, and bauxite resources of India are estimated at 1.4 billion ton,
0.6 billion ton, and 3.3 billion tons, respectively. According to the Geological Survey of
India 2008, the total coal resources of India are 264.5 billion tons as of April 1, 2008.
According to CRISIL Research, Indias bauxite reserves are the fifth largest in the world
with total recoverable reserves estimated at 2,600 million ton, and according to the Energy
Information Agency, a statistical agency of the United States government, India has the
fourth largest coal reserves in the world as of 2007.
    
    Indias economic growth and proximity to other growing economies.India is one of the
fastest growing large economies in the world with a 9.6% increase in real gross domestic
product from fiscal 2006 to 2007 and a 9.0% increase in real gross domestic product from
fiscal 2007 to 2008, according to the Central Statistical Organisation Ministry of
Statistics and Programme Implementation. This growth has been driven primarily by
significant increases in industrial production and investments in infrastructure. We believe
that our focus on the metals and power segments will allow us to directly benefit from this
growth. In addition, India is strategically located close to other growing economies in
China, Southeast Asia and the Middle East.
    
    Indias large and inexpensive labor and talent pools.India has, compared to other
industrialized nations, low labor costs as a result of its large and skilled labor pool and
the availability of many well-educated professionals.
 Strong pipeline of growth projects
  
    
    Zinc segment:In April 2008, HZL announced $900 million (Rs. 36,018 million) of expansion
projects to increase its total lead-zinc capacity to 1,065,000 tpa with fully integrated
mining and captive power generation capacities. These projects include:
 o
    
    establishing two brownfield smelters which are expected to increase the
production capacities of zinc and lead by approximately 210,000 tons and 100,000
tons, respectively, at Rajpura Dariba in the State of Rajasthan, both of which are
expected to be completed by mid-2010;o
    
    expanding ore production capacity at the Rampura Agucha mine from
approximately 5.0 million tpa to 6.0 million tpa and at the Sindesar Khurd mine from
approximately 0.3 million tpa to 1.5 million tpa. HZL is expected to start mining
activity at the Kayar mine, which is expected to have a production capacity of
approximately 0.3 million tpa. These projects are expected to be completed by early
2012;o
    
    setting up a captive power plant with a capacity of 160 MW at Rajpura
Dariba, which is expected to be completed by mid-2010; ando
    
    increasing silver production from the current levels of approximately 100
to 120 tpa to approximately 500 tpa, primarily from the Sindesar Khurd mine where
silver occurs at approximately 200 parts per million, or ppm.
 
    
    Aluminum segment:Vedanta Aluminium is building a greenfield 500,000 tpa aluminum
smelter, together with an associated 1,215 MW captive power plant, in Jharsuguda in the
State of Orissa, in two phases of 250,000 tpa each. Commissioning of the
 47




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first phase
commenced in May 2008, a year ahead of schedule, and will be progressively commissioned
during fiscal 2009. Work has commenced on the second phase and we expect it to begin
commissioning in 2010, subject to the receipt of governmental approvals.
    
    Power segment:We are executing our plan to enter the commercial power generation
business with Sterlite Energys construction of a 2,400 MW thermal coal-based power facility
(comprising four units of 600 MW each) in Jharsuguda in the State of Orissa. The project is
expected to be progressively commissioned from December 2009. We have obtained coal block
allocations of 112.2 million tons from the Ministry of Coal to support this facility. In
addition, BALCO entered into a memorandum of understanding in October 2006 with the
Government of Chhattisgarh, India and the CSEB to build a thermal coal-based 1,200 MW power
facility, along with an integrated coal mine, in the State of Chhattisgarh. The memorandum
of understanding is valid through August 31, 2008. BALCO has applied to the Government of
Chhattisgarh for an amendment to the memorandum of understanding extending its validity and
permitting its assignment to associates, affiliates and parent companies of BALCO. This
application is currently pending. In August 2007, BALCO entered into four engineering,
procurement and construction contracts with SEPCO Electric Power Construction Corporation in
relation to this project. However, the work and obligations under these contracts are
contingent upon receiving board approval for the project.
 Experience for entry into commercial power generation business in India
  Experienced and entrepreneurial management team with outstanding track record
  
    
    selecting attractive acquisition opportunities and successfully improving the operations
and profitability of acquired businesses; and
    
    successfully implementing capital-intensive projects to increase our production
capacities.
  
    
    increasing HZLs production from 172,140 tpa of zinc ingots and 214,447 tpa of zinc mined
metal content when we acquired HZL in 2002 to 218,862 tpa of zinc ingots and 551,295 tpa of
zinc mined metal content in fiscal 2008, representing an increase of 27.1% and 157.1%,
respectively, by increasing the production of HZLs original two hydrometallurgical zinc
smelters, one lead-zinc smelter and three lead-zinc mines; and
    
    increasing the production of BALCOs original aluminum smelter from 89,164 tpa when we
acquired management control of BALCO in 2001 to 109,279 tpa in fiscal 2008, representing an
increase of 22.6%.
 48




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
    
    increasing the lead metal capacity of HZLs lead-zinc smelter at Chanderiya from 35,000
tpa to 85,000 tpa in February 2006;
    
    increasing the copper anode capacity of our Tuticorin copper smelter from 180,000 tpa to
200,000 tpa in 2005 and then to 400,000 tpa in November 2006;
    
    increasing the Korba facility by adding a new 245,000 tpa aluminum smelter to bring the
total installed capacity to 345,000 tpa of aluminum in November 2006;
    
    completing a brownfield expansion with the addition of HZLs two hydrometallurgical zinc
smelters with a capacity of 170,000 tpa each, together with coal-based captive power plants
of 154 MW and 80 MW at Chanderiya in May 2005 and December 2007, respectively. The
capacities of the zinc smelters were further increased to 210,000 tpa through improvements
to the operational efficiencies of both smelters in April 2008;
    
    increasing the capacity of the Rampura Agucha lead-zinc mine and processing plant from
2.0 million tpa to 5.0 million tpa of ore to supply the brownfield zinc smelter expansion at
Chanderiya between 2003 and 2008; and
    
    completing our wind power plants at Gujarat and Karnataka with a total power generation
capacity of 107 MW between 2007 and 2008.
 Ability and capacity to finance world-class projects
  Strategy
  Continuing focus on asset optimization and reducing the cost of production
  
    
    seeking improvements in operations to maximize throughput and plant availability to
achieve production increases at our existing facilities with minimum capital expenditures to
optimize our asset utilization;
    
    reducing energy costs and consumption, including through continued investment in advanced
technologies to reduce power consumption in the refining and smelting processes and in
captive power plants to provide the required power;
    
    increasing automation to reduce the manpower required for a given level of production
volume;
    
    a strong exploration effort seeking to increase the reserves, particularly in our zinc
ore business;
 49




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
    
    continuing to improve recovery ratios such that more finished product is obtained from a
given amount of raw material;
    
    reducing purchase costs, including by entering into long-term contracts for raw
materials, making investments in mining operations and optimizing the mix of raw material
sourcing between long-term contracts, mining operations and the commodities spot markets to
address fluctuations in demand and supply;
    
    securing additional sources of coal through coal block allocations and coal linkages for
use in power plants, such as the coal block allocation of 211.0 million tons we recently
received for use in BALCOs captive power plants;
    
    seeking better utilization of by-products, including through adding additional processing
capabilities to produce end-products from the by-products that can be sold at higher prices
and help lower the cost of production of our core metals; and
    
    reducing greenhouse gas emissions from our operations through various projects, including
for example our recent installation of a back pressure turbine for utilising waste gases of
the roaster plant at one of our zinc smelters at Chanderiya, a project from which we have
received 22,744 voluntary emission reduction credits as of March 31, 2008.
  
    
    increased production volume in all of our metal businesses from fiscal 2007 to fiscal
2008, particularly in BALCO;
    
    an increase in reserves at HZLs Rampura Agucha mine of 23.5 million tons to 63.6 million
tons as of March 31, 2008; and
    
    stable cost of production in most of our businesses notwithstanding inflationary cost
pressures across the mining and metal industry generally, particularly with respect to
logistics and energy costs.
 Increasing our capacities through greenfield and brownfield projects
   Leveraging our project execution and operating skills and experience in building and managing
captive power plants to develop a commercial power generation business
  50




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Seeking further growth and acquisition opportunities that leverage our transactional, project
execution and operational skills and experience
  Consolidating our corporate structure and increasing our direct ownership of our underlying
businesses to derive additional synergies as an integrated group
  Basis of Presentation of Reserves
    51




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Our Copper Business
 Overview
    Principal Products
 Copper Cathode
  Copper Rods
  Sulphuric Acid
  Phosphoric Acid
  Other By-products
  52




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Our Production Process
  
 53




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Supply of Copper Concentrate
  Tuticorin Smelter
 TM
 Tuticorin Acid Plants
 TM
 Silvassa and Tuticorin Refineries
 TM
 Silvassa and Tuticorin Copper Rod Plants
  Delivery to Customers
  54




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Principal Facilities
 Overview
  
 55




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56




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57




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Our Copper Mine
     58




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59




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Total Proven andProven Reserve
    
    Probable Reserve
    
    Probable ReservesCopper
    
    
    
    
    
    Copper
    
    
    
    
    
    CopperQuantity
    
    Grade
    
    Quantity
    
    Grade
    
    Quantity
    
    GradeMine
    
    Source
    
    (million tons)
    
    (%)
    
    (million tons)
    
    (%)
    
    (million tons)
    
    (%)Mt. Lyell
    
    In-situ ore
    
    
    3.6
    
    
    
    1.5
    
    
    
    0.6
    
    
    
    1.5
    
    
    
    4.2
    
    
    
    1.5Secondary ore
    
    
    
    
    
    
    
    
    
    
    5.4
    
    
    
    1.2
    
    
    
    5.4
    
    
    
    1.2Surface stockpile
    
    
    0.05
    
    
    
    1.3
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    1.3Total
    
    
    
    
    
    
    3.6
    
    
    
    1.5
    
    
    
    6.1
    
    
    
    1.2
    
    
    
    9.7
    
    
    
    1.3
 Our Smelter and Refineries
 Overview
  CapacityCopper
    
    Copper
    
    Copper
    
    Sulphuric
    
    Phosphoric
    
    Captive PowerFacility
    
    Anode(1)
    
    Cathode(2)
    
    Rods(2)
    
    Acid(3)
    
    Acid(3)
    
    Plant(tpa)
    
    
    
    
    
    
    
    
    
    (MW)Tuticorin
    
    
    400,000
    
    
    
    205,000
    
    
    
    90,000
    
    
    
    1,300,000
    
    
    
    180,000
    
    
    
    46.5Silvassa
    
    
    
    
    
    
    195,000
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    400,000
    
    
    
    400,000
    
    
    
    240,000
    
    
    
    1,300,000
    
    
    
    180,000
    
    
    
    46.5
 
 Notes:(1)
    
    Copper anode is an intermediate product produced by copper smelters and is not sold to
customers. It is used for the production of copper cathode by copper refineries. Approximately
one ton of copper anode is required for the production of one ton of copper cathode.(2)
    
    Copper cathode is used as a starting material for copper rods. Approximately one ton of
copper cathode is required for the production of one ton of copper rods.(3)
    
    Sulphuric acid is used as a starting material for phosphoric acid. Approximately 2.8 tons of
sulphuric acid are required for the production of one ton of phosphoric acid. 60




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Tuticorin
   TM TM
 Silvassa
 TM
 Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    2006
    
    2007
    
    2008(tons)Tuticorin
    
    Copper anode(1)
    
    
    273,049
    
    
    
    313,117
    
    
    
    335,652Sulphuric acid(2)
    
    
    844,122
    
    
    
    946,539
    
    
    
    1,027,771Phosphoric acid(2)
    
    
    171,892
    
    
    
    172,125
    
    
    
    152,401Copper cathode(3)
    
    
    98,796
    
    
    
    150,565
    
    
    
    162,940Copper rods(3)
    
    
    30,180
    
    
    
    53,660
    
    
    
    81,698Silvassa
    
    Copper cathode(3)
    
    
    174,252
    
    
    
    162,155
    
    
    
    176,354Copper rods(3)
    
    
    136,317
    
    
    
    124,222
    
    
    
    143,060Total
    
    Copper anode
    
    
    273,049
    
    
    
    313,117
    
    
    
    335,652Copper cathode
    
    
    273,048
    
    
    
    312,720
    
    
    
    339,294Copper rods
    
    
    166,497
    
    
    
    177,882
    
    
    
    224,758Sulphuric acid
    
    
    844,122
    
    
    
    946,539
    
    
    
    1,027,771Phosphoric acid
    
    
    171,892
    
    
    
    172,125
    
    
    
    152,401
 
 Notes:(1)
    
    Copper anode is an intermediate product produced by copper smelters and is not sold to
customers. It is used for the production of copper cathode by copper refineries. Approximately
one ton of copper anode is required for the production of one ton of copper cathode.(2)
    
    Sulphuric acid is used as a starting material for phosphoric acid. Approximately 2.8 tons of
sulphuric acid are required for the production of one ton of phosphoric acid.(3)
    
    Copper cathode is used as a starting material for copper rods. Approximately one ton of
copper cathode is required for the production of one ton of copper rods. 61




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Year Ended March 31,Mine (Type of Mine)
    
    Product
    
    2006
    
    2007
    
    2008(tons, except for percentages)Mt. Lyell (Underground)
    
    Ore mined
    
    
    2,605,969
    
    
    
    2,486,525
    
    
    
    2,545,504Ore grade
    
    
    1.3
    %
    
    
    1.3
    %
    
    
    1.2
    %Copper recovery
    
    
    90.5
    %
    
    
    91.0
    %
    
    
    90.9
    %Copper concentrate
    
    
    105,690
    
    
    
    100,966
    
    
    
    99,388Copper in concentrate
    
    
    29,770
    
    
    
    28,378
    
    
    
    27,952Highway Reward(1) (Underground)
    
    Ore mined
    
    
    147,917
    
    
    
    
    
    
    
    Copper concentrate
    
    
    21,506
    
    
    
    
    
    
    
    Copper in concentrate
    
    
    5,616
    
    
    
    
    
    
    
    Total
    
    Ore mined
    
    
    2,753,886
    
    
    
    2,486,525
    
    
    
    2,545,504Copper concentrate
    
    
    127,196
    
    
    
    100,966
    
    
    
    99,388Copper in concentrate
    
    
    35,386
    
    
    
    28,378
    
    
    
    27,952
 
 Note:(1)
    
    TCM has a 70.0% ownership interest in the Highway Reward mine, which was closed in July 2005.
The figures shown represent total mine production at the Highway Reward underground mine,
including the portion attributable to TCMs joint venture partner, BML Holdings Pty Ltd,
during the times when the mine was open, which was used in our business. Principal Raw Materials
 Overview
  Copper Concentrate
    Rock Phosphate
  62




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##### Table of Contents



Power
  Distribution, Logistics and Transport
   Sales and Marketing
     Market Share and Competition
   63




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##### Table of Contents



Our Zinc Business
 Overview
   
    
    benefiting from low-cost production available from its two hydrometallurgical zinc
smelters with capacity of 210,000 tpa each at Chanderiya commissioned in May 2005 and
December 2007, and expanded in April 2008 together with associated captive power plants at
Chanderiya;
    
    increasing the total zinc smelting production capacity;
    
    increasing the percentage of concentrates being sourced from its Rampura Agucha mine as
compared to its other mines to lower its cost of obtaining zinc concentrate;
    
    continuing its initiatives to improve operational efficiencies at its existing
operations;
    
    reducing power costs;
    
    reducing the size of its workforce including through a voluntary retirement plan; and
    
    increasing productivity and upgrading existing technology.
  64




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##### Table of Contents



Principal Products


Zinc




Lead




Sulphuric Acid




Silver
  65




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##### Table of Contents



Our Production Process
   
 66




---



##### Table of Contents



Lead-Zinc Mines
   Zinc Smelters
   TM
 Lead Smelters
 TM
  TM
 Delivery to Customers
  67




---



##### Table of Contents



Principal Facilities
 Overview
  
 68




---



##### Table of Contents



69




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##### Table of Contents



70




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##### Table of Contents



Mines
 Rampura Agucha
    71




---



##### Table of Contents



72




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##### Table of Contents



Rajpura Dariba
        73




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##### Table of Contents



74




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##### Table of Contents



Zawar
          75




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##### Table of Contents



Summary of Mine Reserves
  Total Proven and ProbableProven Reserves
    
    Probable Reserves
    
    ReservesZinc
    
    Lead
    
    
    
    
    
    Zinc
    
    Lead
    
    
    
    
    
    Zinc
    
    LeadMine
    
    Quantity
    
    Grade
    
    Grade
    
    Quantity
    
    Grade
    
    Grade
    
    Quantity
    
    Grade
    
    Grade(million tons)
    
    (%)
    
    (%)
    
    (million tons)
    
    (%)
    
    (%)
    
    (million tons)
    
    (%)
    
    (%)Rampura Agucha
    
    
    11.7
    
    
    
    13.5
    
    
    
    2.1
    
    
    
    51.9
    
    
    
    12.8
    
    
    
    1.9
    
    
    
    63.6
    
    
    
    13.0
    
    
    
    1.9Rajpura Dariba
    
    
    5.2
    
    
    
    5.8
    
    
    
    1.5
    
    
    
    3.8
    
    
    
    6.3
    
    
    
    1.8
    
    
    
    9.0
    
    
    
    6.2
    
    
    
    1.6Zawar
    
    
    3.9
    
    
    
    4.2
    
    
    
    2.0
    
    
    
    3.3
    
    
    
    3.5
    
    
    
    2.2
    
    
    
    7.2
    
    
    
    3.9
    
    
    
    2.1Total
    
    
    20.8
    
    
    
    9.8
    
    
    
    2.0
    
    
    
    59.0
    
    
    
    11.9
    
    
    
    1.9
    
    
    
    79.8
    
    
    
    11.4
    
    
    
    1.9
 Smelters
 Overview
  CapacitySulphuric
    
    Captive PowerFacility
    
    Zinc
    
    Lead
    
    Silver
    
    Acid
    
    Plant(tpa)
    
    
    
    
    
    (MW)Chanderiya
    
    
    445,000
    (1)
    
    
    85,000
    
    
    
    120
    
    
    
    755,000
    (2)
    
    
    234Debari
    
    
    80,000
    (3)
    
    
    
    
    
    
    
    
    
    
    419,000
    
    
    
    29Vizag
    
    
    56,000
    
    
    
    
    
    
    
    
    
    
    
    90,996
    
    
    
    Total
    
    
    581,000
    
    
    
    85,000
    
    
    
    120
    
    
    
    1,264,996
    
    
    
    263
 
 Notes:(1)
    
    Excludes debottlenecking of 80,000 tpa at the Chanderiya zinc smelters which was completed in
April 2008.(2)
    
    Excludes debottlenecking of 96,000 tpa at the Chanderiya sulphuric acid plant which was
completed in April 2008.(3)
    
    Excludes debottlenecking of 8,000 tpa at the Debari zinc smelter which was completed in April
2008. Chanderiya
  
    
    An ISPTM pyrometallurgical lead-zinc smelter with a capacity of 105,000 tpa
of zinc and 35,000 tpa of lead that was commissioned in 1991;
    
    Two RLE hydrometallurgical zinc smelters with a capacity of 170,000 tpa each that were
commissioned in May 2005 and December 2007. Pursuant to the improvement in operational
efficiencies which was completed in April 2008, the zinc smelting capacity increased by
40,000 tpa to 210,000 tpa each;
    
    An AusmeltTM lead smelter with a capacity of 50,000 tpa that was
commissioned in February 2006;
 76




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
    
    Two associated 154 MW and 80 MW coal-based captive power plants;
    
    Two sulphuric acid plants with a total capacity of 755,000 tpa of sulphuric acid.
Pursuant to improvement in operational efficiencies which was completed in April 2008,
the total capacity increased to 851,000 tpa of sulphuric acid; and
    
    A silver refinery with a capacity of 120 tpa silver ingots.
 TM
 Debari
  Vizag
  Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    2006
    
    2007
    
    2008(tons, except for silver which is in kgs)ChanderiyaISPTM Pyrometallurgical lead-zinc smelter
    
    Zinc
    
    
    82,610
    
    
    
    88,183
    
    
    
    86,080Lead
    
    
    19,070
    
    
    
    16,630
    
    
    
    16,265Silver refinery
    
    Silver
    
    
    24,098
    
    
    
    51,296
    
    
    
    80,405First hydrometallurgical zinc smelter(1)
    
    Zinc
    
    
    71,049
    
    
    
    135,673
    
    
    
    165,391Second hydrometallurgical zinc smelter
    
    Zinc
    
    
    
    
    
    
    
    
    
    
    42,070
 77




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##### Table of Contents



Year Ended March 31,Facility
    
    Product
    
    2006
    
    2007
    
    2008(tons, except for silver which is in kgs)AusmeltTM lead smelter
    
    Lead
    
    
    4,566
    
    
    
    27,922
    
    
    
    41,982Sulphuric acid plant
    
    Sulphuric acid
    
    
    324,657
    
    
    
    413,222
    
    
    
    576,493DebariHydrometallurgical zinc smelter
    
    Zinc
    
    
    77,487
    
    
    
    74,353
    
    
    
    78,511Sulphuric acid plant
    
    Sulphuric acid
    
    
    105,943
    
    
    
    106,814
    
    
    
    105,485VizagHydrometallurgical zinc smelter
    
    Zinc
    
    
    52,552
    
    
    
    50,107
    
    
    
    54,271Sulphuric acid plant
    
    Sulphuric acid
    
    
    71,356
    
    
    
    71,405
    
    
    
    71,989Total
    
    Zinc
    
    
    283,698
    
    
    
    348,316
    
    
    
    426,323Lead(2)
    
    
    23,636
    
    
    
    44,552
    
    
    
    58,247Silver
    
    
    24,098
    
    
    
    51,296
    
    
    
    80,405Sulphuric acid
    
    
    501,956
    
    
    
    591,441
    
    
    
    753,966
 
 Notes:(1)
    
    Includes production capitalized in fiscal 2006 and 2008 of 1,030 tons and 1,154 tons,
respectively.(2)
    
    Excludes lead containing a high content of silver (High
Silver lead) produced from the
pyrometallurgical lead-zinc smelter for captive use, which was 1,011 tons, 5,634 tons
and 5,319 tons in fiscal 2006, 2007 and 2008, respectively.  Year Ended March 31,Mine (Type of Mine)
    
    Product
    
    2006
    
    2007
    
    2008(tons, except percentages)Rampura Agucha (Open-pit)
    
    Ore mined
    
    
    3,496,000
    
    
    
    3,748,840
    
    
    
    4,068,215Ore
grade  Zinc
    
    
    13.1
    %
    
    
    13.3
    %
    
    
    13.0
    %Lead
    
    
    2.0
    %
    
    
    2.00
    %
    
    
    1.9
    %Recovery  Zinc
    
    
    91.2
    %
    
    
    91.7
    %
    
    
    92.2
    %Lead
    
    
    59.6
    %
    
    
    60.4
    %
    
    
    61.2
    %Zinc concentrate
    
    
    790,050
    
    
    
    851,089
    
    
    
    914,917Lead concentrate
    
    
    65,194
    
    
    
    69,905
    
    
    
    74,874Rajpura Dariba (Underground)
    
    Ore mined
    
    
    491,624
    
    
    
    579,075
    
    
    
    813,249Ore grade  Zinc
    
    
    5.7
    %
    
    
    5.1
    %
    
    
    4.9
    %Lead
    
    
    1.4
    %
    
    
    1.5
    %
    
    
    2.1
    %Recovery  Zinc
    
    
    80.6
    %
    
    
    80.6
    %
    
    
    81.4
    %Lead
    
    
    64.4
    %
    
    
    67.6
    %
    
    
    71.6
    %Zinc concentrate
    
    
    45,982
    
    
    
    49,644
    
    
    
    66,235Lead concentrate
    
    
    9,245
    
    
    
    12,210
    
    
    
    23,706Zawar (Underground)
    
    Ore mined
    
    
    807,500
    
    
    
    812,000
    
    
    
    901,635Ore grade  Zinc
    
    
    4.1
    %
    
    
    3.5
    %
    
    
    3.7
    %Lead
    
    
    2.1
    %
    
    
    2.4
    %
    
    
    2.4
    %Recovery  Zinc
    
    
    88.9
    %
    
    
    88.7
    %
    
    
    89.0
    %Lead
    
    
    83.9
    %
    
    
    84.3
    %
    
    
    85.2
    %Zinc concentrate
    
    
    52,975
    
    
    
    46,654
    
    
    
    54,676Lead concentrate
    
    
    21,299
    
    
    
    25,219
    
    
    
    27,175Total
    
    Ore mined
    
    
    4,795,124
    
    
    
    5,139,915
    
    
    
    5,783,099Zinc concentrate
    
    
    889,007
    
    
    
    947,387
    
    
    
    1,035,828Lead concentrate
    
    
    95,738
    
    
    
    107,334
    
    
    
    125,755
 Principal Raw Materials
  78




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##### Table of Contents



Zinc and Lead Concentrates
  Power
   Metallurgical Coke
  Distribution, Logistics and Transport
  Sales and Marketing
    Projects and Developments
  79




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##### Table of Contents




    
    Establishing two brownfield smelters which are expected to increase the production
capacities of zinc and lead by approximately 210,000 tons and 100,000
tons,
respectively, at HZLs Rajpura Dariba complex in the State of Rajasthan in Northwest India,
and which are expected to be completed by mid-2010;
    
    Expanding its ore production capacity at the Rampura Agucha mine from approximately 5.0
mtpa to 6.0 mtpa and at the Sindesar Khurd mine from approximately 0.3 mtpa to 1.5 mtpa. HZL
is expected to start mining activity at the Kayar mine which is expected to have a
production capacity of approximately 0.3 mtpa. These projects are expected to be completed
by early 2012;
    
    Setting up a captive thermal power plant with a capacity of 160 MW at Rajpura Dariba
which is expected to be completed by mid-2010; and
    
    Increasing its silver production from the current levels of approximately 100 to 120 tpa
to approximately 500 tpa in large part from additional production at the Sindesar Khurd
mine.
  Market Share and Competition
    Our Aluminum Business
 Overview
   80




---



##### Table of Contents



Principal Products
 Primary Aluminum
  Rolled Products
  By-products
  81




---



##### Table of Contents



Production Process
   
 82




---



##### Table of Contents



Bauxite Mines
  Alumina Refinery
  Additional Supply of Alumina
  Aluminum Smelters
   Fabrication Facility
  Delivery to Customers
  83




---



##### Table of Contents



Principal Facilities
 Overview
   
 84




---



##### Table of Contents



Bauxite Mines
 Chhattisgarh Mines
    85




---



##### Table of Contents



86




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##### Table of Contents



Summary of Bauxite Mine Reserves
  Total Proven andProven Reserves
    
    Probable Reserves
    
    Probable ReservesOre body
    
    Quantity
    
    Oxide
    
    Quantity
    
    Oxide
    
    Quantity
    
    Oxide(million tons)
    
    (%)
    
    (million tons)
    
    (%)
    
    (million tons)
    
    (%)Mainpat
    
    
    4.0
    
    
    
    48.3
    
    
    
    
    
    
    
    
    
    
    
    4.0
    
    
    
    48.3Bodai-Daldali
    
    
    
    
    
    
    
    
    
    
    5.5
    
    
    
    48.3
    
    
    
    5.5
    
    
    
    48.3Total
    
    
    4.0
    
    
    
    48.3
    
    
    
    5.5
    
    
    
    48.3
    
    
    
    9.5
    
    
    
    48.3
 Korba Facility
 Overview
  CapacityCaptive PowerFacility
    
    Alumina(1)
    
    Aluminum
    
    Plant(tpa)
    
    (MW)Korba
    
    
    200,000
    
    
    
    345,000
    
    
    
    810
 
 Note:(1)
    
    Alumina is used for production of aluminum. Approximately two tons of alumina is required for
the production of one ton of aluminum. Refinery
  87




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##### Table of Contents



Smelters
  Fabrication Facility
  Cast House
  Sheet Rolling Shop
  Captive Power Plants
  Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    
    2006
    
    
    2007
    
    
    2008(tons)Korba
    
    Alumina(1)
    
    
    219,485
    
    
    
    222,395
    
    
    
    217,185Ingots(2)
    
    
    58,750
    
    
    
    182,921
    
    
    
    195,795Rods(3)
    
    
    64,602
    
    
    
    72,981
    
    
    
    101,183Rolled products
    
    
    50,391
    
    
    
    57,287
    
    
    
    61,693Total
    
    
    
    
    
    
    173,743
    
    
    
    313,189
    
    
    
    358,671
 
 Note:(1)
    
    Reflects alumina production. Alumina that is produced is used in production of aluminum and
rolled products. Additional alumina needed for production of aluminum is purchased from third
parties and not reflected in alumina production numbers. Approximately two tons of alumina is
required for the production of one ton of aluminum.(2)
    
    Includes production capitalized in fiscal 2006 of 12,288 tons.(3)
    
    Includes production capitalized in fiscal 2006 of 1,300 tons. 88




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##### Table of Contents



Year Ended March 31,Mine (Type of Mine)
    
    Product
    
    2006
    
    
    2007
    
    
    2008(tons, except for percentages)Mainpat (Open-pit)
    
    Bauxite ore mined
    
    
    565,301
    
    
    
    665,495
    
    
    
    628,925Ore grade
    
    
    45.7
    %
    
    
    45.6
    %
    
    
    45.2
    %Bodai-Daldali (Open-pit)
    
    Bauxite ore mined
    
    
    65,821
    
    
    
    331,950
    
    
    
    520,109Ore grade
    
    
    48.6
    %
    
    
    50.0
    %
    
    
    49.5
    %Total
    
    
    
    
    
    
    631,122
    
    
    
    997,445
    
    
    
    1,149,034
 Principal Raw Materials
  Bauxite
  Alumina
  Power
  Water
  Carbon
  89




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##### Table of Contents



Caustic Soda
  Other Raw Materials
  Distribution, Logistics and Transport
  Sales and Marketing
     Projects and Developments
  Market Share and Competition
  90




---



##### Table of Contents



Vedanta Aluminium
 Overview
   Projects and Developments
 Lanjigarh Alumina Refinery
    Jharsuguda Aluminum Smelter
   91




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##### Table of Contents



Our Future Commercial Power Generation Business
 Overview
   Our Experience with Captive Power Plants
   Year Commissioned
    
    Capacity
    
    Location

    
    Fuel Used(MW)1988(1)
    
    
    270
    
    Korba
    
    Thermal coal1997
    
    
    24
    
    Tuticorin
    
    Liquid fuel2003
    
    
    29
    
    Debari
    
    Liquid fuel2003
    
    
    6
    
    Zawar
    
    Liquid fuel2005
    
    
    23
    
    Tuticorin
    
    Liquid fuel2005
    
    
    154
    
    Chanderiya
    
    Thermal coal2006
    
    
    540
    
    Korba
    
    Thermal coal2007
    
    
    75
    (2)
    Lanjigarh
    
    Thermal coal2007
    
    
    107
    
    Gujarat and Karnataka
    
    Wind
    (3)2008
    
    
    80
    
    Chanderiya
    
    Thermal coalTotal
    
    
    1,308
 
 Notes:(1)
    
    Commissioned by BALCO prior to our acquisition of BALCO in 2001.(2)
    
    Expandable to 90 MW, subject to government approvals.(3)
    
    Our wind power plants are not for captive use. 92




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##### Table of Contents




    
    HZLs 16 MW of wind power capacity which is expected to be commissioned by mid-2008.
    
    HZLs 80 MW coal-based captive power plant at its Zawar mines which is expected to be
commissioned by September 2008.
    
    HZLs 160 MW coal-based captive power plants at the Rajpura Dariba mines which are
currently under construction, subject to the receipt of government approvals.
    
    Vedanta Aluminiums 1,215 MW (comprised of nine units of 135 MW each) coal-based captive
power plant at Jharsuguda, with the first unit expected to be commissioned by July 2008 and
all units expected to be commissioned by the end of 2009.
  Our Plans for Commercial Power Generation
 Sterlite Energy  Orissa
     93




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##### Table of Contents



BALCO  Chhattisgarh
   HZL  Wind Power Plants
 107.2 MW
   Other Opportunities in Power
   Risks in Commercial Power Business
  94




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##### Table of Contents



Exploration and Development Activities
   Options to Increase Interests in HZL and BALCO
 Call Options Over Shares in HZL
       95




---



##### Table of Contents



Call Option Over Shares in BALCO
   96




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##### Table of Contents




    
    the fair value of the shares on the exercise date, as determined by an independent
valuer; and
    
    the original sale price (Rs. 49.01 per share) ($1.22 per share) together with interest at
a rate of 14% per annum compounded half yearly from March 2, 2001 through the exercise date,
less all dividends received by the Government of India since March 2, 2001 through the
exercise date.
     Employees
  Company
    
    Location
    
    Primary Company Function
    
    Total EmployeesCopperSterlite Industries (India) Limited
    
    India
    
    Copper smelting and refining
    
    
    1,199Copper Mines of Tasmania Pty Ltd.
    
    Australia
    
    Copper mining
    
    
    97ZincHindustan Zinc Limited
    
    India
    
    Zinc and lead production
    
    
    6,338AluminumBharat Aluminium Company Limited
    
    India
    
    Aluminum production
    
    
    5,176PowerSterlite Energy Limited
    
    India
    
    Commercial power generation
    
    
    35
  97




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Factors  Risks
  Insurance
   Regulatory Matters
 Mining Laws
   98




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##### Table of Contents



Grant of a Mining Lease
    Protection of the Environment
  Labor Conditions
  99




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##### Table of Contents



Royalties
   Environment Laws
   The Environment (Protection) Act, 1986 (EPA)
  The Environment Impact Assessment Notification No: 1533(E), 2006 (EIA Notification)
  Forest (Conservation) Act, 1980 (Forest Act)
  Hazardous Wastes (Management and Handling) Rules, 1989 (Hazardous Wastes Rules)
  Water (Prevention and Control of Pollution) Act, 1974 (Water Act)
  100




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##### Table of Contents



Water (Prevention and Control of Pollution) Cess Act, 1977 (Water Cess Act)
  Air
(Prevention and Control of Pollution) Act, 1981 (Air Act)
  Employment and Labor Laws
  The Industrial Disputes Act, 1947 (IDA)
  Contract Labor (Regulation and Abolition) Act, 1970 (CLRA)
   Employee State Insurance Act, 1948 (ESIA)
  101




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##### Table of Contents



Payment of Wages Act, 1936 (PWA)
  Minimum Wages Act, 1948 (MWA)
  Workmens Compensation Act, 1923 (WCA)
  Payment of Gratuity Act, 1972 (PGA)
   Payment of Bonus Act, 1965 (PBA)
  102




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##### Table of Contents



Employees
Provident Funds and Miscellaneous Provisions Act, 1952 (EPFA)
  Other Laws
 Land Acquisition Act, 1894 (Land Acquisition Act)
  103




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##### Table of Contents



C. Corporate Structure
  
 
 Notes:(1)
    
    Volcan is owned and controlled by the Anil Agarwal Discretionary Trust, or the Agarwal Trust.
Onclave PTC Limited, or Onclave, is the trustee of the Agarwal Trust and controls all voting
and investment decisions of the Agarwal Trust. As a result, shares beneficially owned by
Volcan may be deemed to be beneficially owned by the Agarwal Trust and, in turn, by Onclave.
Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, may be
deemed to have beneficial ownership of shares that may be owned or deemed to be beneficially
owned by Onclave.(2)
    
    SOVL has a call option to acquire from the Government of India a further 29.5% of HZL (or
26.0% if the Government of India exercises in full its right to sell 3.5% of HZL to HZL
employees) which remains exercisable so long as the Government of India has not sold its
remaining shares pursuant to a public offer. See  B. Business Overview  Our Business  Options to Increase
Interests in HZL and BALCO for more information.(3)
    
    We exercised our option to acquire the remaining 49.0% of BALCO owned by the Government of
India on March 19, 2004. The exercise of this option has been contested by the Government of
India. The Government of India has the right and has expressed an intention to sell 5.0% of
BALCO to BALCO employees. See  B. Business Overview  Our Business  Options to Increase Interests in HZL
and BALCO for more information. 104




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
    
    Sterlite Industries (India) Limited.We are incorporated in Kolkata, State of West
Bengal, India, our registered office is in Tuticorin, State of Tamil Nadu, India and we
are headquartered in Mumbai. We have been a public listed company in India since 1988 and
our equity shares are listed and traded on the NSE and BSE. Our ADSs are listed on the
NYSE. Vedanta, through Twin Star and MALCO, owns 60.6% of our issued share capital and
has management control of us. Vedantas 59.9% ownership interest in us is equal to the
sum of Twin Stars 57.0% ownership interest in us plus 80.0% of the 3.6% ownership
interest in us of MALCO (reflecting Vedantas 80.0% ownership interest in MALCO). We are
a majority-owned and controlled subsidiary of Vedanta. The remainder of our share capital
is held by Bhadram Janhit Shalika (previously known as the SIL Employees Welfare Trust),
Life Insurance Corporation of India and other institutional and public shareholders
(35.3%). We operate our copper business within Sterlite, except for our Australian copper
mine, which is owned and operated by our wholly-owned subsidiary CMT.
    
    Bharat Aluminium Company Limited.BALCO is incorporated in New Delhi, State of Delhi,
India and is headquartered at Korba in the State of Chhattisgarh. We own 51.0% of BALCOs
share capital and have management control of the company. The Government of India owns
the remaining 49.0%. We exercised an option to acquire the Government of Indias
remaining ownership interest in BALCO on March 19, 2004, which has been contested by the
Government of India. Further, the Government of India retains the right and has expressed
an intention to sell 5.0% of BALCO to BALCO employees. See  B. Business Overview 
Our Business  Options to Increase Interests in HZL and BALCO for more information. BALCO owns and
operates our aluminum business.
    
    Hindustan Zinc Limited.HZL is incorporated in Jaipur, State of Rajasthan, India and
is headquartered in Udaipur in Rajasthan. HZL is listed on the NSE and BSE. We own 64.9%
of HZLs share capital through our wholly-owned subsidiary SOVL. The remainder of HZLs
share capital is owned by the Government of India (29.5%) and institutional and public
shareholders and employees of HZL (5.6%). Through SOVL we have management control of HZL,
which owns and operates our zinc business, and own a call option to acquire the
Government of Indias remaining ownership interest at a fair market value to be
determined by an independent appraiser. This call option is exercisable so long as the
Government of India has not sold its remaining interest pursuant to a public offer. See
 B. Business Overview  Our Business  Options to Increase Interests in HZL and BALCO for more
information.
    
    Sterlite Energy Limited.Sterlite Energy is incorporated in Mumbai, State of
Maharashtra, India and its registered office is located in Mumbai, Maharashtra. Sterlite
Energy is in the process of moving its registered office to Tuticorin, Tamil Nadu.
Sterlite Energy is our wholly-owned subsidiary.
  
    
    Volcan Investments Limited.Volcan was incorporated in the Bahamas on November 25,
1992, and is owned and controlled by the Agarwal Trust. Onclave is the trustee of the
Agarwal Trust and controls all voting and investment decisions of the Agarwal Trust.
Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman,
controls Onclave. Vedanta, Volcan, Onclave and Mr. Anil Agarwal are parties to a
relationship agreement that regulates the ongoing relationship among them. Volcan owns
approximately 53.5% of the issued ordinary share capital of Vedanta.
 105




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##### Table of Contents




    
    Vedanta Resources plc.On April 22, 2003, Vedanta was created as a new company
wholly-owned by Volcan. We and a number of other companies owned directly or indirectly
by the Agarwal family at that time became subsidiaries of Vedanta. On December 10, 2003,
Vedanta completed an initial public offering of its shares in the United Kingdom and its
shares were listed on the LSE, as a result of which Volcans ownership interest in
Vedanta was reduced and is 53.5% as of the date of this annual report. Vedanta is a
leading metals and mining company that is listed on the LSE and included in the FTSE 100
Index.We are a majority-owned and controlled subsidiary of Vedanta. We are a party to a shared
services agreement with Vedanta and other entities regarding the sharing of management
services. See Item 7. Major Shareholders and Related Party Transactions.In 2004, Vedanta, through its wholly-owned subsidiary, Vedanta Resources Holdings Limited,
or VRHL, acquired 51.0% of KCM, which is incorporated in Zambia. In April 2008, Vedanta
acquired a further 28.4% of KCM. KCM is the largest copper metals and mining company in
Zambia and exports substantially all of its copper production to the Middle East and
Southeast Asia. KCM competes with us on the world copper markets.In April 2007, Vedanta acquired a 51.0% controlling interest in Sesa Goa Limited, which was
incorporated in India, is Indias largest private sector iron ore producer and exports
substantially all of its iron ore production to leading global steel companies in China,
Europe and Japan.
    
    The Madras Aluminium Company Limited.MALCO was incorporated in 1960 in the State of
Tamil Nadu, India where it is also headquartered. MALCO is listed on the NSE and BSE.
Vedanta has management control of MALCO. MALCO is a fully integrated aluminum producer
and its alumina and aluminum products are primarily sold in the domestic Indian market.
MALCO, a competitor of BALCO, had a primary market share in the Indian market of 4.0% by
volume in fiscal 2008, compared to 27.0% by volume for BALCO, according to AAI.MALCO owns 38.8% of India Foils Limited, or IFL, which owns an aluminum foil business. In January
2008, MALCO entered into an agreement to sell its entire 38.8% ownership interest in IFL to a third
party, subject to statutory approvals.
  D. Property, Plant and Equipment
  
 ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 The following discussion of our business, financial condition and results of operations should
be read in conjunction with our consolidated financial statements and the related notes included
elsewhere in this annual report. Some of the statements in the following discussion are
forward-looking statements that reflect our current views with respect to future events and
financial performance. Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, such as those set forth under Item 3.
Key Information  D. Risk Factors and elsewhere in this annual report.
 Overview
  106




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
    
    the net sales for each of our business segments as a percentage of our net sales on a
consolidated basis;
    
    the operating income for each of our business segments as a percentage of our operating
income on a consolidated basis; and
    
    the segment profit, calculated by adjusting operating income for depreciation, depletion
and amortization, voluntary retirement scheme expenses, impairment of assets and guarantees,
impairment of investments and loans and gain on sale of real estate, as applicable, for each
of our business segments as a percentage of our segment profit on a consolidated basis.
 Year Ended March 31,2006
    
    
    2007
    
    
    2008Net Sales:Copper
    
    
    55.3
    %
    
    
    47.8
    %
    
    
    51.3
    %Zinc
    
    
    31.4
    
    
    
    35.6
    
    
    
    31.7Aluminum
    
    
    13.3
    
    
    
    16.6
    
    
    
    16.9Corporate and others
    
    
    
    
    
    
    
    
    
    
    0.1Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating income:Copper
    
    
    24.6
    %
    
    
    18.4
    %
    
    
    14.7
    %Zinc
    
    
    68.4
    
    
    
    67.3
    
    
    
    70.8Aluminum
    
    
    11.2
    
    
    
    14.3
    
    
    
    15.4Corporate and others
    
    
    (4.2
    )
    
    
    
    
    
    
    (0.9
    )Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Segment profit(1):Copper
    
    
    24.3
    %
    
    
    17.9
    %
    
    
    15.2
    %Zinc
    
    
    62.8
    
    
    
    66.1
    
    
    
    67.1Aluminum
    
    
    12.9
    
    
    
    16.0
    
    
    
    17.2Corporate and others
    
    
    
    
    
    
    
    
    
    
    0.5Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 Note:(1)
    
    Segment profit is calculated by adjusting operating income for depreciation, depletion and
amortization, voluntary retirement scheme expenses, guarantees, impairment of investments and
loans and gain on sale of real estate, as applicable. Segment profit is not a recognized
measurement under US GAAP. Our segment profit may not be comparable to similarly titled
measures reported by other companies due to potential inconsistencies in the method of
calculation. We have included our segment profit because we believe it is an indicative
measure of our operating performance and is used by investors and analysts to evaluate
companies in our industry. Our segment profit should be considered in addition to, and not as
a substitute for, other measures of financial performance and liquidity reported in accordance
with US GAAP. We believe that the inclusion of supplementary adjustments applied in our
presentation of segment profit are appropriate because we believe it is a more indicative
measure of our baseline performance as it excludes certain charges that our management
considers to be outside of our core operating results. In addition, our segment profit is
among the primary indicators that our management uses as a basis for planning and forecasting
of future periods. The following table reconciles operating income to segment profit for the
periods presented: 107




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Year Ended March 31,2006
    
    
    2007
    
    
    2008
    
    
    2008(in millions)Copper:Operating income
    
    Rs. 7,659
    
    
    Rs. 17,235
    
    
    Rs. 11,037
    
    
    $
    275.8Plus:Depreciation, depletion and amortization
    
    
    1,323
    
    
    
    1,440
    
    
    
    1,613
    
    
    
    40.3Gain on sale of real estate
    
    
    
    
    
    
    (986
    )
    
    
    
    
    
    
    Segment profit
    
    Rs. 8,982
    
    
    Rs. 17,689
    
    
    Rs. 12,650
    
    
    $
    316.1Zinc:Operating income
    
    Rs. 21,287
    
    
    Rs. 62,908
    
    
    Rs. 53,192
    
    
    $
    1,329.1Plus:Depreciation, depletion and amortization
    
    
    1,929
    
    
    
    2,124
    
    
    
    2,371
    
    
    
    59.3Voluntary retirement scheme expenses
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    Segment profit
    
    Rs. 23,216
    
    
    Rs. 65,129
    
    
    Rs. 55,563
    
    
    $
    1,388.4Aluminum:Operating income
    
    Rs. 3,496
    
    
    Rs. 13,371
    
    
    Rs. 11,581
    
    
    $
    289.4Plus:Depreciation, depletion and amortization
    
    
    1,256
    
    
    
    2,394
    
    
    
    2,663
    
    
    
    66.5Voluntary retirement scheme expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Segment profit
    
    Rs. 4,752
    
    
    Rs. 15,765
    
    
    Rs. 14,244
    
    
    $
    355.9Corporate and Others:Operating income
    
    Rs. (1,311)
    
    
    Rs. (3)
    
    
    Rs. (657)
    
    
    $
    (16.4
    )Plus:Depreciation, depletion and amortization
    
    
    3
    
    
    
    1
    
    
    
    413
    
    
    
    10.3Guarantees, impairment of investments and loans
    
    
    1,300
    
    
    
    
    
    
    
    628
    
    
    
    15.7Segment profit
    
    Rs. (8)
    
    
    Rs. (2)
    
    
    Rs. 384
    
    
    $
    9.6
 
    
    Business Summary
  
    
    Copper.Our wholly-owned copper business is principally one of custom smelting and
includes a smelter, refinery, phosphoric acid plant, sulphuric acid plant and copper rod
plant at Tuticorin in the State of Tamil Nadu in Southern India and a refinery and two
copper rod plants at Silvassa in Western India. In addition, we own the Mt. Lyell copper
mine in Tasmania, Australia, which provides a small percentage of our copper concentrate
requirements. Our primary products are copper cathodes and copper rods. Net sales and
operating income of our copper business have increased from Rs. 67,921 million and Rs. 7,659
million in fiscal 2006 to Rs. 126,276 million
($3,155.3 million) and Rs. 11,037 million
($275.8 million) in fiscal 2008, representing compound annual growth rates of 36.4% and
20.0%, respectively.
    
    Zinc.Our zinc business is owned and operated by HZL, Indias leading and only
integrated zinc producer with a 79.7% market share by volume of the Indian zinc market in
fiscal 2008, according to ILZDA. We have a 64.9% ownership interest in HZL. The remainder of
HZL is owned by the Government of India (29.5%) and institutional and public shareholders
(5.6%). HZL is a fully integrated zinc producer with operations including three lead-zinc
mines, three hydrometallurgical zinc smelters, one lead smelter and one lead-zinc smelter in
the State of Rajasthan in Northwest India and one hydrometallurgical zinc smelter in the
state of Andhra Pradesh in Southeast India. HZLs primary products are zinc and lead ingots.
Net sales and operating income of our zinc business have increased from Rs. 38,573 million
and Rs. 21,287 million in fiscal 2006 to Rs. 78,222 million ($1,954.6 million) and
Rs. 53,192 million ($1,329.1 million) in fiscal 2008, representing compound annual growth
rates of 42.4% and 58.1%, respectively.
    
    Aluminum.Our aluminum business is primarily owned and operated by BALCO. We have a
51.0% ownership interest in BALCO. The remainder of BALCO is owned by the Government of
India. We have exercised our option to acquire the Government of Indias remaining 49.0%
ownership interest, though the exercise of this option has been contested by the Government
of India and the Government of India retains the right and has expressed an intention to
sell 5.0% of BALCO to BALCO employees. BALCOs operations include two bauxite mines, one
alumina refinery, two aluminum smelters, a fabrication facility and two captive power plants
in the State of Chhattisgarh in Central India. BALCOs primary products are aluminum ingots,
rods and rolled products. Net sales and operating income of our aluminum business have
increased from Rs. 16,297 million and Rs. 3,496 million in fiscal 2006 to Rs. 41,596 million
($1,039.4 million) and Rs. 11,581 million ($289.4 million) in fiscal 2008, representing
compound annual growth rates of 59.8% and 82.0%, respectively.
 108




---



##### Table of Contents




    
    Corporate and Others.Our corporate and other business segment primarily includes our
equity investment in Vedanta Aluminium, our guarantees, investments and loans with respect
to IFL and our commercial power generation business that we are
developing. We anticipate that our commercial power generation business will be a separate
business segment after it becomes operational. We hold a 29.5% minority interest in Vedanta
Aluminium, which is not consolidated into our financial results and which is accounted for
as an equity investment.
 Recent Developments
      
    
    leveraging our operational and project execution skills to develop and optimize Asarcos
mines and plants;
    
    providing access to attractive mining assets with a long life;
    
    providing geographic diversification through entry into the North American market; and
    
    providing a stable operating and financial platform for Asarco.
 Factors Affecting Results of Operations
  109




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Metal Prices and Copper TcRc
 Overview
  Copper
  Year Ended March 31,2006
    
    
    2007
    
    
    2008(in US cents per pound)Copper TcRc
    
    23.1¢
    
    31.1¢
    
    15.7¢
  Year Ended March 31,2006
    
    
    2007
    
    
    2008(in US dollars per ton)Copper LME
    
    $
    4,099
    
    
    $
    6,984
    
    
    $
    7,588
 Zinc and Aluminum
  110




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##### Table of Contents



Year Ended March 31,2006
    
    
    2007
    
    
    2008(in US dollars per ton)Zinc LME
    
    $
    1,614
    
    
    $
    3,581
    
    
    $
    2,992Aluminum LME
    
    
    2,028
    
    
    
    2,663
    
    
    
    2,620
 India Market Premium
  Hedging
  Cost of Production
     111




---



##### Table of Contents



Year Ended March 31,2006
    
    
    2007
    
    
    2008(in US dollars per ton, except as indicated)Treatment charge and refining charge (TcRc)(1):Copper
    
    23.1¢/lb
    
    31.1¢/lb
    
    15.7¢/lbCost of production(2):Copper smelting and refining(3)
    
    
    6.1¢/lb
    
    
    6.1¢/lb
    
    1.8¢/lbZinc(4)
    
    $
    691
    
    
    $
    862
    
    
    $
    884Aluminum(5)
    
    
    1,497
    
    
    
    1,510
    
    
    
    1,823
 
 Notes:(1)
    
    Represents our average realized TcRc for the period.(2)
    
    Cost of production is not a recognized measure under US GAAP. We have included cost of
production as a measure of effectiveness because we believe it is an indicative measure of our
operating performance and is used by investors and analysts to evaluate companies in our
industry. Our computation of cost of production should be considered in addition to, and not
as a substitute for, other measures of financial performance and liquidity reported in
accordance with US GAAP. We believe that the cost of production measure is a meaningful
measure of our production cost efficiency as it is more indicative of our production or
conversion costs and is a measure that our management considers to be controllable. Cost of
production is a measure intended for monitoring the operating performance of our operations.
This measure is presented by other non-ferrous metal companies, though our measure may not be
comparable to similarly titled measures reported by other companies. Cost of production as
reported for our metal products consists of direct cash cost of production and excludes
non-cash cost and indirect cost (such as depreciation and interest payments), and are offset
for any amounts we receive upon the sale of the by-products from the refining or smelting
process. In the case of copper, where cost of production relates only to our custom smelting
and refining operations, cost of production is the cost of converting copper concentrate into
copper cathodes. In the case of zinc, where we have integrated operations from production of
zinc ore to zinc metal, cost of production is the cost of extracting ore and conversion of the
ore into zinc metal. In the case of aluminum, where cost of production relates only to BALCOs
old Korba smelter, which has integrated operations from production of bauxite to aluminum
metal, cost of production is the cost of producing bauxite and conversion of bauxite into
aluminum metal. Cost of production is divided by the daily average exchange rate for the year
to calculate US dollar cost of production per lb or per ton of metal as reported. The
following table reconciles segment cost, calculated as segment sales less segment profit, to
cost of production for the periods presented: Year Ended March 31,2006
    
    
    2007
    
    
    2008(in millions, except Production output and Cost of production)Copper:Segment sales
    
    Rs.
    67,921
    
    
    Rs.
    115,192
    
    
    Rs.
    126,276Less:Segment profit
    
    
    (8,982
    )
    
    
    (17,689
    )
    
    
    (12,650
    )Segment cost
    
    
    58,939
    
    
    
    97,503
    
    
    
    113,626Less:Purchased concentrate/rock
    
    
    (55,132
    )
    
    
    (91,489
    )
    
    
    (107,422
    )By-product/free copper net sales
    
    
    (1,520
    )
    
    
    (1,935
    )
    
    
    (4,283
    )Cost for downstream products
    
    
    (722
    )
    
    
    (938
    )
    
    
    (1,197
    )Others, net
    
    
    62
    
    
    
    (1,236
    )
    
    
    (195
    )Total expenses
    
    Rs.
    1,627
    
    
    Rs.
    1,905
    
    
    Rs.
    529Production output (in tons)
    
    
    273,048
    
    
    
    312,720
    
    
    
    339,294Cost of production(a)
    
    
    6.1¢/lb
    
    
    
    6.1¢/lb
    
    
    
    1.8¢/lbZinc:Segment sales
    
    Rs.
    38,573
    
    
    Rs.
    85,963
    
    
    Rs.
    78,222Less:Segment profit
    
    
    (23,216
    )
    
    
    (65,129
    )
    
    
    (55,563
    )
 112




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##### Table of Contents



Year Ended March 31,2006
    
    
    2007
    
    
    2008(in millions, except Production output and Cost of production)Segment cost
    
    
    15,357
    
    
    
    20,834
    
    
    
    22,659Less:Purchased metal
    
    
    (539
    )
    
    
    
    
    
    
    Cost of tolling including raw material cost
    
    
    (1,502
    )
    
    
    (14
    )
    
    
    Cost of intermediary product sold
    
    
    (1,188
    )
    
    
    (2,487
    )
    
    
    (2,944
    )By-product net sales
    
    
    (1,253
    )
    
    
    (1,223
    )
    
    
    (2,637
    )Cost of lead metal sold
    
    
    (690
    )
    
    
    (1,463
    )
    
    
    (1,787
    )Others, net
    
    
    (1,536
    )
    
    
    (2,050
    )
    
    
    (118
    )Total expenses
    
    Rs.
    8,649
    
    
    Rs.
    13,598
    
    
    Rs.
    15,173Production output (in tons)
    
    
    283,698
    
    
    
    348,316
    
    
    
    426,323Cost of production (per ton)(a)
    
    $
    691
    
    
    $
    862
    
    
    $
    884Aluminum:Segment sales
    
    Rs.
    17,721
    
    
    Rs.
    41,002
    
    
    Rs.
    41,695Less:Segment profit
    
    
    (4,752
    )
    
    
    (15,765
    )
    
    
    (14,244
    )Segment cost
    
    
    12,969
    
    
    
    25,237
    
    
    
    27,451Less:Cost of intermediary product sold
    
    
    (154
    )
    
    
    (177
    )
    
    
    (118
    )By-product net sales
    
    
    (408
    )
    
    
    (312
    )
    
    
    (367
    )Cost for downstream products
    
    
    (822
    )
    
    
    (983
    )
    
    
    (1,236
    )Cost for new Korba plant
    
    
    (4,773
    )
    
    
    (16,371
    )
    
    
    (17,292
    )Others, net
    
    
    186
    
    
    
    10
    
    
    
    (251
    )Total expenses
    
    Rs.
    6,998
    
    
    Rs.
    7,403
    
    
    Rs.
    8,187Production output (hot metal) (in tons)
    
    
    105,593
    
    
    
    108,244
    
    
    
    111,594Cost of production (per ton)(a)
    
    $
    1,497
    
    
    $
    1,510
    
    
    $
    1,823
 
 (a)
    
    Exchange rates used in calculating cost of production were based on the daily Reserve
Bank of India, or RBI, reference rates for the years ended March 31, 2006, 2007 and 2008 of
Rs. 44.28 per $1.00, Rs. 45.29 per $1.00 and Rs. 40.24 per $1.00, respectively. (3)
    
    Cost of copper smelting and refining includes cost of freight of copper anodes from Tuticorin
to Silvassa and excludes the benefit of the phosphoric acid plant. Revenues earned from the
sale of sulphuric acid and copper metal recovered in excess of paid copper metal are deducted
from the cash costs. The total cash costs are divided by the total number of pounds of copper
metal produced to calculate the cost of production per pound of copper metal produced.
 (4)
    
    Cost of production of zinc consists of total direct cost of producing zinc from the mines and
smelters. Revenue earned from the sale of sulphuric acid is deducted from the total costs to
calculate the total cash costs to HZL of producing zinc metal. Royalties paid are included in
the cost of production of zinc. The total cash cost is divided by the total number of tons of
zinc metal produced to calculate the cost of production per ton of zinc metal produced.
 (5)
    
    Cost of production of aluminum as presented, including in Note (2) above, relates to cost of production for BALCOs old
Korba smelter and excludes cost of production for BALCOs new Korba smelter. Cost of
production of aluminum consists of total direct cash costs. Revenue earned from the sale of
by-products, such as vanadium, reduces the total cash costs. The total cost is divided by the
total quantity of hot metal produced at the old Korba smelter to calculate the cost of
production per ton of aluminum hot metal produced. Hot metal production output is used instead
of the cast metal production output disclosed elsewhere in this annual report in calculating
cost of production as the hot metal production, which excludes the value-added cost of
casting, is the measure generally used in the aluminum metal industry for calculating cost of
production.Cost of production of aluminum for BALCO including all of its smelters, calculated by dividing
the total cost by the total quantity of hot metal produced at all of BALCOs smelters, was $1,691
per ton, $1,626 per ton and $1,720 per ton for the years ended March 31, 2006, 2007 and
2008.(a)
 
 (a)
    
    Cost of production is not a recognized measure under US GAAP. See Note (2) above for
further discussion regarding cost of production. Cost of production of aluminum for BALCO
including all of its smelters includes the cost of producing bauxite and conversion of
bauxite into aluminum metal, for the portion of BALCOs operations that are integrated from
production of bauxite to aluminum metal, and the cost of conversion of alumina into
aluminum metal, for the portion of BALCOs operations where alumina is sourced from third
parties. The following table reconciles segment cost, calculated as segment sales less
segment profit, to cost of production of aluminum for BALCO, including all of its smelters,
for the periods presented and using the exchange rates set forth in Note (2)(a) above: Year Ended March 31,2006
    
    
    2007
    
    
    2008(in millions, except Production output and Cost of production)Aluminum:Segment sales
    
    Rs.
    17,721
    
    
    Rs.
    41,002
    
    
    Rs.
    41,695Less:Segment profit
    
    
    (4,752
    )
    
    
    (15,765
    )
    
    
    (14,244
    )Segment cost
    
    
    12,969
    
    
    
    25,237
    
    
    
    27,451Less:
 113




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##### Table of Contents

\

Year Ended March 31,2006
    
    
    2007
    
    
    2008(in millions, except Production output and Cost of production)Cost of intermediary product sold
    
    
    (154
    )
    
    
    (177
    )
    
    
    (118
    )By-product net sales
    
    
    (408
    )
    
    
    (312
    )
    
    
    (367
    )Cost for downstream products
    
    
    (997
    )
    
    
    (1,323
    )
    
    
    (1,709
    )Others, net
    
    
    772
    
    
    
    (322
    )
    
    
    (181
    )Total expenses
    
    Rs.
    12,182
    
    
    Rs.
    23,103
    
    
    Rs.
    25,076Production output (hot metal) (in tons)
    
    
    162,728
    
    
    
    313,817
    
    
    
    362,296Cost of production (per ton)
    
    $
    1,691
    
    
    $
    1,626
    
    
    $
    1,720
 Production Volume and Mix
  Year Ended March 31,Product
    
    2006
    
    
    2007
    
    
    2008(tons)Copper
    
    Copper cathode(1)
    
    
    273,048
    
    
    
    312,720
    
    
    
    339,294Copper rods
    
    
    166,497
    
    
    
    177,882
    
    
    
    224,758Zinc
    
    Zinc(2) (3)
    
    
    283,698
    
    
    
    348,316
    
    
    
    426,323Lead(4)
    
    
    23,636
    
    
    
    44,552
    
    
    
    58,247Aluminum
    
    Ingots(5)
    
    
    58,750
    
    
    
    182,921
    
    
    
    195,795Rods(6)
    
    
    64,602
    
    
    
    72,981
    
    
    
    101,183Rolled Products
    
    
    50,391
    
    
    
    57,287
    
    
    
    61,693Total Aluminum
    
    
    173,743
    
    
    
    313,189
    
    
    
    358,671
 
 Notes:(1)
    
    Copper cathode is used as a starting material for copper rods. Approximately one ton of
copper cathode is required for the production of one ton of copper rods.(2)
    
    Includes production capitalized in fiscal 2006 and 2008 of 1,030 tons and 1,154 tons,
respectively.(3)
    
    Excludes tolled metal in fiscal 2006 and 2007 of 34,890 tons and 251 tons, respectively.(4)
    
    Excludes production capitalized in fiscal 2006 of 153 tons.(5)
    
    Includes production capitalized in fiscal 2006 of 12,288 tons.(6)
    
    Includes production capitalized in fiscal 2006 of 1,300 tons.   114




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##### Table of Contents



Government Policy
 India Customs Duties
  March 1, 2005 to
    
    March 1, 2006 to
    
    January 22, 2007 to
    
    April 29, 2008 toFebruary 28, 2006
    
    January 21, 2007
    
    April 28, 2008
    
    PresentCopper
    
    
    10.0
    %
    
    
    7.5
    %
    
    
    5.0
    %
    
    
    5.0
    %Copper concentrate
    
    
    5.0
    %
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    2.0
    %Zinc
    
    
    10.0
    %
    
    
    7.5
    %
    
    
    5.0
    %
    
    
    0.0
    %Aluminum
    
    
    10.0
    %
    
    
    7.5
    %
    
    
    5.0
    %
    
    
    5.0
    %
  Export Incentives
   Prior to
    
    May 5, 2005 to
    
    November 21, 2005 to
    
    July 15, 2006May 4, 2005
    
    November 20, 2005
    
    July 14, 2006
    
    to Present(per ton of exports)
    
    (percentage of FOB value in exports)Copper cathode
    

Rs. 6,500
    
    4.5%(1)
    
    5.0%(3)
    
    2.2%(4)Copper rods
    

Rs. 9,000
    
    5.0%(2)
    
    5.0%(2)
    
    2.2%(5)
 
 Notes:(1)
    
    Subject to a cap of Rs. 7,700 per ton.(2)
    
    Subject to a cap of Rs. 10,050 per ton.(3)
    
    Subject to a cap of Rs. 9,000 per ton.(4)
    
    Subject to a cap of Rs. 7,500 per ton.(5)
    
    Subject to a cap of Rs. 7,760 per ton.  Prior to
    
    May 26, 2005 to
    
    July 3, 2006 to
    
    April 1, 2007 to
    
    October 9, 2007May 26, 2005
    
    July 2, 2006
    
    March 31, 2007
    
    October 8, 2007
    
    to Present(percentage of FOB value of exports)Zinc concentrate
    
    
    3.0
    %
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    5.0
    %
    
    
    3.0
    %Zinc ingots
    
    
    9.0
    %
    
    
    6.0
    %
    
    
    4.0
    %
    
    
    7.0
    %
    
    
    5.0
    %Lead concentrate
    
    
    3.0
    %
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    5.0
    %
    
    
    3.0
    %
 115




---



##### Table of Contents



Prior to
    
    May 26, 2005 to
    
    July 3, 2006 to
    
    April 1, 2007 to
    
    October 9, 2007May 26, 2005
    
    July 2, 2006
    
    March 31, 2007
    
    October 8, 2007
    
    to Present(percentage of FOB value of exports)Aluminum ingots
    
    
    3.0
    %
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    5.0
    %(1)
    
    
    3.0
    %Aluminum rods
    
    
    3.0
    %
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    5.0
    %(1)
    
    
    5.0
    %Aluminum rolled products
    
    
    7.0
    %
    
    
    4.0
    %
    
    
    3.0
    %
    
    
    6.0
    %(1)
    
    
    4.0
    %
  Taxes and Royalties
       
    
    Profits from newly established units in special economic zones are entitled to a tax
holiday for a specified period;
    
    Profits from newly constructed power plants (including for captive use) benefit from a
tax holiday for a specified period;
    
    Investments in projects where alternative energy such as wind energy is generated can
claim large tax depreciation in the first year of operations; and
    
    Income from investment in mutual funds is exempt from a tax subject to certain
deductions.
  116




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##### Table of Contents



Exchange Rates
  Power Business
  Critical Accounting Estimates
  Mine Properties
     117




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##### Table of Contents



Useful Economic Lives of Assets and Impairment
   Asset Retirement Obligations
  Commitments, Contingencies and Guarantees
  Income Tax
  118




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##### Table of Contents



Results of Operations
 Overview
 Consolidated Statement of Operations Data
  Year Ended March 31,2006
    
    2007
    
    2008Consolidated Statement of Operations Data:Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Other operating revenues
    
    
    1.1
    
    
    
    0.9
    
    
    
    1.1Total revenue
    
    
    101.1
    
    
    
    100.9
    
    
    
    101.1Cost of sales
    
    
    (70.8
    )
    
    
    (60.0
    )
    
    
    (66.9
    )Selling and distribution expenses
    
    
    (1.7
    )
    
    
    (1.4
    )
    
    
    (1.5
    )General and administration expenses
    
    
    (2.1
    )
    
    
    (1.1
    )
    
    
    (1.9
    )Other income/(expenses):Gain on sale of real estate
    
    
    
    
    
    
    0.4
    
    
    
    Impairment of assets
    
    
    
    
    
    
    
    
    
    
    Voluntary retirement scheme expenses
    
    
    
    
    
    
    (0.0
    )
    
    
    Guarantees, impairment of investments and loans
    
    
    (1.1
    )
    
    
    
    
    
    
    (0.3
    )Operating income
    
    
    25.4
    
    
    
    38.8
    
    
    
    30.5Interest and dividend income
    
    
    1.5
    
    
    
    0.9
    
    
    
    2.7Interest expense
    
    
    (2.6
    )
    
    
    (1.8
    )
    
    
    (1.4
    )Net realized and unrealized investment gains
    
    
    0.4
    
    
    
    0.9
    
    
    
    1.8Income before income taxes, minority interests and
equity in net (loss)/income of associate
    
    
    24.8
    
    
    
    38.8
    
    
    
    33.6Income taxesCurrent
    
    
    (6.4
    )
    
    
    (9.6
    )
    
    
    (7.5
    )Deferred
    
    
    (0.9
    )
    
    
    (0.8
    )
    
    
    (1.3
    )Income after income taxes, before minority interests
and equity in net (loss)/income of associate
    
    
    17.5
    
    
    
    28.4
    
    
    
    24.8Minority interests
    
    
    (4.9
    )
    
    
    (8.7
    )
    
    
    (7.7
    )Equity in net (loss)/income of associate, net of taxes
    
    
    (0.1
    )
    
    
    0.0
    
    
    
    0.2Net income from continuing operations
    
    
    12.5
    
    
    
    19.7
    
    
    
    17.3Discontinued Operations:Income from divested business, net of tax
    
    
    0.3
    
    
    
    0.0
    
    
    
    0.0Net income
    
    
    12.8
    %
    
    
    19.7
    %
    
    
    17.3
    %
 119




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##### Table of Contents



Net Sales by Geographic Location
  2006
    
    
    2007
    
    
    2008(in millions, except percentages)% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    
    
    
    
    % ofNet Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net SalesIndia
    
    Rs.
    68,852
    
    
    
    56.1
    %
    
    Rs.
    114,222
    
    
    
    47.3
    %
    
    Rs.
    140,503
    
    
    $
    3,510.8
    
    
    
    57.0
    %Far East(1)
    
    
    22,654
    
    
    
    18.4
    
    
    
    69,624
    
    
    
    28.9
    
    
    
    62,303
    
    
    
    1,556.8
    
    
    
    25.3Other(2)
    
    
    31,285
    
    
    
    25.5
    
    
    
    57,400
    
    
    
    23.8
    
    
    
    43,608
    
    
    
    1,089.6
    
    
    
    17.7Total
    
    Rs.
    122,791
    
    
    
    100.0
    %
    
    Rs.
    241,246
    
    
    
    100.0
    %
    
    Rs.
    246,414
    
    
    $
    6,157.2
    
    
    
    100.0
    %
 
 Notes:(1)
    
    Far East includes a number of countries, primarily including China, South Korea, Singapore
and Thailand.(2)
    
    Other includes Kenya, Nigeria, Ethiopia, Algeria, Sudan, Morocco, Namibia, Egypt, Oman,
U.A.E., Turkey, Qatar, Saudi Arabia, Syria, Israel, Bangladesh, Sri Lanka, Pakistan, Belgium,
France, Germany, Italy, Jordan, the UK, The Netherlands, Luxembourg, Rotterdam, Spain, Sweden,
Switzerland, Australia, Cameroon, Malawi and Iran. Customer Concentration
  
    
    the percentage of our net sales accounted for by our ten largest customers on a
consolidated basis; and
 
    
    for each of our three primary businesses, the percentage of the net sales of such
business accounted for by the ten largest customers of such business.
 Year Ended March 31,2006
    
    2007
    
    2008Consolidated
    
    
    20.0
    %
    
    
    22.2
    %
    
    
    26.5
    %Copper
    
    
    32.0
    
    
    
    33.9
    
    
    
    16.8Zinc
    
    
    27.6
    
    
    
    47.0
    
    
    
    36.4Aluminum
    
    
    42.1
    
    
    
    39.9
    
    
    
    37.2
  Comparison of Years Ended March 31, 2007 and March 31, 2008
 Net Sales, Other Operating Revenues and Operating Income
 Consolidated
 Rs. Rs. Rs.
 Rs. Rs. Rs.
 120




---



##### Table of Contents



Rs. Rs.
 
    
    Cost of sales increased from
Rs. 144,798 million in fiscal 2007 to Rs. 164,869 million
($4,119.6 million) in fiscal 2008, an increase of
Rs. 20,071 million, or 13.9%. Cost of
sales increased primarily due to increases in production volumes across all our
businesses and higher cost of purchased copper concentrate, resulting from higher daily
average copper LME prices. The increases in production volume were primarily due to a
capacity expansion at our Tuticorin facility in our copper business, our new Korba
smelter in our aluminum business and our second new hydrometallurgical zinc smelter at
Chanderiya in our zinc business. Cost of sales as a percentage of net sales increased
from 60.0% in fiscal 2007 to 66.9% in fiscal 2008, primarily due to higher commodity
prices relative to the costs of production.
    
    Selling and distribution expenses increased from Rs. 3,444 million in fiscal 2007 to
Rs. 3,808 million ($95.2 million) in fiscal 2008, an increase of Rs. 364 million, or
10.6%. This increase was due to increased sales volumes across all our businesses as most
of the selling and distribution expenses are proportional to the sales volume. As a
percentage of net sales, however, selling and distribution expenses increased marginally
from 1.4% in fiscal 2007 to 1.5% in fiscal 2008.
    
    General and administrative expenses increased from Rs. 2,633 million in fiscal 2007 to
Rs. 4,572 million ($114.2 million) in fiscal 2008, an increase of Rs. 1,939 million, or
73.6%, primarily as a result of an increase in exploration and technical consultancy
costs at HZL and an increase in salaries and other general costs as a result of expansion
of our business. As a percentage of net sales, general and administrative expenses
increased from 1.1% in fiscal 2007 to 1.9% in fiscal 2008. These expenses increased
primarily in our zinc and aluminum business as a result of an increase in capacities and
scale of operations.
    
    We did not have a gain on sale of real estate in fiscal 2008, compared to Rs. 986
million in fiscal 2007 from the sale of property in Mumbai comprising land and building
for an amount of Rs. 1,000 million.
    
    We did not incur any voluntary retirement scheme expenses in fiscal 2008, compared to
Rs. 97 million in fiscal 2007.
    
    We incurred guarantees, impairment of investments and loans in fiscal 2008 of Rs. 628
million ($15.7 million), compared to nil in fiscal 2007. This was due to provisions made
for corporate guarantees provided to banks and financial institutions.
    
    Depreciation, depletion and amortization increased from Rs. 5,959 million in fiscal
2007 to Rs. 7,060 million ($176.4 million) in fiscal 2008, an increase of Rs. 1,101
million, or 18.5%. This increase related primarily to the capitalization of our expanded
capacities in our copper, zinc, aluminum and wind power businesses.
 Copper
 Rs. Rs. Rs.
 
    
    Copper cathode production increased from 312,720 tons in fiscal 2007 to 339,294 tons
in fiscal 2008, an increase of 8.5%, enabled by a capacity expansion at our Tuticorin
facility which increased the anode and cathode capacities to 400,000 tpa in November
2006. Copper cathode sales decreased from 133,402 tons in fiscal 2007 to 112,411 tons in
fiscal 2008, a decrease of 15.7%, as we converted a higher percentage of our copper
cathode production into copper rods in fiscal 2008 as compared to fiscal 2007.
 121




---



##### Table of Contents




    
    Production of copper rods increased from 177,882 tons in fiscal 2007 to 224,758 tons
in fiscal 2008, an increase of 26.4%. This increase in production was enabled by the
increase in rod plant capacity at Tuticorin in the second half of fiscal 2007. Copper rod
sales increased from 177,746 tons in fiscal 2007 to 224,662 tons in fiscal 2008, an
increase of 26.4%. The increase in sales was due to the increase in production.
    
    Sales of copper in the Indian market increased from 116,522 tons in fiscal 2007 to
157,037 tons in fiscal 2008, an increase of 34.8%, and our exports decreased from 194,626
tons in fiscal 2007 to 180,035 tons in fiscal 2008, a decrease of 7.5%. We endeavor to
sell as large a quantity of our products as possible domestically, where we receive an
Indian market premium. Our domestic sales as a percentage of total sales increased from
37.5% in fiscal 2007 to 46.6% in fiscal 2008 as the demand in the domestic market
increased more rapidly than our production volume growth.
    
    The daily average copper cash settlement price on the LME increased from $6,984 per
ton in fiscal 2007 to $7,588 per ton in fiscal 2008, an increase of 8.6%.
 Rs. Rs. Rs.
 
    
    TcRc rates decreased from an average of 31.1¢/lb realized in fiscal 2007 to an average
of 15.7¢/lb realized in fiscal 2008 as a result of a global weakening of the TcRc market
resulting in a significant decrease in the market TcRc rate.
    
    Cost of production, which consists of cost of smelting and refining costs, was reduced
significantly from 6.1¢/lb in fiscal 2007 to 1.8¢/lb in fiscal 2008, primarily due to
improved copper recovery, improved by-product management and higher realization on the
sale of sulphuric acid by-product.
    
    Higher copper LME prices contributed to increased profitability of our mining
operations, which was partially offset by slightly reduced production as our sole
remaining copper mine, Mt. Lyell.
    
    We earned a profit of Rs. 986 million in fiscal 2007 from the sale of real estate in
Mumbai, with no such profit in fiscal 2008.
 Zinc
 Rs. Rs. Rs.
 
    
    Zinc ingot production increased from 348,316 tons in fiscal 2007 to 426,323 tons in
fiscal 2008, an increase of 22.4%, as a result of the contribution of a full years
production from our first hydrometallurgical zinc smelter at Chanderiya and the
contribution from our second hydrometallurgical zinc smelter at Chanderiya which was
commissioned in December 2007, in addition to marginal increases in production from other
smelters. Zinc ingot sales increased from 349,615 tons in fiscal 2007 to 425,531 tons in
fiscal 2008, an increase of 21.7%, enabled by higher production.
    
    Zinc ingot sales in the domestic market increased from 204,286 tons in fiscal 2007 to
337,672 tons in fiscal 2008, an increase of 65.3%. We endeavor to sell as large a
quantity of our products as possible domestically, where we receive an Indian market
premium. Our domestic sales as a percentage of total sales increased from 58.4% in fiscal
2007 to 79.4% in fiscal 2008 as the demand in the domestic market increased more rapidly
than our production volume growth.
    
    The daily average zinc cash settlement price on the LME decreased from $3,581 per ton
in fiscal 2007 to $2,992 per ton in fiscal 2008, a decrease of 16.4%.
 122




---



##### Table of Contents




    
    We also sold surplus zinc concentrate of 254,249 dmt in fiscal 2007 and 231,797 dmt in
fiscal 2008 to third parties, a decrease of 8.8%. The decrease was due to increased
internal consumption of zinc concentrate with the commissioning of our second
hydrometallurgical zinc smelter at Chanderiya in December 2007. We sold surplus lead
concentrate of 59,050 dmt in fiscal 2007 and 65,418 dmt in fiscal 2008 to third parties, an increase of 10.8%,
which was enabled by higher mining output in fiscal 2008.
    
    Lead ingot production increased from 44,552 tons in fiscal 2007 to 58,247 tons in
fiscal 2008, an increase of 30.7%, as a result of increased production from the
AusmeltTM plant. Lead ingot sales increased from 44,916 tons in fiscal 2007 to
58,298 tons in fiscal 2008, an increase of 29.8%.
    
    The daily average lead cash settlement price on the LME increased from $1,426 per ton
in fiscal 2007 to $2,875 per ton in fiscal 2008, an increase of 101.6%.
 Rs. Rs. Rs.
 Aluminum
 Rs. Rs. Rs.
 
    
    Aluminum production increased from 313,189 tons in fiscal 2007 to 358,671 tons in
fiscal 2008, an increase of 14.5%, as our new Korba smelter of 245,000 tpa capacity
increased production from 207,643 tons in fiscal 2007 to 249,392 tons in fiscal 2008. The
existing smelter production increased from 105,546 tons in fiscal 2007 to 109,279 tons in
fiscal 2008, an increase of 3.5%, primarily due to improvements in operational
efficiency. Due to higher production volume from the new smelter, wheeling income from
the sale of surplus power was reduced in fiscal 2008 as compared to fiscal 2007.
    
    Aluminum sales increased from 315,002 tons in fiscal 2007 to 358,328 tons in fiscal
2008, an increase of 13.8%. Sales of aluminum ingots increased from 184,482 tons in
fiscal 2007 to 195,785 tons in fiscal 2008, an increase of 6.1%, as production from the
new Korba smelter was primarily sold in ingot form. Wire rod sales increased from 72,948
tons in fiscal 2007 to 101,316 tons in fiscal 2008, an increase of 38.9% as a result of
increased production due to the addition of two wire rod mills at the new Korba smelter.
Rolled product sales increased from 57,572 tons in fiscal 2007 to 61,227 tons in fiscal
2008, an increase of 6.3%. The increases in sales of wire rods and rolled products
reflect increased demand for these products, particularly in the electrical and
construction sectors, and our continued focus on the sale of value-added products.
    
    Aluminum sales in the domestic market increased from 224,163 tons in fiscal 2007 to
265,839 tons in fiscal 2008, an increase of 18.6%, as a result of increased production.
Our aluminum exports increased from 90,839 tons in fiscal 2007 to 92,489 tons in fiscal
2008. We endeavor to sell as large a quantity of our products as possible domestically,
where we receive an Indian market premium. Our domestic sales as a percentage of total
sales increased from 71.2% in fiscal 2007 to 74.2% in fiscal 2008 as the demand in the
domestic market increased more rapidly than our production volume growth.
    
    The daily average aluminum cash settlement price on the LME declined marginally from
$2,663 per ton in fiscal 2007 to $2,620 per ton in fiscal 2008, a decrease of 1.6%.
 Rs. Rs. Rs.
 123




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Corporate and Others
 Rs. Rs.
 Interest and Dividend Income
 Rs. Rs. Rs.
 Interest Expense
 Rs. Rs. Rs. 943
 Net Realized and Unrealized Investment Gains
 Rs. Rs. Rs.
 Income Taxes
 Rs. Rs.
 Minority Interests
  Equity in Net (Loss)/Income of Associate, Net of Taxes
 Rs. Rs.
 124




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##### Table of Contents



Income from Divested Business, Net of Tax
 Rs.  Rs.
 Comparison of Years Ended March 31, 2006 and March 31, 2007
 Net Sales, Other Operating Revenues and Operating Income
 Consolidated
 Rs. Rs. Rs.
 Rs. Rs. Rs.
 Rs. Rs. Rs.
 
    
    Cost of sales increased from Rs. 86,981 million in fiscal 2006 to Rs. 144,798 million
in fiscal 2007, an increase of Rs. 57,817 million, or 66.5%. Cost of sales increased in
our copper business primarily as a result of higher copper concentrate prices and in our
aluminum business primarily as a result of an increase in production volume. Cost of
sales as a percentage of net sales, however, decreased from 70.8% in fiscal 2006 to 60.0%
in fiscal 2007, due to higher metal prices across all metals and stable cost of
production in all of our businesses.
    
    Selling and distribution expenses increased from Rs. 2,117 million in fiscal 2006 to
Rs. 3,444 million in fiscal 2007, an increase of Rs. 1,327 million, or 62.7%. This
increase was due to increased sales volumes across all our businesses as most of the
selling and distribution expenses are proportional to the sales volume. As a percentage
of net sales, however, selling and distribution expenses decreased from 1.7% in fiscal
2006 to 1.4% in fiscal 2007 as a result of a larger percentage increase in metal prices
as compared to selling and distribution expenses.
    
    General and administrative expenses increased from Rs. 2,596 million in fiscal 2006 to
Rs. 2,633 million in fiscal 2007, an increase of Rs. 37 million, or 1.4%, primarily as a
result of the expansion of our businesses. As a percentage of net sales, however, general
and administrative expenses decreased from 2.1% in fiscal 2006 to 1.1% in fiscal 2007 as
a result of a larger percentage increase in metal prices as compared to general and
administrative expenses.
    
    We incurred voluntary retirement scheme expenses in fiscal 2007 of Rs. 97 million for
a voluntary retirement package offered to employees of HZL, compared to no voluntary
retirement scheme expenses in fiscal 2006.
    
    We earned a profit of Rs. 986 million in fiscal 2007 from the sale of property in
Mumbai comprising land and building for an amount of Rs. 1,000 million.
 125




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
    
    Depreciation, depletion and amortization increased from Rs. 4,511 million in fiscal
2006 to Rs.
5,959 million in fiscal 2007, an increase of Rs. 1,448 million, or 32.1%.
This increase related primarily to capitalization of our expanded capacities in our
aluminum business.
 Copper
 Rs. Rs.  Rs.
 
    
    Copper cathode production increased from 273,048 tons in fiscal 2006 to 312,720 tons
in fiscal 2007, an increase of 14.5%, enabled by a capacity expansion at our Tuticorin
facility which increased the anode and cathode capacities to 400,000 tpa in November
2006. Copper cathode sales increased from 105,268 tons in fiscal 2006 to 133,402 tons in
fiscal 2007, an increase of 26.7%.
    
    Production of copper rods increased from 166,497 tons in fiscal 2006 to 177,882 tons
in fiscal 2007, an increase of 6.8%. This increase in production was enabled by the
increase in rod plant capacity at Tuticorin in the second half of fiscal 2007. Copper rod
sales increased from 166,356 tons in fiscal 2006 to 177,746 tons in fiscal 2007, an
increase of 6.8%. The increase in sales was due to the increase in production.
    
    Sales of copper in the Indian market increased from 106,270 tons in fiscal 2006 to
116,522 tons in fiscal 2007, an increase of 9.6%, and our exports increased from 165,354
tons in fiscal 2006 to 194,626 tons in fiscal 2007, an increase of 17.7%. The increase in
exports was enabled by our increased production levels and growth in export markets.
While we endeavor to sell as large a quantity of our products as possible domestically,
our domestic sales as a percentage of total sales declined from 39.1% in fiscal 2006 to
37.4% in fiscal 2007 as our production volume increased more rapidly than demand in the
domestic market.
    
    The daily average copper cash settlement price on the LME increased from $4,099 per
ton in fiscal 2006 to $6,984 per ton in fiscal 2007, an increase of 70.4%.
 Rs. Rs. Rs.
 
    
    TcRc rates increased from an average of 23.1¢/lb realized in fiscal 2006 to an average
of 31.1¢/lb realized in fiscal 2007 as a result of favorable market conditions.
    
    Cost of production, which consists of cost of smelting and refining costs, remained
the same at 6.1¢/lb in fiscal 2006 and fiscal 2007. Higher energy prices which impacted
costs were offset by higher credit for free metal due to higher LME prices.
    
    Higher daily average copper LME prices contributed to increased profitability of our
mining operations, which was partially offset by reduced production due to the closure of
one of our two mines in Australia in July 2005.
    
    We earned a profit of Rs. 986 million in fiscal 2007 from the sale of real estate in
Mumbai, with no such profit in fiscal 2006.
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Zinc
 Rs. Rs. Rs. 47,390
 
    
    The daily average zinc cash settlement price on the LME increased from $1,614 per ton
in fiscal 2006 to $3,581 per ton in fiscal 2007, an increase of 121.9%.
    
    Zinc ingot production increased from 283,698 tons in fiscal 2006 to 348,316 tons in
fiscal 2007, an increase of 22.8%, as a result of increased production from our first
hydrometallurgical zinc smelter at Chanderiya. The first hydrometallurgical zinc smelter
at Chanderiya, which we began commissioning in May 2005 and was fully commissioned in May
2006, produced 135,673 tons of zinc in fiscal 2007 as compared to 71,049 tons in fiscal
2006.
    
    Zinc ingot sales increased from 322,744 tons in fiscal 2006 to 349,615 tons in fiscal
2007, an increase of 8.3%, enabled by higher production and higher exports as a result of
strong demand primarily in Asia.
    
    Zinc ingot sales in the domestic market decreased from 309,128 tons in fiscal 2006 to
204,286 tons in fiscal 2007, a decrease of 33.9%. This decrease was primarily due to
lower consumption in the domestic market by end users. Export sales increased from 13,616
tons in fiscal 2006 to 145,329 tons in fiscal 2007 due to lower consumption in the
domestic market and development of new export markets.
    
    We also sold surplus zinc concentrate of 194,704 dmt in fiscal 2006 and 254,249 dmt in
fiscal 2007, and surplus lead concentrate of 59,050 dmt in fiscal 2007 and nil in fiscal
2006, to third parties. The increase in sales of zinc concentrate to third parties was
enabled by higher mining output in fiscal 2007.
    
    Net sales were augmented in fiscal 2006 by the tolling of zinc concentrate. Our
tolling arrangements involve sending surplus zinc concentrate from our mines to third
party smelters who return the zinc metal post-conversion to us. We engage in tolling from
time to time to take advantage of domestic demand. We tolled 34,890 tons of zinc in
fiscal 2006 and 251 tons in fiscal 2007. The decrease in tolling was due to the increase
in production from our first hydrometallurgical zinc smelter at Chanderiya.
    
    Lead ingot production increased from 23,636 tons in fiscal 2006 to 44,552 tons in
fiscal 2007, an increase of 88.5%, as a result of commissioning of our new lead smelter
at Chanderiya. Sales of lead ingots increased from 26,928 tons in fiscal 2006 to 44,916
tons in fiscal 2007, an increase of 66.8%.
 Rs. Rs. Rs.
 Aluminum
 Rs. Rs. Rs.
 127




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
    
    Aluminum production increased from 173,743 tons in fiscal 2006 to 313,189 tons in
fiscal 2007, an increase of 80.3%, as our new Korba smelter commenced phased and
progressive commissioning in fiscal 2007 and was fully commissioned in November 2006. The
new smelter at Korba produced 207,643 tons of aluminum in fiscal 2007 as compared to
69,014 tons of aluminum in fiscal 2006.
    
    Aluminum sales increased from 171,206 tons (including 13,588 tons capitalized) in
fiscal 2006 to 315,002 tons in fiscal 2007, an increase of 84.0%. Sales of aluminum
ingots increased from 57,100 tons in fiscal 2006 to 184,482 tons in fiscal 2007, an
increase of 223.1%, as production from the new Korba smelter was primarily sold in ingot
form. Wire rod sales increased from 64,499 tons in fiscal 2006 to 72,948 tons in fiscal
2007, an increase of 13.1%. Rolled product sales increased from 49,607 tons in fiscal
2006 to 57,572 tons in fiscal 2007, an increase of 16.1%. The increases in sales of wire
rods and rolled products reflect increased demand for these products, particularly in the
electrical and construction sectors, and our continued focus on the sale of value-added
products.
    
    Aluminum sales in the domestic market increased from 158,788 tons in fiscal 2006 to
224,163 tons in fiscal 2007, an increase of 41.2%. Our aluminum exports increased from
12,418 tons in fiscal 2006 to 90,839 tons of in fiscal 2007. Both increases were as a
result of increased production at our new Korba smelter. While we endeavor to sell as
large a quantity of our products as possible domestically, our domestic sales as a
percentage of total sales declined from 92.7% in fiscal 2006 to 71.2% in fiscal 2007 as
our production volume increased more rapidly than demand growth in the domestic market.
    
    The daily average aluminum cash settlement price on the LME increased from $2,028 per
ton in fiscal 2006 to $2,663 per ton in fiscal 2007, an increase of 31.3%.
 Rs. Rs. Rs.
 Corporate and Others
 Rs. Rs. Rs.
 Interest and Dividend Income
 Rs. Rs. Rs.
 Interest Expense
 Rs. Rs. Rs.
 Net Realized and Unrealized Investment Gains
 Rs. Rs. Rs.
 128




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Income Taxes
 Rs. Rs.
 Minority Interests
  Equity in Net (Loss)/Income of Associate, Net of Taxes
 Rs. Rs.
 Income from Divested Business, Net of Tax
 Rs. Rs. Rs. Rs. Rs.
 Liquidity and Capital Resources
 Capital Requirements
  
    
    capital expenditures, towards expansion of capacities in existing businesses including
modernization of facilities;
    
    the establishment of our planned commercial power generation business;
    
    consolidation of our ownership in our various subsidiaries; and
    
    acquisitions of complementary businesses that we determine to be attractive
opportunities.
  Rs. Rs. Rs.
 129




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Rs.
  Rs.
 Rs. Rs.
 Rs. Rs.
   Rs. Rs. Rs.
 Capital Resources
  130




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##### Table of Contents



Net Cash Provided by or Used in Operating Activities
 Rs. 2,842
 Net Cash Provided by or Used in Investing Activities
   Net Cash Provided by or Used in Financing Activities
    131




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Outstanding Loans
  Working Capital Loans
 Rs. Rs.
 Floating Rate Notes
 Rs.
 Foreign Currency Loans
 Rs.
 Rs. .
 Term Loans
 Rs. Rs. Rs. Rs. Rs. Rs. Rs.
 132




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##### Table of Contents



Buyers Credit
 Rs.
 Non-Convertible Debentures
 Rs. Rs. Rs.
 Export Obligations
 Rs. Rs.
 Guarantees and Put Option
  
    
    Guarantees on the issuance of customs duty bonds amounting to Rs. 334 million ($8.3
million) for import of capital equipment at concessional rates of duty. We have fulfilled
our obligations under the bonds and await the completion of procedural formalities by the
governmental authorities for the release of the bonds. We do not anticipate any liability on
these guarantees.
    
    Guarantees on behalf of IFL against its loan obligations to the extent of Rs. 1,820
million ($45.5 million) and the outstanding amounts against these guarantees as of March 31,
2008 was Rs. 1,631 million ($40.8 million). For loan obligations of Rs. 1,146 million 
($28.6
million) of IFL guaranteed by us, we have also granted a put option to a bank under which
the bank may require us to purchase the loan from the bank in lieu of looking to our
guarantee. We reviewed our liabilities under the guarantees and put option taking into
consideration the financial position of IFL and estimated that the fair value of the
guarantees and put option as of March 31, 2006 was Rs. 886 million ($20.6 million). We
recognized a liability of Rs. 784 million for the guarantees and put option in fiscal 2006.
In January 2008, an agreement was entered into between MALCO, a party under common control
of Vedanta, and a third party for the disposal of MALCOs entire interest in IFL. The transaction
is expected to be completed in the next financial year after obtaining necessary statutory
approvals. In connection with this agreement, we are obligated to
settle the guarantees issued to the banks. Accordingly, during fiscal 2008 we revised our liability to Rs.1,412 million ($35.3 million)
to represent the expected net cash outflow at completion. Thus, an additional charge of Rs.
628 million ($15.7 million) has been recognized in our financial statements during the year
ended March 31, 2008.
    
    Corporate guarantee of Rs. 7,000 million ($174.9 million) on behalf of Vedanta Aluminium
for obtaining credit facilities. We also issued a corporate guarantee of Rs. 11,464 million
($286.5 million) for importing capital equipment at concessional rates of duty under the
Export Promotion Capital Goods Scheme enacted by the Government of India and Rs. 269 million
($6.7 million) for raw material imports. Vedanta Aluminium is obligated to export goods
worth eight times the value of concessions enjoyed in a period of eight years following the
date of import, failing which we will be liable to pay the dues to the Government of India.
With respect to the corporate guarantee of Rs. 7,000 million ($174.9 million), Vedanta
Aluminium has issued a counter guarantee to us indemnifying us for any liability on such
guarantee. As of March 31, 2008, we determined that we have no liability on either of these
corporate guarantees.
    
    Bank guarantee of AUD 5.0 million (Rs. 183 million or $4.6 million) in favor of the
Ministry for Economic Development, Energy and Resources of Australia as a security against
rehabilitation liability on behalf of CMT. This guarantee is backed up
 133




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by the issuance of a
corporate guarantee of Rs. 320 million ($8.0 million). These liabilities are fully
recognized in the consolidated financial statements. We do not anticipate any liability on
this guarantee.
    
    Bank indemnity guarantees amounting to AUD 2.9 million (Rs. 9.5 million or $2.4 million)
in favor of the State Government of Queensland, Australia, as a security against
rehabilitation liabilities that are expected to occur at the closure of the mine. The
environmental liability has been fully recognized in our consolidated financial statements.
We do not anticipate any liability on these guarantees.
    
    Performance bank guarantees amounting to Rs. 2,663 million ($66.5 million) as of March
31, 2008. These guarantees are issued in the normal course of business while bidding for
supply contracts or in lieu of advances received from customers. The guarantees have varying
maturity dates normally ranging from six months to three years. These are contractual
guarantees and are enforceable if the terms and conditions of the contracts are not met and
the maximum liability on these contracts is the amount mentioned above. We do not anticipate
any liability on these guarantees.
    
    Bank guarantees for securing supplies of materials and services in the normal course of
business. The value of these guarantees as of March 31, 2008 was
Rs. 912 million ($22.8
million). We have also issued bank guarantees in the normal course of business for an
aggregate value of Rs. 468 million ($11.7 million) for litigations, against provisional
valuation and for other liabilities. We do not anticipate any liability on these guarantees.
 Rs.
 Contractual Obligations
  Payment Due by PeriodTotal
    
    
    Less than 1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    More than 5 Years(in millions)Bank loans and borrowings
    
    Rs.
    14,020
    
    
    $
    350.3
    
    
    Rs.
    4,071
    
    
    $
    101.7
    
    
    Rs.
    8,941
    
    
    $
    223.4
    
    
    Rs.
    
    
    
    $
    
    
    
    Rs.
    1,008
    
    
    $
    25.2Capital commitments
    
    
    81,733
    
    
    
    2,042.3
    
    
    
    42,437
    
    
    
    1,060.4
    
    
    
    39,296
    
    
    
    981.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    Rs.
    95,753
    
    
    $
    2,392.6
    
    
    Rs.
    46,508
    
    
    $
    1,162.1
    
    
    Rs.
    48,237
    
    
    $
    1,205.3
    
    
    Rs.
    
    
    
    $
    
    
    
    Rs.
    1,008
    
    
    $
    25.2
 Rs. Rs.
  Off-Balance Sheet Arrangements
 Rs.
 134




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Capital Expenditures and Commitments
  
    
    capital expenditures, towards expansion of capacities in existing businesses including
modernization of facilities;
 
    
    the establishment of our planned commercial power generation business;
 
    
    consolidation of our ownership in our various subsidiaries; and
 
    
    acquisitions of complementary businesses that we determine to be attractive
opportunities.
  For Year Ended March 31,2006
    
    
    2007
    
    
    2008(in millions)Capital Expenditures
    
    
    $357.9
    
    
    
    $588.4
    
    
    
    $635.4
 Rs. Rs.
 Contingencies
 Rs. Rs.
 Rs.
 Recent Accounting Pronouncements
 FIN 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
  SFAS No. 157, Fair Value Measurements
  135




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SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
  SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB
No. 51
  SFAS No. 141 (Revised), Business Combination
  SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities  an amendment of
FASB Statement No. 133
  
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 A. Directors and Senior Management
  136




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Name
    
    Age
    
    PositionDirectorsAnil Agarwal(1)
    
    
    55
    
    
    Non-Executive ChairmanNavin Agarwal
    
    
    47
    
    
    Executive Vice-Chairman(2)Kuldip Kumar Kaura
    
    
    61
    
    
    Managing Director and Chief Executive Officer(2)Tarun Jain(3)
    
    
    48
    
    
    Whole Time Director(2)Dwarka Prasad Agarwal
    
    
    76
    
    
    Non-Executive DirectorBerjis Minoo Desai(1)(3)(4)(5)
    
    
    51
    
    
    Non-Executive DirectorGautam Bhailal Doshi(1)(4)(5)
    
    
    55
    
    
    Non-Executive DirectorSandeep H. Junnarkar(3)(4)(5)
    
    
    56
    
    
    Non-Executive DirectorIshwarlal Patwari
    
    
    76
    
    
    Non-Executive DirectorExecutive OfficersDindayal Jalan
    
    
    51
    
    
    Chief Financial OfficerDilip Golani
    
    
    42
    
    
    President and Group Head of Management AssuranceOther Significant EmployeesCopper BusinessRajagopal Kishore Kumar
    
    
    45
    
    
    Chief Executive Officer, Copper DivisionZinc BusinessMahendra Singh Mehta
    
    
    52
    
    
    Chief Executive Officer, HZL and Whole Time Director, HZL(2)Aluminum BusinessPramod Suri
    
    
    50
    
    
    President, BALCO and Whole Time Director, BALCO(2)Power BusinessC.V. Krishnan
    
    
    58
    
    
    Managing Director, Power
 
 Notes:(1)
    
    Member of the Remuneration Committee.(2)
    
    A Whole Time Director is a director who is employed full-time in rendering services to the
management of the company with respect to which he is a director. An individual can be a whole
time director with respect to only one company, although he or she may accept the position of
non-whole time director in other companies. In addition to Messrs. Tarun Jain, Mahendra Singh
Mehta and Pramod Suri, Messrs. Navin Agarwal and Kuldip Kumar Kaura are also each considered
to be a whole time director.(3)
    
    Member of the Shareholders and Investors Grievance Committee.(4)
    
    Member of the Audit Committee.(5)
    
    Independent director. Directors
 Anil Agarwal
 Navin Agarwal
 137




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Kuldip Kumar Kaura
 Tarun Jain
 Dwarka Prasad Agarwal
 Berjis Minoo Desai
 Gautam Bhailal Doshi
 Sandeep H. Junnarkar
 138




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##### Table of Contents



Ishwarlal Patwari
 Executive Officers
 Dindayal Jalan
 Dilip Golani
 Other Significant Employees
 Copper Business
 Rajagopal Kishore Kumar
 Zinc Business
 Mahendra Singh Mehta
 139




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##### Table of Contents



Aluminum Business
 Pramod Suri
 Power Business
 C.V. Krishnan
 B. Compensation
 Compensation of Directors and Executive Officers
   Salary, bonuses,
    
    Fair Value of Share
    
    Contribution toallowances and
    
    Options granted under
    
    Provident andName
    
    perquisites
    

the Vedanta LTIP
    

Superannuation Funds(in million)Navin Agarwal
    
    Rs.
    60.21
    
    
    Rs.
    5.47
    
    
    Rs.
    4.95Kuldip Kumar Kaura
    
    
    36.99
    
    
    
    2.96
    
    
    
    1.86Tarun Jain
    
    
    27.70
    
    
    
    6.03
    
    
    
    2.33Dindayal Jalan
    
    
    11.71
    
    
    
    3.63
    
    
    
    0.89Dilip Golani
    
    
    7.31
    
    
    
    2.14
    
    
    
    0.43
   Outstanding Awards or Options
  Employee Benefit Plans
  140




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##### Table of Contents



Provident Fund
  Gratuity
  Superannuation Fund
  Compensated Absence
  Vedanta Long-Term Incentive Plan
     Limitations on Liability and Indemnification Matters
  141




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C. Board Practices
 Composition of the Board
     Committees of the Board
   Audit Committee
  
    
    to serve as an independent and objective party to monitor our financial reporting process
and internal control systems;
 142




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##### Table of Contents




    
    to review and appraise the audit efforts of our independent accountants and exercise
ultimate authority over the relationship between us and our independent accountants; and
    
    to provide an open avenue of communication among the independent accountants, financial
and senior management and the board of directors.
   Remuneration Committee
   Shareholders and Investors Grievance Committee
   D. Employees
  E.
Share Ownership for Directors and Executive Officers
  143




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Equity Shares Beneficially OwnedName
    
    Number
    
    PercentAnil Agarwal(1)
    
    
    429,329,150
    
    
    
    60.6
    %Navin Agarwal
    
    
    
    
    
    
    Kuldip Kumar Kaura
    
    
    
    
    
    
    Tarun Jain
    
    
    
    
    
    
    Dwarka Prasad Agarwal
    
    
    
    
    
    
    Berjis Minoo Desai
    
    
    
    
    
    
    Gautam Bhailal Doshi
    
    
    
    
    
    
    Sandeep H. Junnarkar
    
    
    17,500
    
    
    
    *Ishwarlal Patwari
    
    
    1,372,830
    
    
    
    *Dindayal Jalan(2)
    
    
    1,250
    
    
    
    *Dilip Golani
    
    
    250
    
    
    
    *All our directors and executive officers as a group (11 persons)
    
    
    430,720,980
    
    
    
    60.8
    %
 
 Notes:*
    
    Represents beneficial ownership of less than 1.0%.(1)
    
    Consists of 429,329,150 equity shares beneficially owned by Vedanta. Volcan, owns
approximately 53.5% of the issued ordinary share capital of Vedanta. Volcan is owned and
controlled by the Agarwal Trust. Onclave is the trustee of the Agarwal Trust and controls all
voting and investment decisions of the Agarwal Trust. As a result, shares beneficially owned
by Volcan may be deemed to be beneficially owned by the Agarwal Trust and, in turn, by
Onclave. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman,
may be deemed to have beneficial ownership of shares that may be owned or deemed to be
beneficially owned by Onclave. Vedanta, Volcan, Onclave and Mr. Anil Agarwal are parties to a
relationship agreement that regulates the ongoing relationship among them. See Item 7. Major
Shareholders and Related Party Transactions. As a result of this agreement, Volcan, the
Agarwal Trust, Onclave and Mr. Anil Agarwal disclaim beneficial ownership of the shares
beneficially owned by Vedanta.(2)
    
    Includes 1,000 equity shares directly held by Mrs. Veena Jalan, the wife of Mr. Dindayal
Jalan. 
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 A. Major Shareholders
   Number of Shares
    
    PercentageName of Beneficial Owner
    
    Beneficially Owned
    
    Beneficially OwnedVedanta Resources plc(1)
    
    
    429,329,150
    
    
    
    60.6
    %
 
 Note:(1)
    
    Information based on a report on Schedule 13G jointly filed with the Commission on
February 14, 2008 by Vedanta, VRHL, Twin Star, Volcan, the Agarwal Trust, Onclave and Mr. Anil
Agarwal. As of December 31, 2007, Vedanta had beneficial ownership of 429,329,150 equity
shares, consisting of 403,715,750 equity shares held by Twin Star and 25,613,400 equity shares
held by MALCO. Twin Star is the owner of 80.0% of the outstanding shares of MALCO and is a
controlling shareholder of MALCO. Therefore, our shares beneficially owned by MALCO are also
deemed to be beneficially owned by Twin Star. Twin Star is a wholly-owned subsidiary of VRHL,
and VRHL is in turn a wholly-owned subsidiary of Vedanta; accordingly, our shares beneficially
owned by Twin Star may be regarded as being beneficially owned by VRHL and Vedanta. Volcan
owns 53.5% of the outstanding shares of Vedanta. Volcan is 100% owned and controlled by the
Agarwal Trust. Onclave is the trustee of the Agarwal Trust and controls all voting and
investment decisions of the Agarwal Trust. As a result, securities beneficially owned by
Volcan may be regarded as being beneficially owned by the Agarwal Trust and, in turn, by
Onclave. Mr. Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman,
may be deemed to have beneficial ownership of shares that may be owned or deemed to be
beneficially owned by Onclave.  144




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##### Table of Contents



B. Related Party Transactions
  Related Parties
 Volcan and the Agarwal Family
  Vedanta
    
    
    The parties agree to ensure that Vedanta is capable, at all times, of carrying on its
business independently of the Volcan Parties as required by the listing rules of the FSA;
    
    Vedantas board of directors and nominations committee and any other committee of
Vedantas board of directors (other than the audit committee or the remuneration committee
or any committee which may be established by the board of directors in connection with a
specific transaction, the constitution of which is approved by the board of directors) to
which significant powers, authorities or discretions are delegated shall at all times
comprise a majority of directors who are independent of the
 145




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Volcan Parties and who are free from any business or other relationship with the Volcan
Parties which could materially interfere with the exercise of the directors judgment
concerning Vedanta;
    
    Vedantas remuneration committee and audit committee shall at all times consist only of
non-executive directors;
    
    Volcan is entitled to nominate for appointment to the board of directors of Vedanta such
number of persons as is one less than the number of directors who are independent of the
Volcan Parties and who are free from any business or other relationship with the Volcan
Parties which could materially interfere with the exercise of the directors judgment
concerning Vedanta;
    
    Neither Mr. Anil Agarwal nor any non-independent directors shall be permitted, unless the
independent directors agree otherwise, to vote on any resolutions of Vedantas board of
directors or of a committee of the board to approve the entry into, variation, amendment,
novation or abrogation or enforcement of any contract, arrangement or transaction with any
of the Volcan Parties;
    
    Volcan shall not exercise voting rights attaching to its shares in Vedanta or any
resolution to approve the entry into, variation, amendment, novation or abrogation of any
transactions or arrangements between Vedanta and the Volcan Parties;
    
    The Volcan Parties represented and warranted to Vedanta that at the time of the execution
of the relationship agreement they did not own directly or indirectly any interests in the
smelting, refining, mining or sale of any base metals or mineral otherwise than through
Vedanta or any member of the Vedanta group;
    
    The Volcan Parties agreed to, directly or indirectly, acquire or otherwise invest in any
company, business, business operation or other enterprise which engages in the smelting,
refining or mining of base metals or minerals only through Vedanta or other member of the
Vedanta group. However, this agreement does not prevent, restrict or limit:
 
    
    the acquisition or ownership by the Volcan Parties of not more than 5% in aggregate
of any class of shares, debentures or other securities in issue from time to time of any
company which engages in the smelting, refining or mining of base metals or minerals
which is for the time being listed on any stock exchange; or
    
    the acquisition or ownership, directly or indirectly, by the Volcan Parties of any
interest in, a base metal or mineral property or asset (together with any associated
property, plant and equipment), which is not adjacent or geographically proximate to an
existing property or operation of Vedanta group so as to give them operational synergies,
where the acquisition cost (including assumed indebtedness), including any related
capital expenditures committed at the date of acquisition for the following 12 months, is
equal to $50 million or less, for which purpose any acquisitions of two or more related
or adjacent base metal or mineral properties or assets shall be aggregated when
calculating the acquisition cost, provided that the relevant interested party (i) is not
an officer or director of a Vedanta group company; and (ii) before acquiring such
property or asset, first made the opportunity to acquire such property or asset available
to the Vedanta group, with a reasonable period for the independent directors of Vedanta
to consider the opportunity, on terms no less favorable than those on which they are
proposed to be acquired by the interested party and a majority of the independent
directors has determined that the Vedanta group should not make the acquisition; and
 
    
    Transactions and relationships between Vedanta and the Volcan Parties must be conducted
at arms length and on a normal commercial basis, including those to be provided under the
shared services agreement.
 Related Transactions
 Shared Services Agreement  STL, Sterlite Gold, Vedanta and Sterlite
  146




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
    
    a party may terminate the shared services agreement or a particular service which is
provided pursuant to the shared services agreement if another party commits a material
breach of the shared services agreement or upon another party becoming subject to or
entering into arrangements in the context of insolvency. A party may also terminate a
particular service on three months notice;
    
    the services under the shared services agreement will be provided by us or Vedanta, as
the case may be, to STL and Sterlite Gold and the transactions between the parties will be
on an arms length basis;
    
    the cost of access to certain of the directors, officers and employees of such member of
the Vedanta group shall be paid by STL or Sterlite Gold, as the case may be, to us or
Vedanta, as appropriate; and
    
    the cost of the services provided pursuant to the shared services agreement is calculated
by apportioning the total salary cost to us or the Vedanta group of the employment of the
relevant director, officer or employee to STL or Sterlite Gold, as appropriate based on the
time spent for each such member of the Vedanta group.
  
    
    amend the list of employees of Vedanta who may be hired under the shared services
agreement to reflect only those individuals who actually performed the services;
    
    amend the amount to be paid to Vedanta based on estimated cost plus 20%; and
    
    allow only 25% of Mr. Anil Agarwals salary costs to be taken into account when
determining the charge to STL and Sterlite Gold, to reflect the limited services provided to
STL and Sterlite Gold since the listing of Vedanta.
  Representative Office Agreement  Vedanta and Sterlite
 
 Consultancy Agreement  Vedanta and Sterlite
  147




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Sale of Aluminum Conductor Business  Sterlite and STL
  Issuance of Equity Shares by Vedanta Aluminium  Sterlite, Twin Star and Vedanta Aluminium
  Issuance of Debentures by Vedanta Aluminium  Sterlite and Vedanta Aluminium
  Loan Agreement  Sterlite and Vedanta Aluminium
  Advancement to Relative of a Director  Sterlite and Mrs. Rajani Jain
  Guarantees  Sterlite, IFL, CMT, TCM and Vedanta Aluminium
  Acquisition of Sterlite Energy  Twin Star Infrastructure Limited, Mr. Anil Agarwal, Mr. Dwarka
Prasad Agarwal and Sterlite
 
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Issuance of Debentures by Sterlite Energy  Sterlite and Sterlite Energy
  Payable to Monte Cello Corporation NV  Monte Cello Corporation NV and CMT
  Conflicts of Interest and Allocations of Business Opportunities
    149




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C. Interest of Experts and Counsel
  
 ITEM 8. FINANCIAL INFORMATION
 A. Consolidated Statements and Other Financial Information
  Legal Proceedings
  We have commenced proceedings against the Government of India which has disputed our exercise of
the call option to purchase its remaining 49.0% ownership interest in BALCO.
  150




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A public interest litigation proceeding has been filed to challenge the validity of the divestment
of HZLs shares by the Government of India and is currently pending adjudication by the Supreme
Court of India.
  Appeal proceedings in the High Court of Bombay brought by SEBI to overrule a decision by the SAT
that we have not violated regulations prohibiting fraudulent and unfair trading practices.
  We are involved in certain litigation seeking cancellation of permits and environmental approval
for the alleged violation of certain air, water and hazardous waste management regulations at our
Tuticorin plant.
    Petitions have been filed in the Supreme Court of India and the High Court of Orissa to seek the
cessation of construction of Vedanta Aluminiums refinery in Lanjigarh and related mining
operations in Niyamgiri Hills.
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BALCO is involved in various litigations in relation to the alleged encroachment of land on which
the Korba facility is situated and the State Government of Chhattisgarh has issued notices to BALCO
alleging that BALCO had encroached on state-owned land.
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BALCO is involved in an arbitration in relation to a power purchase agreement with the Chhattisgarh
State Electricity Board and has initiated arbitration proceedings against Chhattisgarh State
ElectricityBoard.
  Demands against HZL by Department of Mines and Geology.
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Certain of our subsidiaries have been named in legal actions by third party claimants and by Indian
sales tax, excise and related tax authorities for additional sales tax, excise and indirect duties.
  Dividend Policy
    
    
    the rate of dividend to be declared shall not exceed the average of the rates at which
dividends were declared in the five years immediately preceding that year or 10.0% of our
paid-up share capital, whichever is less;
    
    the total amount to be drawn from the accumulated profits earned in previous years and
transferred to the reserves shall not exceed an amount equal to one-tenth of the sum of our
paid-up share capital and net reserves, and the amount so drawn shall first be utilized to
set off the losses incurred in the financial year before any dividend in respect of
preference or equity share is declared; and
    
    the balance of the reserves after such withdrawal shall not fall below 15.0% of our
paid-up share capital.
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B. Significant Changes
  
 ITEM 9. THE OFFER AND LISTING
 A. Offer and Listing Details
    
    
    the reported high and low trading prices for our ADSs on the NYSE;
    
    the imputed high and low trading prices for our equity shares, translated into US
dollars, based on the Indian Rupee prices for such equity shares as quoted in the official
list of each of the NSE and BSE and the noon buying rate of the Federal Reserve Bank of New
York on the last business day of each period presented; and
    
    the average of the aggregate trading volume of our ADSs on the NYSE and our equity shares
on the NSE and BSE,
  Average
    
    
    
    
    
    
    
    
    
    Average NSE
    
    
    
    
    
    
    
    
    
    AverageNYSE Daily
    
    
    
    
    
    
    
    
    
    Daily Equity
    
    
    
    
    
    
    
    
    
    BSE DailyADS
    
    NSE Price
    
    Share
    
    BSE Price
    
    Equity ShareNYSE Price Per ADS
    
    Trading
    
    Per Equity Share
    
    Trading
    
    Per Equity Share
    
    TradingFiscal Year
    
    High
    
    Low
    
    Volume
    
    High
    
    Low
    
    Volume
    
    High
    
    Low
    
    Volume2004
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    15.02
    
    
    $
    1.43
    
    
    
    57,8902005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.45
    
    
    
    3.48
    
    
    
    27,633
    
    
    
    7.44
    
    
    
    3.06
    
    
    
    32,4892006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.90
    
    
    
    5.00
    
    
    
    91,999
    
    
    
    15.91
    
    
    
    5.14
    
    
    
    46,6862007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27.28
    
    
    
    5.96
    
    
    
    1,936,458
    
    
    
    27.38
    
    
    
    6.00
    
    
    
    744,2412008(1)
    
    
    28.97
    
    
    
    11.12
    
    
    
    1,799,135
    
    
    
    28.73
    
    
    
    10.38
    
    
    
    1,443,249
    
    
    
    28.49
    
    
    
    10.37
    
    
    
    346,732Quarters20071st Quarter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25.64
    
    
    
    5.60
    
    
    
    2,480,277
    
    
    
    25.72
    
    
    
    5.63
    
    
    
    965,7762nd Quarter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.50
    
    
    
    7.21
    
    
    
    2,905,384
    
    
    
    10.45
    
    
    
    7.20
    
    
    
    1,191,0733rd Quarter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.48
    
    
    
    9.84
    
    
    
    1,393,084
    
    
    
    13.49
    
    
    
    9.84
    
    
    
    494,4724th Quarter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.09
    
    
    
    9.56
    
    
    
    893,414
    
    
    
    13.34
    
    
    
    9.90
    
    
    
    293,10220081st Quarter
    
    
    15.14
    
    
    
    14.00
    
    
    
    3,651,575
    
    
    
    15.18
    
    
    
    10.23
    
    
    
    1,013,206
    
    
    
    15.09
    
    
    
    10.23
    
    
    
    344,546
 155




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Average
    
    
    
    
    
    
    
    
    Average NSE
    
    
    
    
    
    
    
    
    AverageNYSE Daily

    
    
    
    
    
    
    
    
    Daily Equity
    
    
    
    
    
    
    
    
    BSE DailyADS
    
    NSE Price
    
    Share
    
    BSE Price
    
    Equity ShareNYSE
Price
Per ADS
    
    Trading

    
    Per Equity Share
    
    Trading
    
    Per Equity Share
    
    TradingFiscal Year
    
    High
    
    
    Low
    
    Volume
    
    High
    
    
    Low
    
    Volume
    
    High
    
    
    Low
    
    Volume2nd Quarter
    
    
    19.00
    
    
    
    11.12
    
    
    1,499,510
    
    
    
    19.67
    
    
    
    12.65
    
    
    864,362
    
    
    
    19.72
    
    
    
    12.65
    
    
    228,2333rd Quarter
    
    
    28.97
    
    
    
    18.03
    
    
    2,299,630
    
    
    
    29.18
    
    
    
    18.37
    
    
    2,465,796
    
    
    
    28.93
    
    
    
    18.31
    
    
    506,1464th Quarter
    
    
    27.05
    
    
    
    16.31
    
    
    1,340,533
    
    
    
    27.05
    
    
    
    13.87
    
    
    1,431,814
    
    
    
    27.11
    
    
    
    14.00
    
    
    309,25720091st Quarter(2)
    
    
    23.00
    
    
    
    16.18
    
    
    870,735
    
    
    
    23.16
    
    
    
    16.16
    
    
    1,114,536
    
    
    
    22.33
    
    
    
    16.18
    
    
    234,079Last Six MonthsDecember 2007
    
    
    28.97
    
    
    
    23.33
    
    
    1,239,205
    
    
    
    29.18
    
    
    
    23.65
    
    
    1,770,655
    
    
    
    28.93
    
    
    
    23.70
    
    
    333,272January 2008
    
    
    27.05
    
    
    
    16.80
    
    
    1,638,881
    
    
    
    27.53
    
    
    
    14.12
    
    
    1,688,139
    
    
    
    27.60
    
    
    
    14.25
    
    
    318,078February 2008
    
    
    22.00
    
    
    
    17.95
    
    
    1,205,165
    
    
    
    22.00
    
    
    
    17.02
    
    
    1,182,550
    
    
    
    21.90
    
    
    
    16.90
    
    
    220,657March 2008
    
    
    20.20
    
    
    
    16.31
    
    
    1,162,635
    
    
    
    20.84
    
    
    
    16.42
    
    
    1,395,106
    
    
    
    20.83
    
    
    
    16.42
    
    
    401,351April 2008
    
    
    22.06
    
    
    
    17.77
    
    
    690,189
    
    
    
    22.55
    
    
    
    17.39
    
    
    997,553
    
    
    
    22.49
    
    
    
    17.38
    
    
    214,145May 2008
    
    
    23.00
    
    
    
    19.51
    
    
    773,512
    
    
    
    23.49
    
    
    
    19.08
    
    
    1,261,493
    
    
    
    22.65
    
    
    
    18.98
    
    
    235,246June 2008(2)
    
    
    21.96
    
    
    
    16.18
    
    
    1,224,481
    
    
    
    22.33
    
    
    
    16.18
    
    
    1,079,273
    
    
    
    22.33
    
    
    
    16.18
    
    
    256,157
 
 Note:(1)
    
    From June 20, 2007.(2)
    
    Through June 24, 2008. B. Plan of Distribution
  C. Markets
  D. Selling Shareholders
  E. Dilution
  F. Expenses of the Issue
  
 ITEM 10. ADDITIONAL INFORMATION
 A. Share Capital
  B. Memorandum and Articles of Association
 General
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Share Capital
   Changes in Capital or our Memorandum of Association and Articles of Association
  
    
    increase our authorized or paid up share capital;
    
    consolidate all or any part of our shares into a smaller number of shares each with a
larger par value;
    
    split all or any part of our shares into a larger number of shares each with a smaller
par value;
    
    convert any of our paid-up shares into stock, and reconvert any stock into any number of
paid-up shares of any denomination;
    
    cancel shares which, at the date of passing of the resolution, have not been taken or
agreed to be taken by any person, and diminish the amount of the authorized share capital by
the amount of the shares so cancelled;
    
    reduce our issued share capital; or
    
    alter our Memorandum of Association or Articles of Association.
 Directors
   157




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General Meetings of Shareholders
   
    
    the consideration of our annual financial statements and report of our directors and
auditors;
    
    the election of directors;
    
    the appointment of auditors and the fixing of their remuneration;
    
    the authorization of dividends; and
    
    the transaction of any other business of which notice has been given.
 inter alia
 Division of Shares
   Voting Rights
   158




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Quorum
  Shareholder Resolutions
   Dividends
   159




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
    
    the rate of dividend to be declared shall not exceed the lesser of 10% of our paid-up
capital or the average of the rates at which dividends were declared in the five years
immediately preceding that year;
    
    the total amount to be drawn from the accumulated profits may not exceed 10% of the sum
of our paid-up capital and free reserves and any amount so drawn shall first be used to set
off any losses incurred in that financial year; and
    
    the balance of our reserves following such withdrawal shall not fall below 15% of our
paid-up capital.
 Distribution of Assets on a Winding-up
  Transfer of Shares
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Disclosure of Ownership Interest
   Alteration of Shareholder Rights
  Share Register and Record Dates
   161




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##### Table of Contents



Annual Report
   Borrowing Powers
  Issue of Equity Shares and Pre-emptive Rights
   
    
    the right, exercisable by the shareholders of record, to renounce the equity shares
offered in favor of any other person;
    
    the number of equity shares offered; and
    
    the period of the offer, which may not be less than 15 days from the date of the offer.
If the offer is not accepted, it is deemed to have been declined.
  162




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Capitalization of Profits and Reserves
  
    
    paying up any amount remaining unpaid on the shares held by our shareholders; or
    
    issuing to our shareholders, fully paid bonus equity shares (issued either at par or a
premium).
  
    
    no company shall, pending the conversion of convertible securities, issue any bonus
equity shares unless a similar benefit is extended to the holders of such convertible
securities through a reservation of equity shares in proportion to such conversion;
    
    the bonus issue shall be made out of free reserves built out of genuine profits or share
premium collected in cash only;
    
    bonus equity shares cannot be issued unless all the partly paid up equity shares have
been fully paid-up;
    
    the company has not defaulted in the payment of interest or principal in respect of fixed
deposits and interest on existing debentures or principal on redemption of such debentures;
    
    a declaration of bonus equity shares in lieu of dividend cannot be made;
    
    the company shall have sufficient reason to believe that it has not defaulted in the
payment of statutory dues of the employees such as contribution to provident fund, gratuity
and bonus; and
    
    the bonus issue must be implemented within six months from the date of approval by the
board of directors.
 Purchase of Own Equity Shares
  
    
    the buy-back must be authorized by the companys Articles of Association;
    
    a special resolution authorizing the buy-back must be passed in a general meeting;
    
    the buy-back is limited to 25% of the companys total paid up capital and free reserves;
    
    the ratio of debt owed is not more than twice the capital and free reserves after such
buy-back; and
    
    the buy-back is in accordance with the SEBI (Buy-Back
of Securities) Regulation, 1998.
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Rights of Minority Shareholders
   
    
    that the companys affairs are being conducted in a manner prejudicial to public interest
or in a manner oppressive to any member or members or in a manner prejudicial to the
interests of the company; or
    
    that a material change has taken place in the management or control of the company,
whether by a change in its board of directors or management or in the ownership of the
companys shares and by reason of such change, it is likely that the affairs of the company
will be conducted in a manner prejudicial to public interest or in a manner prejudicial to
the interests of the company.
 Provisions on Squeeze Out of Minority Shareholders
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Book-Entry Shares and Liquidity
  Comparison of Shareholders Rights
   Delaware Law
    
    Indian LawAnnual and Special Meetings of ShareholdersShareholders of a Delaware
corporation generally do
not have the right to call
meetings of shareholders
unless that right is
granted in the certificate
of incorporation or bylaws.
However, if a corporation
fails to hold its annual
meeting within a period of
30 days after the date
designated for the annual
meeting, or if no date has
been designated for a
period of 13 months after
its last annual meeting,
the Delaware Court of
Chancery may order a
meeting to be held upon the
application of a
shareholder.
    
    While shareholders of a company do not have any right to
call for an annual general meeting, shareholders holding
one-tenth of the voting share capital of the company have
a right to request an extraordinary general meeting.
However, in the event the company defaults in holding an
annual general meeting within 15 months from the date of
its last annual general meeting, the Government of India
may order a meeting to be held upon the application of
any shareholder.Quorum Requirements for Meetings of ShareholdersA Delaware corporations
certificate of
incorporation or bylaws can
specify the number of
shares which constitute the
quorum required to conduct
business at a meeting,
provided that in no event
shall a quorum consist of
less than one-third of the
shares entitled to vote at
a meeting.
    
    Our Articles of Association specify that five members
personally present constitute the quorum required to
conduct business at a general meeting, which is
consistent with Indian law requirements.Board of DirectorsA typical certificate of
incorporation and bylaws
would provide that the
number of directors on the
board of directors will be
fixed from time to time by
a vote of the majority of
the authorized directors.
Under Delaware law, a board
of directors can be divided
into classes and cumulative
voting in the election of
directors is only permitted
if expressly authorized in
a corporations certificate
of incorporation.
    
    Our Articles of Association provide that unless otherwise
determined by the shareholders at a general meeting, the
number of directors shall not be less than three or more
than 12.
Under Indian law, the appointment and removal of
directors (other than additional directors) is required
to be approved by the shareholders.
There is no concept under Indian law as to division of
the board of directors into different classes or
cumulative voting.
 165




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##### Table of Contents



Delaware Law
    
    Indian LawRemoval of DirectorsA typical certificate of
incorporation and bylaws
provide that, subject to
the rights of holders of
any preferred stock,
directors may be removed at
any time by the affirmative
vote of the holders of at
least a majority, or in
some instances a
supermajority, of the
voting power of all of the
then outstanding shares
entitled to vote generally
in the election of
directors, voting together
as a single class. A
certificate of
incorporation could also
provide that such a right
is only exercisable when a
director is being removed
for cause (removal of a
director only for cause is
the default rule in the
case of a classified board).
    
    Under Indian law, a director of a company, other than a
director appointed by the Government of India, may be
removed by the affirmative vote of shareholders holding a
majority of the voting share capital, provided that a
special notice of the resolution to remove the director
is given in accordance with the provisions of the Indian
Companies Act. Under our Articles of Association, any
director who has been appointed by any persons pursuant
to the provisions of an agreement with us may be removed
at any time by such person.Filling Vacancies on the Board of DirectorsA typical certificate of
incorporation and bylaws
provide that, subject to
the rights of the holders
of any preferred stock, any
vacancy, whether arising
through death, resignation,
retirement,
disqualification, removal,
an increase in the number
of directors or any other
reason, may be filled by a
majority vote of the
remaining directors, even
if such directors remaining
in office constitute less
than a quorum, or by the
sole remaining director.
Any newly elected director
usually holds office for
the remainder of the full
term expiring at the annual
meeting of stockholders at
which the term of the class
of directors to which the
newly elected director has
been elected expires.
    
    The board of directors has the power to fill a vacancy on
the board and any director so appointed shall hold office
only so long as the vacating director would have held
such office if no vacancy had occurred.Interested Director TransactionsUnder Delaware law, some
contracts or transactions
in which one or more of a
Delaware corporations
directors has an interest
are not void or voidable
because of such interest
provided that some
conditions, such as
obtaining the required
approval and fulfilling the
requirements of good faith
and full disclosure, are
met. For an interested
director transaction not to
be voided, either the
stockholders or the board
of directors must approve
in good faith any such
contract or transaction
after full disclosure of
the material facts or the
contract or transaction
must have been fair as to
the corporation at the time
it was approved. If board
approval is sought, the
contract or transaction
must be approved in good
faith by a majority of
disinterested directors
after full disclosure of
material facts, even though
less than a majority of a
quorum.
    
    Under Indian law, contracts or arrangements in which one
or more directors of an Indian company has an interest
are not void or voidable because of such interest,
provided that certain conditions, such as obtaining the
required approval of the board of directors and
disclosing the nature of the interest to the board of
directors, are satisfied. Subject to a few exceptions,
for an interested director transaction not to be voided,
(a) the interested director is required to disclose the
nature of his concern or interest at a meeting of the
board of directors; (b) the board of directors is
required to grant its consent to the contract or
arrangement; (c) the interested director is not permitted
to take part in the discussion of, or vote on, the
contract or arrangement; and (d) the approval of the
Government of India is required to be obtained in the
event the paid up share capital of the company is more
than Rs. 10 million. An interested director is not to be
counted for the purposes of quorum at the time of any
such discussion or vote and if the interested director
does vote, the vote shall be void. The contravention of
relevant provisions is punishable with fine.
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Delaware Law
    
    Indian LawCumulative VotingDelaware law does not
require that a Delaware
corporation provide for
cumulative voting. However,
the certificate of
incorporation of a Delaware
corporation may provide
that shareholders of any
class or classes or of any
series may vote
cumulatively either at all
elections or at elections
under specified
circumstances.
    
    There is no concept of cumulative voting under Indian law.Shareholder Action Without a MeetingUnless otherwise specified
in a Delaware corporations
certificate of
incorporation, any action
required or permitted to be
taken by shareholders at an
annual or special meeting
may be taken by
shareholders without a
meeting, without notice and
without a vote, if
consents, in writing,
setting forth the action,
are signed by shareholders
with not less than the
minimum number of votes
that would be necessary to
authorize the action at a
meeting. All consents must
be dated. No consent is
effective unless, within 60
days of the earliest dated
consent delivered to the
corporation, written
consents signed by a
sufficient number of
holders to take the action
are delivered to the
corporation.
    
    There is no concept of shareholder action without a
meeting under Indian law.Business CombinationsWith certain exceptions, a
merger, consolidation or
sale of all or
substantially all the
assets of a Delaware
corporation must be
approved by the board of
directors and a majority
(unless the certificate of
incorporation requires a
higher percentage) of the
outstanding shares entitled
to vote thereon.
Delaware law also requires
a special vote of
stockholders in connection
with a business combination
with an interested
stockholder as defined in
Section 203 of the Delaware
General Corporation Law.
See  Interested
Stockholders below.
    
    The sale, lease or disposal of all or substantially all
of the assets of an Indian company must be approved by
the board of directors and shareholders holding a
majority of the voting share capital of the company.

Under the Indian Companies Act, the merger of two
companies is required to be approved by a court of
competent jurisdiction and by a three-fourths majority
of each class of shareholders and creditors of the
company present and voting at the meetings held to
approve the merger.
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Delaware Law
    
    Indian LawInterested StockholdersSection 203 of the Delaware
General Corporation Law
generally prohibits a
Delaware corporation from
engaging in specified
corporate transactions
(such as mergers, stock and
asset sales, and loans)
with an interested
stockholder for three
years following the time
that the stockholder
becomes an interested
stockholder. Subject to
specified exceptions, an
interested stockholder is
a person or group that owns
15% or more of the
corporations outstanding
voting stock (including any
rights to acquire stock
pursuant to an option,
warrant, agreement,
arrangement or
understanding, or upon the
exercise of conversion or
exchange rights, and stock
with respect to which the
person has voting rights
only), or is an affiliate
or associate of the
corporation and was the
owner of 15% or more of the
voting stock at any time
within the previous three
years.
A Delaware corporation may
elect to opt out of, and
not be governed by, Section
203 through a provision in
either its original
certificate of
incorporation or its
bylaws, or an amendment to
its original certificate or
bylaws that was approved by
majority stockholder vote.
With a limited exception,
this amendment would not
become effective until
12 months following its
adoption.
    
    Indian law does not prohibit corporate transactions but
does require disclosure of related party transactions in
the financial statements of the company.
During the time that a related party transaction exists,
a company is required to disclose the name of the related
parties, describe the relationship between the parties,
describe the nature of the transactions and disclose the
volume of the transactions either as an amount or as an
appropriate proportion, the amounts or appropriate
proportions of outstanding items pertaining to related
parties at the balance sheet date and provisions for
doubtful debts due from such parties at that date and the
amounts written off or written back in the period in
respect of debts due from or to related parties.
Transactions undertaken between a company and a person
having a substantial interest in the company would
qualify as a related party transaction and would be
required to be disclosed under applicable accounting
standards. A party is considered to have a substantial
interest in a company if that party owns, directly or
indirectly, 20% or more of the voting power in the
company.Limitations on Personal Liability of DirectorsA Delaware corporation may
include in its certificate
of incorporation provisions
limiting the personal
liability of its directors
to the corporation or its
shareholders for monetary
damages for many types of
breach of fiduciary duty.
However, these provisions
may not limit liability for
any breach of the duty of
loyalty, acts or omissions
not in good faith or that
involve intentional
misconduct or a knowing
violation of law, the
authorization of unlawful
dividends, shares
repurchases or shares
barring redemptions, or any
transaction from which a
director derived an
improper personal benefit.
A typical certificate of
incorporation would also
provide that if Delaware
law is amended so as to
allow further elimination
of, or limitations on,
director liability, then
the liability of directors
will be eliminated or
limited to the fullest
extent permitted by
Delaware law as so amended.
However, these provisions
would not be likely to bar
claims arising under US
federal securities laws.
    
    Generally, Indian law provides that directors are not
personally liable in respect of contracts of the company.
However, where a director acts without the approval or
ratification of the company, such director may be
personally liable. Directors are also personally liable
for breach of trust or misfeasance, both civilly and in
some cases criminally. The Indian Companies Act contains
certain provisions making directors personally liable to
discharge certain monetary obligations in their capacity
as directors, such as the non-refund of share application
monies or excess application monies within the time limit
stipulated by the Indian Companies Act. Similarly, the
Indian Companies Act provides for civil liability of
directors for misstatements in a prospectus issued by the
company that has been signed by the directors, including
the obligation to pay compensation to any persons
subscribing to the shares of the company on the faith of
statements made in the prospectus.
Directors and officers liability insurance policies are
available in India. However, the permissible coverage
under such policies is subject to the same limitations as
on the ability of the company to indemnify its directors
as described under  Indemnification of Directors and
Officers.
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Delaware Law
    
    Indian LawIndemnification of Directors and OfficersUnder Delaware law, subject
to specified limitations in
the case of derivative
suits brought by a
corporations stockholders
in its name, a corporation
may indemnify any person
who is made a party to any
third party action, suit or
proceeding on account of
being a director, officer,
employee or agent of the
corporation (or was serving
at the request of the
corporation in such
capacity for another
corporation, partnership,
joint venture, trust or
other enterprise) against
expenses, including
attorneys fees, judgments,
fines and amounts paid in
settlement actually and
reasonably incurred by him
or her in connection with
the action, suit or
proceeding through, among
other things, a majority
vote of a quorum consisting
of directors who were not
parties to the suit or
proceeding, if the person:
    
acted in good faith
and in a manner he or she
reasonably believed to be
in or not opposed to the
best interests of the
corporation or, in some
circumstances, at least not
opposed to its best
interests; and
    
in a criminal
proceeding, had no
reasonable cause to believe
his or her conduct was
unlawful.




    
    Under Indian law, subject to specified exceptions, any
provision, whether contained in the Articles of
Association of a company or in any agreement, exempting
or indemnifying any director, officer or auditor of the
company against any liability in respect of any
negligence, default, breach of duty or breach of trust
which would by law otherwise attach to such director,
officer or auditor, shall be void. However, pursuant to
the exceptions permitted under Indian law, our Articles
of Association provide for indemnification of any officer
or agent against any liability incurred by such person in
successfully defending any proceeding, whether civil or
criminal, in which such person is acquitted in whole or
in part on the grounds that such person had acted
honestly and reasonably, or in connection with an
application made by an officer or agent to the High Court
of the relevant state for relief for reason that he or
she has a reason to apprehend that any proceeding may be
brought against him in respect of any negligence,
default, breach of duty, misfeasance or breach of trust
in which relief has been granted by such High Court.Delaware law permits
indemnification by a
corporation under similar
circumstances for expenses
(including attorneys fees)
actually and reasonably
incurred by such persons in
connection with the defense
or settlement of a
derivative action or suit,
except that no
indemnification may be made
in respect of any claim,
issue or matter as to which
the person is adjudged to
be liable to the
corporation unless the
Delaware Court of Chancery
or the court in which the
action or suit was brought
determines upon application
that the person is fairly
and reasonably entitled to
indemnity for the expenses
which the court deems to be
proper.To the extent a director,
officer, employee or agent
is successful in the
defense of such an action,
suit or proceeding, the
corporation is required by
Delaware law to indemnify
such person for reasonable
expenses incurred thereby.
Expenses (including
attorneys fees) incurred
by such persons in
defending any action, suit
or proceeding may be paid
in advance of the final
disposition of such action,
suit or proceeding upon
receipt of an undertaking
by or on behalf of that
person to repay the amount
if it is ultimately
determined that that person
is not entitled to be so
indemnified.Appraisal RightsA shareholder of a Delaware
corporation participating
in certain major corporate
transactions may, under
certain circumstances, be
entitled to appraisal
rights pursuant to which
the shareholder may receive
cash in the amount of the
fair value of the shares
held by that shareholder
(as determined by a court)
in lieu of the
consideration the
shareholder would otherwise
receive in the transaction.
    
    There is no concept of appraisal rights under Indian law.
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Delaware Law
    
    Indian LawShareholder SuitsUnder Delaware law, a
stockholder may bring a
derivative action on behalf
of the corporation to
enforce the rights of the
corporation, including for,
among other things, breach
of fiduciary duty,
corporate waste and actions
not taken in accordance
with applicable law. An
individual also may
commence a class action
suit on behalf of himself
or herself and other
similarly situated
stockholders where the
requirements for
maintaining a class action
under Delaware law have
been met. A person may
institute and maintain such
a suit only if such person
was a stockholder at the
time of the transaction
which is the subject of the
suit or his or her shares
thereafter devolved upon
him or her by operation of
law. Additionally, under
established Delaware case
law, the plaintiff
generally must be a
stockholder not only at the
time of the transaction
which is the subject of the
suit, but also through the
duration of the derivative
suit. Delaware law also
requires that the
derivative plaintiff make a
demand on the directors of
the corporation to assert
the corporate claim before
the suit may be prosecuted
by the derivative
plaintiff, unless such
demand would be futile. In
such derivative and class
actions, the court has
discretion to permit the
winning party to recover
attorneys fees incurred in
connection with such
action.
    
    Under the Indian Companies Act, shareholders holding not
less than one tenth of the issued share capital,
shareholders representing not less than one tenth of the
total number of members or one hundred members, provided
that they have paid all calls and other sums due on their
shares, have the right to request the National Company
Law Tribunal, a statutory body, for an order or
injunction as to the taking or not taking of an action by
the company on the following grounds of oppression or
mismanagement: (a) that the companys affairs are being
conducted in a manner prejudicial to public interest, in
a manner oppressive to any member or members or in a
manner prejudicial to the interests of the company; and
(b) that a material change has taken place in the
management or control of the company, whether by a change
in the board of directors or management or in the
ownership of the companys shares, and by reason of such
change it is likely that the affairs of the company will
be conducted in a manner prejudicial to public interest
or in a manner prejudicial to the interests of the
company.Inspection of Books and RecordsAll shareholders of a
Delaware corporation have
the right, upon written
demand, to inspect or
obtain copies of the
corporations shares ledger
and its other books and
records for any purpose
reasonably related to such
persons interest as a
shareholder.
    
    Pursuant to our Articles of Association, our board of
directors has the authority to determine whether and to
what extent and at what times and places and under what
conditions or regulations our books are open to the
inspection of the shareholders. Further, no shareholder
of the company has the right to inspect any record of the
company except as conferred under law or authorized by
the board of directors or by the shareholders in a
general meeting. The books containing the minutes of the
proceedings of any general meetings of the shareholders
are required to be kept at the registered office of the
company and such materials are to be opened for
inspection by any shareholder, without charge, subject to
reasonable restrictions which may be imposed by a
companys articles or the general meeting of the
shareholders. If an inspection is refused, the company
and every officer of the company in default will be
punishable with a fine. Under Indian law, the audited
financial statements for the relevant financial year, the
directors report and the auditors report are required
to be provided to the shareholders before the annual
general meeting.
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Delaware Law
    
    Indian LawAmendment of Governing DocumentsUnder Delaware law,
amendments to a
corporations certificate
of incorporation require
the approval of
stockholders holding a
majority of the outstanding
shares entitled to vote on
the amendment. If a class
vote on the amendment is
required by Delaware law, a
majority of the outstanding
stock of the class is
required, unless a greater
proportion is specified in
the certificate of
incorporation or by other
provisions of Delaware law.
Under Delaware law, the
board of directors may
amend bylaws if so
authorized in the charter.
The stockholders of a
Delaware corporation also
have the power to amend
bylaws.
    
    Under Indian Law, subject to certain specified amendments
that require the additional approval of the central
government, a company may make amendments to its articles
with the approval of shareholders holding a super
majority of the shares of the company.Distributions and Dividends; Repurchases and RedemptionsDelaware law permits a
corporation to declare and
pay dividends out of
statutory surplus or, if
there is no surplus, out of
net profits for the fiscal
year in which the dividend
is declared and/or for the
preceding fiscal year as
long as the amount of
capital of the corporation
following the declaration
and payment of the dividend
is not less than the
aggregate amount of the
capital represented by the
issued and outstanding
stock of all classes having
a preference upon the
distribution of assets.
Under Delaware
law, any
corporation may purchase or
redeem its own shares,
except that generally it
may not purchase or redeem
those shares if the capital
of the corporation is
impaired at the time or
would become impaired as a
result of the redemption. A
corporation may, however,
purchase or redeem capital
shares that are entitled
upon any distribution of
its assets to a preference
over another class or
series of its shares if the
shares are to be retired
and the capital reduced.
    
    Under Indian law, a company may only pay a dividend in an
amount in excess of 10% of its paid up capital out of the
profits of that year after it has transferred to the
reserves of the company a percentage of its profits for
that year ranging between 2.5% to 10% depending on the
rate of dividend proposed to be declared in that year. If
the profits for a year are insufficient, the dividend for
that year may be declared out of the accumulated profits
earned in previous years and transferred to reserves,
subject to the following conditions: (i) the rate of
dividend to be declared may not exceed the lesser of the
average of the rates at which dividends were declared in
the five years immediately preceding the year, or 10% of
paid-up capital; (ii) the total amount to be drawn from
the accumulated profits from previous years and
transferred to the reserves may not exceed an amount
equivalent to one tenth of the paid-up capital and free
reserves and the amount so drawn is first to be used to
set off the losses incurred in the financial year before
any dividends in respect of preference or equity shares;
and (iii) the balance
of reserves after withdrawals must
not be below 15% of paid-up capital. Shareholders have a
right to claim a dividend, after such dividend has been
declared by the company at a general meeting.
Shareholders also have a right to claim the interim
dividends, which may be declared only pursuant to a
resolution of the companys board of directors. Dividends
may be paid only in cash. Where a dividend has been
declared by a company but has not been paid within 30
days from the date of declaration to any shareholder
entitled to the payment of such dividend, a penalty can
be imposed on a director who is knowingly a party to such
default.
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Delaware Law
    
    Indian LawA company is prohibited from acquiring its own shares
unless the consequent reduction of capital is effected
and sanctioned by a High Court. However, pursuant to
certain amendments to the Indian Companies Act, a company
has been empowered to purchase its own shares or other
specified securities out of its free reserves, or the
securities premium account or the proceeds of any shares
or other specified securities (other than the kind of
shares or other specified securities proposed to be
bought back), subject to certain conditions including: (a) 
the buy-back must be authorized by the articles of
association of the company; (b) a resolution must be
passed by a super majority of the outstanding shares in
the general meeting of the company authorizing the
buy-back; (c) the buy-back is limited to 25% of the total
paid up capital and free reserves; (d) the ratio of debt
owed by the company must not be more than twice the
capital and free reserves after such buy-back; and
(e) the buy-back must be in accordance with the
SEBI (Buy-Back of
Securities) Regulations, 1998.Conditions (a) and (b) mentioned above would not be
applicable if the buy-back is for less than 10% of the
total paid-up equity capital and free reserves of the
company and such buy-back has been authorized by the
board of directors of the company. Further, a company
buying back its securities is not permitted to buy-back
any additional securities for a period of one year after
the buy-back or to issue any securities for a period of
six months.A company is also prohibited from purchasing its own
shares or specified securities directly or indirectly.
 Comparison of Corporate Governance Standards
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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSEDirector IndependenceA majority of the board must consist of independent
directors. Independence is defined by various criteria
including the absence of a material relationship between
the director and the listed company. For example,
directors who are employees, are immediate family of an
executive officer of the company or receive over
$100,000 per year in direct compensation from the listed
company are not independent. Directors who are employees
of or otherwise affiliated through immediate family with
the listed companys independent auditor are also not
independent. Determinations of independence were made by
the board.
The non-management directors must meet at regularly
scheduled executive sessions without management.
(The NYSE requirements for a board consisting of
independent directors and non-management directors
meeting at regularly scheduled executive sessions do not
apply to us as a foreign private issuer.)
    
    If the Chairman of the board of directors is an executive
director, at least 50% of the board of directors should
comprise of independent directors. If the Chairman of the
board of directors is a non-executive director, then at
least one third of the board should comprise of independent
directors, provided that where the non-executive Chairman is
a promoter of the company or is related to any promoter or
person occupying a management position at the board of
directors level or at one level below that, at least 50% of
the board of directors should comprise of independent
directors. Clause 49 of the listing agreements define an
independent director to mean a non-executive director who
(i) is receiving directors remuneration and does not have
any other material pecuniary relationship or transaction
with the company, its promoters, its directors, its senior
management or its holding company or its subsidiaries or its
associates, which may affect the independence of the
director; (ii) is not related to promoters or management at
the board level or at one level below the board; (iii) has
not been an executive of the company in the immediately
preceding three financial years; (iv) is not a partner or an
executive and has not been a partner or executive during the
preceding three financial years, of the statutory audit firm
or the internal audit firm or the legal firm and consulting
firm of the company; (v) is not a material supplier, service
provider, customer, lessee, or lessor of the company and
(vi) is not a shareholder, owning 2% or more of the voting
shares of the company.
There is no comparable requirement under Indian law.
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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSEAudit CommitteeThe audit committee must (i) be comprised entirely of
independent directors; (ii) be directly responsible for
the appointment, compensation, retention and oversight
of any registered public accounting firm engaged
(including resolution of disagreements between
management and the auditor regarding financial
reporting) for the purpose of preparing or issuing an
audit report or performing other audit, review or attest
services for the listed issuer, and each such registered
public accounting firm must report directly to the audit
committee; (iii) establish procedures for the receipt,
retention and treatment of complaints with respect to
accounting and auditing issues; (iv) establish
procedures for the confidential, anonymous submission by
employees of the listed issuer of concerns regarding
questionable accounting or auditing matters; (v) be
authorized to engage independent counsel and other
advisers it deems necessary to perform its duties; and
(vi) be given sufficient funding by the board of
directors to compensate the independent auditors and
other advisors as well as for the payment of ordinary
administrative expenses incurred by the committee that
are necessary or appropriate in carrying out its duties.
    
    The listing agreements require that the role of the audit
committee should include the following:    
To oversee the companys financial reporting process
and the disclosure of its financial information to ensure
that the financial statement is correct, sufficient and
credible.    
To recommend to the board of directors the
appointment and removal of the external auditor, fix the
audit fee and also approve of payment to such auditor for
any other services rendered by him.    
To review with management the annual financial
statements before submission to the board of directors,
focusing primarily on matters required to be included in the
Directors Responsibility Statement, any changes in
accounting policies and practices, any major accounting
entries based on exercise of judgment by management, any
qualifications in the draft audit report, any significant
adjustments arising out of the audit, the going concern
assumption, compliance with accounting standards, compliance
with stock exchange and legal requirements concerning
financial statements and any related party transactions.     To review with management, the performance of
external and internal auditors, and the adequacy of internal
control systems.     To review the adequacy of the internal audit
function, including the structure of the internal audit
department, staffing and seniority of the official heading
the department, reporting structure coverage and frequency
of internal audit.     To discuss with internal auditors any significant
findings and follow-up thereon.     To review the findings of any internal
investigations by the internal auditors into matters where
there is suspected fraud or irregularity or a failure of
internal control systems of a material nature and report the
matter to the board.     To discuss with external auditors before the audit
commences, the nature and scope of the audit as well as to
conduct post-audit discussions to ascertain any area of
concern.     To review the companys quarterly financial
statements and management policies.
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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSE     To examine the reasons for substantial defaults in
payment to depositors, debenture holders, shareholders (in
case of non-payment of declared dividends) and creditors.     To review the functioning of whistle blower
mechanism.     To review the managements discussion and analysis
of financial condition and results of operation.     To review the statement of significant related party
transactions submitted by the management.     To review the management letters/letters of internal
control weaknesses issued by the statutory auditors.     To review the internal audit reports relating to
internal control weaknesses.     To review the appointment, removal and terms of
remuneration of the chief internal auditor.The audit committee must consist of at least three
members, and each member must be independent within the
meaning established by the NYSE and Rule 10A-3 under the
Exchange Act.
The audit committee members must be financially literate
or become financially literate within a reasonable
period of their appointment to the audit committee.

Each listed company must have disclosed whether its
board of directors has identified an audit committee
financial expert (as defined under applicable rules of
the Commission) and if not, the reasons why the board
has not done so.
The audit committee must have a written charter that
addresses the committees purpose and responsibilities.
At a minimum, the committees purpose must
be to assist
the board in the oversight of the integrity of the
companys financial statements, the companys compliance
with legal and regulatory requirements, the independent
auditors qualifications and independence and the
performance of the companys internal audit function and
independent auditors.
    
    Clause 49 of the listing agreements require that a qualified
and independent audit committee should be set up, which has
a minimum of three members. Two-thirds of its members should
be independent directors and the chairman of the audit
committee should be an independent director.
The listing agreements also require that all members of the
audit committee should be financially literate and at least
one member should have financial management and accounting
expertise.
In addition to the role of the audit committee described
above, the audit committee is required to have powers that
include the ability to investigate any activity within their
terms of reference, seek information from any employee,
obtain outside legal or other professional advice and secure
attendance of outsiders with relevant expertise if this is
considered necessary.The duties and responsibilities of the audit committee
include conducting a review of the independent auditing
firms annual report describing the firms internal
quality control procedures, any material issues raised
by the most recent internal quality control review or
peer review of the firm and any steps taken to address
such issues.
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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSEThe audit committee is also to assess the auditors
independence by reviewing all relationships between the
company and its auditor. It must establish the companys
hiring guidelines for employees and former employees of
the independent auditor.The committee must also discuss the companys annual
audited financial statements and quarterly financial
statements with management and the independent auditors,
the companys earnings press releases, as well as
financial information and earnings guidance provided to
analysts and rating agencies, and policies with respect
to risk assessment and risk management.Each listed company must have an internal audit function.
    
    The listing agreements require an Indian listed company to
have an internal audit function.The committee must also meet separately, periodically,
with management, with internal auditors (or other
personnel responsible for the internal audit function)
and with independent auditors and review with the
independent auditor any audit problems or difficulties
and managements response.
    
    Clause 49 of the listing agreements also require that the
audit committee should meet at least four times in a year
and not more than four months should lapse between two
meetings.The committee must report regularly to the board.(The NYSE audit committee requirements apply to us as
foreign private issuers are not exempt from this
requirement.)Compensation CommitteeListed companies must have a compensation committee
composed entirely of independent board members as
defined by the NYSE listing standards.
The committee must have a written charter that addresses
its purpose and responsibilities.
    
    The listing agreements state that a company may set up a
remuneration committee, which should be comprised of at
least three directors, all of whom shall be non-executive
directors and the chairman of the remuneration committee
shall be an independent director.These responsibilities include (i) reviewing and
approving corporate goals and objectives relevant to CEO
compensation; (ii) evaluating CEO performance and
compensation in light of such goals and objectives for
the CEO; (iii) based on such evaluation, reviewing and
approving CEO compensation levels; (iv) recommending to
the board non-CEO compensation, incentive compensation
plans and equity-based plans; and (v) producing a report
on executive compensation as required by the Commission
to be included in the companys annual proxy statement
or annual report. The committee must also conduct an
annual performance self-evaluation.(The NYSE compensation committee requirements do not
apply to us as a foreign private issuer.)
 176




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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSENominating/Corporate Governance CommitteeListed companies must have a nominating/corporate
governance committee composed entirely of independent
board members.
    
    There is no comparable provision under Indian law.The committee must have a written charter that addresses
its purpose and responsibilities, which include
(i) identifying individuals qualified to become board
members; (ii) selecting, or recommending that the board
select, the director nominees for the next annual
meeting of shareholders; (iii) developing and
recommending to the board a set of corporate governance
principles applicable to the company; (iv) overseeing
the evaluation of the board and management; and
(v) conducting an annual performance evaluation of the
committee.(The NYSE nominating/corporate governance committee
requirements do not apply to us as a foreign private
issuer.)Equity-Compensation PlansShareholders must be given the opportunity to vote on
all equity-compensation plans and material revisions
thereto, with limited exceptions.

(The NYSE requirement for shareholder approval of
equity-compensation plans does not apply to us as a
foreign private issuer.)
    
    Section 79A of the Indian Companies Act requires that a
company may issue equity shares at a discount of a class of
shares already issued if such issue is authorized by a
special resolution passed by the company in a general
meeting.
The SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999, as amended, also require that a special
resolution be passed by the shareholders of a company in a
general meeting to approve an employee stock option or stock
purchase scheme.Corporate Governance GuidelinesListed companies must adopt and disclose corporate
governance guidelines. 
(The NYSE requirement that corporate governance
guidelines be adopted does not apply to us as a foreign
private issuer. However, we must disclose differences
between the corporate governance standards to which we
are subject and those of the NYSE.)
    
    Corporate governance requirements for listed companies in
India are included in Clause 49 of the listing agreements
required to be entered into with the NSE and BSE.
 177




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##### Table of Contents



Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSECode of Business Conduct and EthicsAll listed companies, United States and foreign, must
adopt and disclose a code of business conduct and ethics
for directors, officers and employees, and promptly
disclose any waivers of the code for directors or
executive officers.
(The NYSE requirement for a code of business conduct and
ethics does not apply to us as a foreign private
issuer.)
    
    Clause 49 of the listing agreements require that the board
of directors shall lay down a code of conduct for all board
members and senior management of a listed company. This code
of conduct is required to be posted on the website of the
company. Further, all board members and senior management
personnel are required to affirm compliance with the code on
an annual basis and the companys annual report must contain
a declaration to this effect signed by its chief executive
officer.
 C. Material Contracts
  Shared Services Agreement dated December 5, 2003 among STL, Sterlite Gold, Vedanta and Sterlite
  Consultancy Agreement dated March 29, 2005 between Vedanta and Sterlite
  Representative Office Agreement dated March 29, 2005 between Vedanta and Sterlite
  Agreement dated August 30, 2006 between STL and Sterlite for the sale of Sterlites aluminum
conductor business
  Agreements dated October 3, 2006 between Sterlite and Twin Star Infrastructure Limited, Mr. Anil
Agarwal and Mr. Dwarka Prasad Agarwal for the sale of Sterlite Energy
  Outstanding loans
  Option Agreement dated February 18, 2005 between Sterlite, IFL and ICICI Bank Limited
  Corporate Guarantee dated February 8, 2005 by Sterlite to ICICI Bank Limited on behalf of IFL
  Loan Agreement dated February 4, 2008 between Sterlite and Vedanta Aluminium
  178




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##### Table of Contents



Memoranda of Understanding dated August 29, 2007 and December 23, 2007, as amended, between
Sterlite and Vedanta Aluminium
  Purchase and Sale Agreement dated May 30, 2008 among Asarco LLC, AR Silver Bell, Inc., Copper Basin
Railway, Inc., Asarco Santa Cruz, Inc., Sterlite (USA) Inc. and Sterlite Industries (India)
Limited
  D. Exchange Controls
 General
  Foreign Direct Investment
  
    
    investments in excess of specified sectoral caps or investments in sectors in which FDI
is not permitted or in sectors which specifically require approval of the FIPB;
    
    investments by any foreign investor who had on January 12, 2005, an existing joint
venture or a technology transfer/trade mark agreement in the same field as the Indian
company in which the FDI is proposed. However, no prior approval is required if: (a) the
investor is a venture capital funds registered with SEBI, or (b) the existing joint venture,
investment by either of the parties is less than 3%, or (c) the existing joint venture or
collaboration is now defunct or sick;
    
    foreign investment of more than 24% in the equity capital of units manufacturing items
reserved for small scale industries;
    
    all proposals for manufacturing activities requiring a license under the Industries
(Development and Regulation) Act, 1951 and that are proposed to be located outside a radius
of 25 kilometers of the standard urban area limits; and
 179




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
    
    all proposals relating to the acquisition of shares of an Indian company by a foreign
investor (including an individual of Indian nationality or origin residing outside India and
corporations established and incorporated outside India) which are not under the automatic
route.
     Issue of ADSs
    Restrictions on Redemption of ADSs, Sale of the Equity Shares Underlying the ADSs and the
Repatriation of Sale Proceeds
   180




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Fungibility of ADSs
  
    
    the shares of the Indian company are purchased on a recognized stock exchange in India;
    
    the shares of the Indian company are purchased on a recognized stock exchange with the
permission of the domestic custodian for the ADSs issued by the Indian company and such
shares are deposited with the custodian after purchase;
    
    the Indian company has authorized the custodian to accept shares from non-resident
investors for re-issuance of ADSs;
    
    the number of shares of the Indian company so purchased does not exceed the ADSs
converted into underlying shares; and
    
    compliance with the provisions of the ADR Scheme and the guidelines issued thereunder.
 Sponsored ADS Facilities
  
    
    the facility to sell the shares would be available pari passuto all categories of
shareholders;
    
    the sponsoring company whose shareholders propose to divest existing shares in the
overseas market through the issue of ADSs will give an option to all its shareholders
indicating the number of shares to be divested and the mechanism of determining the price
under the applicable ADS norms. If the shares offered for divestment are more than the
pre-specified number to be divested, shares would be accepted from the existing shareholders
in proportion to their existing shareholdings;
    
    the proposal for divestment of the shares would have to be approved by a special
resolution of the Indian company;
    
    the proceeds of the ADS issue raised abroad shall be repatriated to India within a period
of one month from the closing of the issue. However, the proceeds of the ADS offering can
also be retained abroad to meet the future foreign exchange requirements of the company; and
    
    the issue-related expenses in relation to the public issue of ADSs under this scheme
would be subject to a ceiling of 7% of the issue size, in the case of public issues, and 2%
of the issue size, in the case of private placements. Issue-related expenses would include
underwriting commissions and charges, legal expenses and reimbursable expenses.
Issue-related expenses shall be passed on to shareholders participating in the sponsored
issue on a pro-rata basis. Issue-related expenses beyond the ceiling would require the
approval of the RBI.
 181




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Investment by Foreign Institutional Investors
     
    
    a public offer, where the price of the equity shares to be issued is not less than the
price at which the equity shares are issued to Indian residents; or
    
    a private placement, where the price of the equity shares to be issued is not less than
the price set out in the relevant guidelines, including the SEBI Guidelines or the
guidelines issued by the former Controller of Capital Issues, as applicable.
  Portfolio Investment by Non-Resident Indians
  182




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Transfer of Shares
  
    
    investments to be made by venture capital funds registered with SEBI;
    
    where the existing joint venture investment by either of the parties is less than 3%; or
    
    where the existing venture/collaboration is defunct or sick.
   Transfer of Shares of an Indian Company by a Person Resident Outside India
  Exchange Rates
  183




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Period End(1)
    
    Average(1)(2)
    
    High
    
    LowFiscal Year:2004
    
    
    43.40
    
    
    
    45.96
    
    
    
    47.46
    
    
    
    43.402005
    
    
    43.62
    
    
    
    44.86
    
    
    
    46.45
    
    
    
    43.272006
    
    
    44.48
    
    
    
    44.17
    
    
    
    46.26
    
    
    
    43.052007
    
    
    43.10
    
    
    
    44.93
    
    
    
    46.83
    
    
    
    42.782008
    
    
    40.02
    
    
    
    40.13
    
    
    
    43.05
    
    
    
    38.482009 (through June 24, 2008)
    
    
    42.75
    
    
    
    41.30
    
    
    
    42.97
    
    
    
    39.73Month:December 2007
    
    
    39.41
    
    
    
    39.38
    
    
    
    39.55
    
    
    
    39.29January 2008
    
    
    39.31
    
    
    
    39.27
    
    
    
    39.55
    
    
    
    39.13February 2008
    
    
    39.96
    
    
    
    39.67
    
    
    
    40.11
    
    
    
    39.12March 2008
    
    
    40.02
    
    
    
    40.15
    
    
    
    40.46
    
    
    
    39.76April 2008
    
    
    40.45
    
    
    
    39.97
    
    
    
    40.45
    
    
    
    39.73May 2008
    
    
    42.15
    
    
    
    42.00
    
    
    
    42.93
    
    
    
    40.45June 2008 (through June 24, 2008)
    
    
    42.75
    
    
    
    42.76
    
    
    
    42.97
    
    
    
    42.38
 
 Notes:(1)
    
    The noon buying rate at each period end and the average rate for each period may have
differed from the exchange rates used in the preparation of financial statements included
elsewhere in this annual report.(2)
    
    Represents the average of the exchange rates on the last day of each month during the period
for all fiscal years presented and the average of the noon buying rate for all days during the
period for all months presented.   Period End(1)
    
    Average(1)(2)
    
    High
    
    LowFiscal Year:2004
    
    
    1.31
    
    
    
    1.45
    
    
    
    1.68
    
    
    
    1.252005
    
    
    1.29
    
    
    
    1.35
    
    
    
    1.46
    
    
    
    1.252006
    
    
    1.40
    
    
    
    1.33
    
    
    
    1.42
    
    
    
    1.282007
    
    
    1.23
    
    
    
    1.30
    
    
    
    1.39
    
    
    
    1.232008
    
    
    1.10
    
    
    
    1.15
    
    
    
    1.27
    
    
    
    1.062009 (through June 24, 2008)
    
    
    1.05
    
    
    
    1.05
    
    
    
    1.10
    
    
    
    1.04Month:December 2007
    
    
    1.14
    
    
    
    1.15
    
    
    
    1.17
    
    
    
    1.13January 2008
    
    
    1.12
    
    
    
    1.13
    
    
    
    1.16
    
    
    
    1.11February 2008
    
    
    1.07
    
    
    
    1.10
    
    
    
    1.12
    
    
    
    1.06March 2008
    
    
    1.10
    
    
    
    1.08
    
    
    
    1.12
    
    
    
    1.06April 2008
    
    
    1.06
    
    
    
    1.07
    
    
    
    1.10
    
    
    
    1.05May 2008
    
    
    1.05
    
    
    
    1.05
    
    
    
    1.07
    
    
    
    1.04June 2008 (through June 24, 2008)
    
    
    1.05
    
    
    
    1.05
    
    
    
    1.07
    
    
    
    1.04
 
 Notes:(1)
    
    The noon buying rate at each period end and the average rate for each period may have
differed from the exchange rates used in the preparation of financial statements included
elsewhere in this annual report.(2)
    
    Represents the average of the exchange rates on the last day of each month during the period
for all fiscal years presented and the average of the noon buying rate for all days during the
period for all months presented. 184




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E. Taxation
 India Taxation
  Residence
  Taxation of Income from ADSs
  185




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Withdrawal of Equity Shares in Exchange for the ADSs
  Taxation of Dividend
  Taxation of Sale of the Equity Shares
  Sale of the Equity Shares on a Recognized Stock Exchange
    Securities Transaction Tax
  Sale of the Equity Shares otherwise than on a Recognized Stock Exchange
  186




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Capital Losses
  Tax Treaties
  Withholding Tax on Capital Gains
  Buy-Back of Securities
  Stamp Duty
  Wealth Tax, Gift Tax and Inheritance Tax
  Service Tax
  Minimum Alternate Tax
  187




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Fringe Benefit Tax
  Tax Credit
  United States Federal Income Taxation
   
    
    banks;
    
    certain financial institutions;
    
    insurance companies;
    
    broker dealers;
    
    United States expatriates;
    
    traders that elect to mark-to-market;
    
    tax-exempt entities;
    
    persons liable for the alternative minimum tax;
    
    persons holding an ADS or equity share as part of a straddle, hedging, conversion or
integrated transaction;
    
    persons that actually or constructively own 10.0% or more of our voting stock;
    
    persons who acquired ADSs or equity shares pursuant to the exercise of any employee share
option or otherwise as compensation; or
    
    persons holding ADSs or equity shares through partnerships or other pass-through
entities.
 INVESTORS SHOULD CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE UNITED STATES FEDERAL
TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF ADSs OR EQUITY SHARES.
  188




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
    
    an individual who is a citizen or resident of the United States;
    
    a corporation (or other entity taxable as a corporation) organized under the laws of the
United States, any State thereof or the District of Columbia;
    
    an estate whose income is subject to United States federal income taxation regardless of
its source; or
    
    a trust that (1) is subject to the primary supervision of a court within the United
States and the control of one or more United States persons for all substantial decisions of
the trust or (2) was in existence on August 20, 1996, was treated as a domestic trust on the
previous day and has a valid election in effect under the applicable United States Treasury
regulations to be treated as a domestic trust.
    Taxation of Dividends and Other Distributions on the ADSs or Equity Shares
    189




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Taxation of a Disposition of ADSs or Equity Shares
   Passive Foreign Investment Company
   
    
    at least 75% of its gross income is passive income, or
    
    at least 50% of the value of its assets (based on an average of the quarterly values of
the assets during a taxable year) is attributable to assets that produce or are held for the
production of passive income (the asset test).
    190




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
    
    the excess distribution or gain will be allocated ratably over your holding period for
the ADSs or equity shares;
    
    the amount allocated to the current taxable year, and any taxable year prior to the first
taxable year in which we became a PFIC, will be treated as ordinary income; and
    
    the amount allocated to each other year will be subject to the highest tax rate in effect
for that year and the interest charge generally applicable to underpayments of tax will be
imposed on the resulting tax attributable to each such year.
    de minimis
  Information Reporting and Backup Withholding
   191




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F. Dividends and Paying Agents
  G. Statements by Experts
  H. Documents on Display
  www.sec.gov
 I. Subsidiary Information
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Qualitative Analysis
 Currency Risk
  10% movement in currency
    
    For Rs./US$
    
    
    For AUD/US$(in millions)Copper
    
    Rs.
    603.6
    
    
    $
    15.0
    
    
    Rs.
    383
    
    
    $
    11.0Zinc
    
    
    5,501.8
    
    
    
    136.7
    
    
    
    
    
    
    
    Aluminum
    
    
    3,220.2
    
    
    
    80.0
    
    
    
    
    
    
    
    Total
    
    Rs.
    9,325.6
    
    
    $
    231.7
    
    
    Rs.
    383
    
    
    $
    11.0
    192




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Interest Rate Risk
    US Dollar
    
    Indian RupeeMovement in interest rates
    
    Interest Rates
    
    Interest Rates
    
    Total(in millions)0.5%
    
    Rs.
    181.8
    
    
    $
    4.5
    
    
    Rs.
    
    
    
    $
    
    
    
    Rs.
    181.8
    
    
    $
    4.51.0%
    
    
    363.6
    
    
    
    9.1
    
    
    
    
    
    
    
    
    
    
    
    363.6
    
    
    
    9.12.0%
    
    
    727.1
    
    
    
    18.2
    
    
    
    
    
    
    
    
    
    
    
    727.1
    
    
    
    18.2
 Commodity Price Risk
     $100 movement in LME price
    
    Change in Operating Income(in millions)Copper
    
    Rs.
    107
    
    
    $
    2.7Zinc
    
    
    2,156
    
    
    
    53.6Aluminum
    
    
    1,494
    
    
    
    37.1Total
    
    Rs.
    3,757
    
    
    $
    93.4
 193




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Quantitative Analysis
  March 31,2007
    
    
    2008
    
    
    2008Asset
    
    
    Liability
    
    
    Asset
    
    
    Liability
    
    
    Asset
    
    
    Liability(in millions)Cash flow hedges:Commodity contracts
    
    Rs.
    
    
    
    Rs.
    479
    
    
    Rs.
    
    
    
    Rs.
    19
    
    
    $
    
    
    
    $
    0.5Forward foreign currency contracts
    
    
    
    
    
    
    273
    
    
    
    18
    
    
    
    307
    
    
    
    0.4
    
    
    
    7.6Interest rate swap (floating to fixed)
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value hedges:Commodity contracts
    
    
    184
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    0.8Forward foreign currency contracts
    
    
    34
    
    
    
    9
    
    
    
    183
    
    
    
    283
    
    
    
    4.6
    
    
    
    7.1Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-qualifying hedges:Commodity contracts
    
    
    1,884
    
    
    
    98
    
    
    
    1,426
    
    
    
    
    
    
    
    35.6
    
    
    
    Forward foreign currency contracts
    
    
    77
    
    
    
    377
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest rate swap
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value
    
    Rs.
    2,190
    
    
    Rs.
    1,236
    
    
    Rs.
    1,627
    
    
    Rs.
    639
    
    
    $
    40.6
    
    
    $
    16.0
 
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  
 PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
     194




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ITEM 15. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
   Managements Annual Report on Internal Control over Financial Reporting
  Changes to Internal Controls
  195




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##### Table of Contents



ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16B. CODE OF ETHICS
 www.sterlite-industries.com Information contained in our website does not constitute a part of
this annual report.
 
 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    Fiscal2007
    
    
    2008(in thousands)Audit fees (audit and review of financial statements)
    
    $
    1,509.6
    
    
    $
    1,171.4Audit-related fees (including fees related to the ADS offering and other miscellaneous audit related certifications)
    
    
    126.3
    
    
    
    638.5Tax fees (tax audit, other certifications and tax advisory services)
    
    
    45.4
    
    
    
    91.4All other fees (certification on corporate governance and advisory services)
    
    
    
    
    
    
    21.8Total
    
    $
    1,681.3
    
    
    $
    1,923.1
 Audit Committee Pre-approval Process
 de
minimus
 
 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  196




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ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  
 PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
  
    
    Report of Independent Registered Public Accounting Firm
    
    Consolidated Statements of Operations for the years ended March 31, 2006, 2007 and 2008
    
    Consolidated Balance Sheets as of March 31, 2007 and 2008
    
    Consolidated Statements of Cash Flows for the years ended March 31, 2006, 2007 and 2008
    
    Consolidated Statements of Changes in Shareholders Equity for the years ended March 31,
2006, 2007 and 2008
    
    Notes to the Consolidated Financial Statements
    
    Schedule II  Valuation and Qualifying Accounts
 
 ITEM 19. EXHIBITS
  1.1
    
    Certificate of Incorporation of Sterlite Industries (India) Limited, as amended  incorporated by reference
to Exhibit 3.1 of Amendment No. 5 to the Registration Statement on Form F-1 (File No. 333-138739), as filed
with the Commission on June 4, 2007.1.2 **
    
    Memorandum of Association of Sterlite Industries (India) Limited, as amended.1.3
    
    Articles of Association of Sterlite Industries (India) Limited, as amended  incorporated by reference to
Exhibit 3.3 of Amendment No. 2 to the Registration Statement on Form F-1 (File No. 333-138739), as filed
with the Commission on February 8, 2007.2.1
    
    Form of Deposit Agreement among Sterlite Industries (India) Limited, Citibank, N.A., as Depositary, and
owners and holders from time to time of American Depositary Shares evidenced by American Depositary Receipts
issued thereunder amended (including the Form of ADR)  incorporated by reference to Exhibit (a) of
Amendment No. 2 to the Registration Statement on Form F-6 (File No. 333-139102), as filed with the
Commission on June 15, 2007.2.2
    
    Specimen share certificate (effective as of November 30, 2006)  incorporated by reference to Exhibit 4.3 to
the Registration Statement on Form 8-A (File No. 001-33175) as filed with the Commission on November 30,
2006.4.1
    
    Vedanta Resources plc Long-Term Incentive Plan  incorporated by reference to Exhibit 10.1 to the
Registration Statement on Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.2
    
    Relationship Agreement dated December 5, 2003 among Vedanta Resources plc, Volcan Investments Limited,
Dwarka Prasad Agarwal, Agnivesh Agarwal and Anil Agarwal  incorporated by reference to Exhibit 10.2 to the
Registration Statement on Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.3 **
    
    Deed of Adherence dated December 11, 2007 among Vedanta Resources plc, Volcan Investments Limited, Onclave
PTC
 197




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##### Table of Contents



Limited and Anil Agarwal.4.4
    
    Shared Services Agreement dated December 5, 2003 among Vedanta Resources plc, Sterlite Optical Technologies
Limited, Sterlite Gold Limited and Sterlite Industries (India) Limited, including the letter agreement dated
April 13, 2006 amending the Shared Services Agreement  incorporated by reference to Exhibit 10.3 to
the Registration Statement on Form F-1 (File No. 333-138739), as filed with the Commission on November 15,
2006.4.5
    
    Consultancy Agreement dated March 29, 2005 between Vedanta Resources plc and Sterlite Industries (India)
Limited  incorporated by reference to Exhibit 10.4 to the Registration Statement on Form F-1 (File
No. 333-138739), as filed with the Commission on November 15, 2006.4.6
    
    Representative Office Agreement dated March 29, 2005 between Vedanta Resources plc and Sterlite Industries
(India) Limited  incorporated by reference to Exhibit 10.5 to the Registration Statement on Form F-1 (File
No. 333-138739), as filed with the Commission on November 15, 2006.4.7
    
    Shareholders Agreement between the President of India and Sterlite Opportunities and Ventures Limited dated
April 4, 2002  incorporated by reference to Exhibit 10.6 to the Registration Statement on Form F-1 (File
No. 333-138739), as filed with the Commission on November 15, 2006.4.8
    
    Shareholders Agreement between Sterlite Industries (India) Limited, Government of India and Bharat
Aluminium Company Limited dated March 2, 2001  incorporated by reference to Exhibit 10.7 to the
Registration Statement on Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.9
    
    Guarantee Agreement between the President of India, Sterlite Industries (India) Limited, Sterlite Optical
Technologies Limited and Sterlite Opportunities and Ventures Limited dated April 4, 2002  incorporated by
reference to Exhibit 10.8 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the
Commission on November 15, 2006.4.10
    
    Agreement between Vedanta Aluminium Limited and Orissa Mining Corporation Limited dated October 5, 2004 
incorporated by reference to Exhibit 10.9 to the Registration Statement on Form F-1 (File No. 333-138739),
as filed with the Commission on November 15, 2006.4.11
    
    Mining lease between the Government of Rajasthan and Hindustan Zinc Limited dated March 13, 1980 renewed on
September 15, 2000 pursuant to an order of the Government of Rajasthan dated May 1, 2000 and an indenture
dated September 15, 2000  incorporated by reference to Exhibit 10.10 to the Registration Statement on Form
F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.12
    
    $92.6 million Term Facility Agreement between Sterlite Industries (India) Limited as borrower and CALYON,
Standard Chartered Bank and ICICI Bank Limited as lenders dated March 22, 2006  incorporated by reference
to Exhibit 10.11 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the
Commission on November 15, 2006.4.13
    
    Japanese Yen 3,570 million and $19.65 million Term Loan Facilities Agreement between Sterlite Industries
(India) Limited as borrower and ICICI Bank Limited, Sumitomo Mitsui Banking Corporation and DBS Bank Ltd as
lenders dated September 19, 2005  incorporated by reference to Exhibit 10.12 to the Registration Statement
on Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.14
    
    $125 million Term Facility Agreement between Hindustan Zinc Limited as borrower and ABN AMRO Bank N.V.,
CALYON, Standard Chartered Bank, DBS Bank Ltd, Mizuho Corporate Bank, Ltd., Sumitomo Mitsui Banking
Corporation, The Sumitomo Trust and Banking Co., Ltd., Cathay United Bank, Hua Nan Commercial Bank, National
Bank of Kuwait S.A.K., Bank of Taiwan, The Export-Import Bank of the Republic of China, Chang Hwa Commercial
Bank Ltd., Chiao Tung Bank Co., Ltd., The International Commercial Bank of China, Co. Ltd., Mascareignes
International Bank Ltd., Syndicate Bank, Canara Bank and The Shanghai Commercial and Savings Bank, Ltd. as
lenders dated July 29, 2005  incorporated by reference to Exhibit 10.13 to the Registration Statement on
Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.15
    
    Rs. 7,000 million Rupee Term Facility Agreement between Bharat Aluminium Company Limited as the borrower and
Union Bank of India, Export Import Bank of India, Uco Bank, State Bank of Travancore, State Bank of
Saurashtra, State Bank of Hyderabad, State Bank of Patiala and State Bank of Indore as lenders dated
August 18, 2004  incorporated by reference to Exhibit 10.14 to the Registration Statement on Form F-1 (File
No. 333-138739), as filed with the Commission on November 15, 2006.4.16
    
    $50 million Facility Agreement between Bharat Aluminium Company Limited as borrower and ICICI Bank Limited,
Singapore Branch, ICICI Bank Limited, Bahrain Branch and ICICI Bank Limited, Offshore Banking Unit as
lenders dated
 198




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##### Table of Contents



November 8, 2004  incorporated by reference to Exhibit 10.15 to the Registration Statement on
Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.17
    
    $50 million Facility Agreement between Bharat Aluminium Company Limited as borrower and ICICI Bank Limited,
ICICI Bank Limited, Bahrain Branch and ICICI Bank Limited, Offshore Banking Unit as lenders dated
November 10, 2004  incorporated by reference to Exhibit 10.16 to the Registration Statement on Form F-1
(File No. 333-138739), as filed with the Commission on November 15, 2006.4.18
    
    Rs. 10,000 million Facility Agreement between Bharat Aluminium Company Limited as borrower and Oriental Bank
of Commerce, Syndicate Bank, The Jammu & Kashmir Bank Limited, Corporation Bank, Housing Development Finance
Corporation Limited, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State
Bank of Mysore, State Bank of Patiala, State Bank of Saurashtra, The Federal Bank Limited, The Karnataka
Bank Limited, The Karur Vysya Bank Limited, UCO Bank, Vijaya Bank, ABN AMRO Bank N.V., The Laxmi Vilas Bank
Limited as lenders dated September 16, 2003  incorporated by reference to Exhibit 10.17 to the Registration
Statement on Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.19
    
    Subscription Agreement between Sterlite Industries (India) Limited and the Life Insurance Corporation of
India dated April 9, 2003  incorporated by reference to Exhibit 10.18 to the Registration Statement on Form
F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.20.
    
    Option Agreement between Sterlite Industries (India) Limited, India Foils Limited and ICICI Bank Limited
dated February 18, 
2005  incorporated by reference to Exhibit 10.19 to the Registration Statement on Form
F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.21
    
    Corporate Guarantee by Sterlite Industries (India) Limited to ICICI Bank Limited on behalf of India Foils
Limited dated February 8, 2005  incorporated by reference to Exhibit 10.20 to the Registration Statement on
Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.22
    
    Corporate Guarantee by Sterlite Industries (India) Limited to ICICI Bank Limited on behalf of Vedanta
Aluminium Limited dated December 4, 2004  incorporated by reference to Exhibit 10.21 to the Registration
Statement on Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.23
    
    Frame Contract between Sterlite Industries (India) Limited and the Copper Mines of Tasmania Pty Ltd dated
July 1, 2004, as amended on July 1, 2004  incorporated by reference to Exhibit 10.22 to the Registration
Statement on Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.24
    
    Copper Concentrate Purchase Contract between Sterlite Industries (India) Limited and the Copper Mines of
Tasmania Pty Ltd dated July 1, 2005  incorporated by reference to Exhibit 10.23 to the Registration
Statement on Form F-1 (File No. 333-138739), as filed with the Commission on November 15, 2006.4.25
    
    Agreement for Sale and Purchase of the Power Transmission Line Division between Sterlite Industries (India)
Limited and Sterlite Optical Technologies Limited dated August 30, 2006  incorporated by reference to
Exhibit 10.24 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the Commission
on November 15, 2006.4.26
    
    Agreement between Sterlite Industries (India) Limited and Navin Agarwal dated October 8, 2003  incorporated
by reference to Exhibit 10.25 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with
the Commission on November 15, 2006.4.27
    
    Agreement between Sterlite Industries (India) Limited and Kuldip Kumar Kaura dated September 12, 2006 
incorporated by reference to Exhibit 10.26 to the Registration Statement on Form F-1 (File No. 333-138739),
as filed with the Commission on November 15, 2006.4.28
**
    
    Letter issued by Sterlite Industries (India) Limited to Kuldip Kumar Kaura dated March 27, 2008.4.29
    
    Agreement between Sterlite Industries (India) Limited and Tarun Jain dated December 6, 2004  incorporated
by reference to Exhibit 10.27 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with
the Commission on November 15, 2006.4.30
    
    Agreement between Sterlite Industries (India) Limited and Rajani Jain dated February 15, 2006  incorporated
by reference to Exhibit 10.28 of Amendment No. 1 to the Registration Statement on Form F-1 (File
No. 333-138739), as filed with the Commission on November 22, 2006.4.31
    
    Share Purchase Agreement between
Sterlite Industries (India) Limited and Anil Agarwal dated October 3,
2006 relating to
 199




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##### Table of Contents



the sale of Sterlite Energy Limited
 incorporated by reference to Exhibit 10.29 of Amendment No. 1 to the
Registration Statement on Form F-1 (File No. 333-138739), as filed with the
Commission on November 22, 2006.4.32
    
    Share Purchase Agreement between Sterlite Industries (India) Limited and Dwarka Prasad Agarwal dated
October 3, 2006 relating to the sale of Sterlite Energy Limited  incorporated by reference to Exhibit 10.30
of Amendment No. 1 to the Registration Statement on Form F-1 (File No. 333-138739), as filed with the
Commission on November 22, 2006.4.33
    
    Share Purchase Agreement between Sterlite Industries (India) Limited and Twin Star Infrastructure Limited
dated October 3, 2006 relating to the sale of Sterlite Energy Limited  incorporated by reference to
Exhibit 10.31 of Amendment No. 1 to the Registration Statement on Form F-1 (File No. 333-138739), as filed
with the Commission on November 22, 2006.4.34
    
    Specialty Deed between Copper Mines of Tasmania Pty Ltd, Mt Lyell Mining Company Limited, Citibank Limited
and Citibank, N.A. dated April 1, 1999  incorporated by reference to Exhibit 10.36 of Amendment No. 2 to
the Registration Statement on Form F-1 (File No. 333-138739), as filed with the Commission on February 8,
2007.4.35
    
    Subordination Deed Poll between Monte Cello Corporation N.V., Citibank Limited and Citibank, N.A. dated
April 1, 1999  incorporated by reference to Exhibit 10.37 of Amendment No. 2 to the Registration Statement
on Form F-1 (File No. 333-138739), as filed with the Commission on February 8, 2007.4.36
    
    Deed of Assignment of Debt between Monte Cello Corporation N.V. and Mt Lyell Mining Company Limited dated
April 1, 1999  incorporated by reference to Exhibit 10.38 of Amendment No. 2 to the Registration Statement
on Form F-1 (File No. 333-138739), as filed with the Commission on February 8, 2007.4.37
    
    Deed of Assignment of Debt between Monte Cello Corporation N.V., Citibank Limited and Citibank, N.A. dated
April 1, 1999  incorporated by reference to Exhibit 10.39 of Amendment No. 2 to the Registration Statement
on Form F-1 (File No. 333-138739), as filed with the Commission on February 8, 2007.4.38
**
    
    Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated
August 29, 2007 relating to the subscription of the Zero Percent Optionally Fully Convertible Debentures.4.39
**
    
    Addendum dated March 17, 2008 to the Memorandum of Understanding between Sterlite Industries (India) Limited
and Vedanta Aluminium Limited dated August 29, 2007 relating to the subscription of the Zero Percent
Optionally Fully Convertible Debentures.4.40
**
    
    Memorandum of Understanding between Sterlite Industries (India) Limited and Vedanta Aluminium Limited dated
December 23, 2007 relating to the subscription of the Zero Percent Optionally Fully Convertible Debentures.4.41
**
    
    Addendum dated March 17, 2008 to the Memorandum of Understanding between Sterlite Industries (India) Limited
and Vedanta Aluminium Limited dated December 23, 2007 relating to the subscription of the Zero Percent
Optionally Fully Convertible Debentures.4.42
**
    
    Purchase and Sale Agreement dated May 30, 2008 among Asarco LLC, AR Silver Bell, Inc., Copper Basin
Railway, Inc., Asarco Santa Cruz, Inc., Sterlite (USA) Inc. and Sterlite Industries (India)
Limited.4.43
**
    
    Rs. 10,000 million Loan Agreement between Sterlite Industries (India) Limited and Vedanta Aluminium Limited
dated February 4, 2008.8.1 **
    
    List of subsidiaries of Sterlite Industries (India) Limited.12.1
**
    
    Certification by the Chief Executive Officer pursuant to 17 CFR 240. 15d-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.12.2
**
    
    Certification by the Chief Financial Officer pursuant to 17 CFR 240. 15D-14(a), as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.13.1
**
    
    Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.13.2
**
    
    Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 **
    
    Filed herewith 200




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SIGNATURES
   STERLITE INDUSTRIES (INDIA) LIMITEDBy:
    
    /s/ Dindayal JalanName
    
    Dindayal JalanTitle:
    
    Chief Financial Officer
 201




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##### 



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
  
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Statements of Operations for the years ended March 31, 2006, 2007 and 2008
    
    
    F-3Consolidated Balance Sheets as of March 31, 2007 and 2008
    
    
    F-4Consolidated Statements of Cash Flows for the years ended March 31, 2006, 2007 and 2008
    
    
    F-5Consolidated Statements of Changes in Shareholders Equity for the years ended March
31, 2006, 2007 and 2008
    
    
    F-6Notes to the Consolidated Financial Statements
    
    
    F-8Schedule II  Valuation and Qualifying Accounts
    
    
    F-52
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
      
  F-2




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 For the Year Ended March 31,
    
    2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollars inmillions(Note 2)Sales External
    
    
    131,841
    
    
    
    254,388
    
    
    
    263,395
    
    
    
    6,581.6 Related parties
    
    
    1,667
    
    
    
    4,523
    
    
    
    4,692
    
    
    
    117.2Less: Excise duty
    
    
    (10,717
    )
    
    
    (17,665
    )
    
    
    (21,673
    )
    
    
    (541.6
    )Net Sales
    
    
    122,791
    
    
    
    241,246
    
    
    
    246,414
    
    
    
    6,157.2Other operating revenues
    
    
    1,334
    
    
    
    2,251
    
    
    
    2,616
    
    
    
    65.4Total revenue
    
    
    124,125
    
    
    
    243,497
    
    
    
    249,030
    
    
    
    6,222.6Cost of sales
    
    
    (86,981
    )
    
    
    (144,798
    )
    
    
    (164,869
    )
    
    
    (4,119.6
    )Selling and distribution expenses
    
    
    (2,117
    )
    
    
    (3,444
    )
    
    
    (3,808
    )
    
    
    (95.2
    )General and administration expenses
    
    
    (2,596
    )
    
    
    (2,633
    )
    
    
    (4,572
    )
    
    
    (114.2
    )Other income/(expenses) (Note 24)Gain on sale of real estate
    
    
    
    
    
    
    986
    
    
    
    
    
    
    
    Voluntary retirement scheme
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    Guarantees, impairment of investments and loans
    
    
    (1,300
    )
    
    
    
    
    
    
    (628
    )
    
    
    (15.7
    )Operating income
    
    
    31,131
    
    
    
    93,511
    
    
    
    75,153
    
    
    
    1,877.9Interest and dividend income
    
    
    1,873
    
    
    
    2,072
    
    
    
    6,548
    
    
    
    163.6Interest expense
    
    
    (3,238
    )
    
    
    (4,329
    )
    
    
    (3,386
    )
    
    
    (84.6
    )Net realized and unrealized investment gains
    
    
    541
    
    
    
    2,280
    
    
    
    4,511
    
    
    
    112.8Income before income taxes, minority interests and
equity in net (loss)/income of associate
    
    
    30,307
    
    
    
    93,534
    
    
    
    82,826
    
    
    
    2,069.7Income taxes Current
    
    
    (7,894
    )
    
    
    (23,192
    )
    
    
    (18,410
    )
    
    
    (460.0
    ) Deferred
    
    
    (1,111
    )
    
    
    (1,967
    )
    
    
    (3,214
    )
    
    
    (80.3
    )Income after income taxes, before minority interests
and equity in net (loss)/income of associate
    
    
    21,302
    
    
    
    68,375
    
    
    
    61,202
    
    
    
    1,529.4Minority interests
    
    
    (6,073
    )
    
    
    (21,053
    )
    
    
    (19,093
    )
    
    
    (477.1
    )Equity in net (loss)/income of associate, net of taxes
    
    
    (99
    )
    
    
    24
    
    
    
    491
    
    
    
    12.3Net income from continuing operations
    
    
    15,130
    
    
    
    47,346
    
    
    
    42,600
    
    
    
    1,064.6Discontinued operations:Income from divested business, net of tax
    
    
    369
    
    
    
    86
    
    
    
    
    
    
    
    Net income
    
    
    15,499
    
    
    
    47,432
    
    
    
    42,600
    
    
    
    1,064.6Basic and diluted earnings per share:Income from continuing operations
    
    
    27.35
    
    
    
    84.78
    
    
    
    63.16
    
    
    
    1.58Income from discontinued operations
    
    
    0.67
    
    
    
    0.15
    
    
    
    
    
    
    
    Basic and diluted earnings per share
    
    
    28.02
    
    
    
    84.93
    
    
    
    63.16
    
    
    
    1.58Weighted average number of equity shares used in
computing earnings per share
    
    
    553,216,634
    
    
    
    558,494,411
    
    
    
    674,478,018
    
    
    
    674,478,018
  F-3




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 As of March 31,
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millions(Note 2)ASSETSCurrent assetsCash and cash equivalents
    
    
    9,436
    
    
    
    12,363
    
    
    
    308.9Restricted  cash, deposits and investments
    
    
    1,093
    
    
    
    1,659
    
    
    
    41.5Short-term investments and deposits
    
    
    51,325
    
    
    
    154,364
    
    
    
    3,857.2Accounts receivable, net
    
    
    15,769
    
    
    
    15,652
    
    
    
    391.1Inventories
    
    
    28,645
    
    
    
    33,358
    
    
    
    833.5Deferred income taxes
    
    
    1,152
    
    
    
    421
    
    
    
    10.5Other current assets, net
    
    
    11,771
    
    
    
    14,138
    
    
    
    353.2Total current assets
    
    
    119,191
    
    
    
    231,955
    
    
    
    5,795.9Non-current assetsLong-term investments
    
    
    1,139
    
    
    
    1,123
    
    
    
    28.1Investment in associate
    
    
    3,033
    
    
    
    19,524
    
    
    
    487.9Deferred income taxes
    
    
    1,455
    
    
    
    374
    
    
    
    9.3Property, plant and equipment, net
    
    
    99,513
    
    
    
    121,582
    
    
    
    3,038.0Other non-current assets, net
    
    
    1,550
    
    
    
    1,621
    
    
    
    40.5Total non-current assets
    
    
    106,690
    
    
    
    144,224
    
    
    
    3,603.8Total assets
    
    
    225,881
    
    
    
    376,179
    
    
    
    9,399.7LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesShort-term and current portion of long-term debt
    
    
    8,353
    
    
    
    10,190
    
    
    
    254.6Accounts payable
    
    
    35,336
    
    
    
    44,811
    
    
    
    1,119.7Accrued expenses
    
    
    2,411
    
    
    
    1,921
    
    
    
    48.0Current income taxes payable
    
    
    2,349
    
    
    
    1,067
    
    
    
    26.7Deferred income taxes
    
    
    1,479
    
    
    
    765
    
    
    
    19.1Other current liabilities
    
    
    7,996
    
    
    
    7,305
    
    
    
    182.5Total current liabilities
    
    
    57,924
    
    
    
    66,059
    
    
    
    1,650.6Non-current liabilitiesLong-term debt, net of current portion
    
    
    13,128
    
    
    
    9,949
    
    
    
    248.6Deferred income taxes
    
    
    13,985
    
    
    
    16,369
    
    
    
    409.0Other non-current liabilities
    
    
    4,194
    
    
    
    4,581
    
    
    
    114.5Total non-current liabilities
    
    
    31,307
    
    
    
    30,899
    
    
    
    772.1Total liabilities
    
    
    89,231
    
    
    
    96,958
    
    
    
    2,422.7Commitments and contingencies (Note 20)Minority interests
    
    
    39,690
    
    
    
    58,098
    
    
    
    1,451.7Shareholders equityEquity shares  par value Rs. 2 per equity
share (925,000,000 equity shares authorized as
of March 31, 2007 and 2008; 558,494,411 and
708,494,411 equity shares issued and
outstanding as of March 31, 2007 and March 31,
2008, respectively) (Note 18)
    
    
    1,117
    
    
    
    1,417
    
    
    
    35.4Additional paid-in-capital
    
    
    26,220
    
    
    
    106,426
    
    
    
    2,659.3Retained earnings
    
    
    70,463
    
    
    
    113,598
    
    
    
    2,838.5Accumulated other comprehensive losses
    
    
    (840
    )
    
    
    (318
    )
    
    
    (7.9
    )Total shareholders equity
    
    
    96,960
    
    
    
    221,123
    
    
    
    5,525.3Total liabilities and shareholders equity
    
    
    225,881
    
    
    
    376,179
    
    
    
    9,399.7
  F-4




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 For the Year Ended March 31,
    
    2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millions(Note 2)Cash flows from operating activitiesNet income
    
    
    15,499
    
    
    
    47,432
    
    
    
    42,600
    
    
    
    1,064.6Adjustments to reconcile net income to net cash provided by
/ (used in) operating activitiesDepreciation, depletion and amortization
    
    
    4,547
    
    
    
    5,970
    
    
    
    7,060
    
    
    
    176.4Amortization of foreign currency redeemable convertible
bonds issuance expenses
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    Net realized and unrealized investment gains
    
    
    (541
    )
    
    
    (2,280
    )
    
    
    (4,511
    )
    
    
    (112.7
    )(Gain)/loss on sale of property, plant and equipment, net
    
    
    (32
    )
    
    
    36
    
    
    
    (8
    )
    
    
    (0.2
    )Gain on sale of real estate
    
    
    
    
    
    
    (986
    )
    
    
    
    
    
    
    Equity in net loss/(income) of associate
    
    
    99
    
    
    
    (24
    )
    
    
    (491
    )
    
    
    (12.3
    )Guarantees, impairment of investments and loans
    
    
    1,300
    
    
    
    
    
    
    
    628
    
    
    
    15.7Deferred income taxes
    
    
    1,111
    
    
    
    1,967
    
    
    
    3,214
    
    
    
    80.3Minority interests
    
    
    6,073
    
    
    
    21,053
    
    
    
    19,093
    
    
    
    477.1Changes in assets and liabilities:Accounts receivable, net
    
    
    (5,916
    )
    
    
    (4,976
    )
    
    
    117
    
    
    
    2.9Other current and non-current assets
    
    
    (1,903
    )
    
    
    (5,909
    )
    
    
    730
    
    
    
    18.2Inventories
    
    
    (9,017
    )
    
    
    (10,532
    )
    
    
    (4,715
    )
    
    
    (117.8
    )Accounts payable and accrued expenses
    
    
    12,339
    
    
    
    8,885
    
    
    
    3,611
    
    
    
    90.2Other current and non-current liabilities
    
    
    1,685
    
    
    
    3,956
    
    
    
    3,099
    
    
    
    77.3Short-term investments
    
    
    (5,668
    )
    
    
    (24,174
    )
    
    
    (88,021
    )
    
    
    (2,199.4
    )Net cash provided by / (used in) operating activities
    
    
    19,595
    
    
    
    40,418
    
    
    
    (17,594
    )
    
    
    (439.7
    )Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (15,919
    )
    
    
    (25,362
    )
    
    
    (25,430
    )
    
    
    (635.4
    )Proceeds from sale of property, plant and equipment
    
    
    113
    
    
    
    1,171
    
    
    
    24
    
    
    
    0.6Net changes in restricted  deposits and investments
    
    
    (870
    )
    
    
    20
    
    
    
    (600
    )
    
    
    (15.0
    )Investment in subsidiaries
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    Investment in associate
    
    
    
    
    
    
    (1,315
    )
    
    
    (19,890
    )
    
    
    (497.0
    )Short term deposits
    
    
    
    
    
    
    
    
    
    
    (10,508
    )
    
    
    (262.6
    )Proceeds from sale of non-core business
    
    
    
    
    
    
    1,485
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (16,676
    )
    
    
    (24,006
    )
    
    
    (56,404
    )
    
    
    (1,409.4
    )Cash flows from financing activitiesProceeds from issuance of equity shares
    
    
    
    
    
    
    
    
    
    
    80,506
    
    
    
    2,011.6Net changes in restricted cash
    
    
    (9
    )
    
    
    (9
    )
    
    
    34
    
    
    
    0.8Proceeds from/(repayment of) short-term debt
    
    
    (1,627
    )
    
    
    221
    
    
    
    6,119
    
    
    
    152.9Proceeds from long-term debt
    
    
    5,275
    
    
    
    3,809
    
    
    
    3,156
    
    
    
    78.9Repayment of long-term debt
    
    
    (2,592
    )
    
    
    (15,481
    )
    
    
    (12,203
    )
    
    
    (304.9
    )Payment of dividends, including dividend tax
    
    
    (672
    )
    
    
    (4,450
    )
    
    
    (1,030
    )
    
    
    (25.7
    )Net cash (used in)/provided by financing activities
    
    
    375
    
    
    
    (15,910
    )
    
    
    76,582
    
    
    
    1,913.6Effect of exchange rate changes on cash and cash equivalents
    
    
    55
    
    
    
    (324
    )
    
    
    343
    
    
    
    8.6Net increase in cash and cash equivalents
    
    
    3,349
    
    
    
    178
    
    
    
    2,927
    
    
    
    73.1Cash and cash equivalents at the beginning of the year
    
    
    5,909
    
    
    
    9,258
    
    
    
    9,436
    
    
    
    235.8Cash and cash equivalents at the end of the year
    
    
    9,258
    
    
    
    9,436
    
    
    
    12,363
    
    
    
    308.9Supplementary information:Interest paid
    
    
    2,591
    
    
    
    3,724
    
    
    
    2,760
    
    
    
    69.0Income taxes paid
    
    
    7,105
    
    
    
    22,489
    
    
    
    18,530
    
    
    
    463.0
  2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millions(Note 2)Conversion of foreign currency redeemable convertible bonds to equity shares
    
    
    1,074
    
    
    
    
    
    
    
    
    
    
    
    
  F-5




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 AccumulatedEquity shares
    
    
    
    
    
    
    
    
    
    other
    
    
    
    
    
    TotalNo. of
    
    Par
    
    Additional
    
    Retained
    
    comprehensive
    
    Comprehensive
    
    shareholdersshares
    
    value
    
    paid-in-capital
    
    earnings
    
    income/(loss)
    
    income/(loss)
    
    equityBalance at April 1, 2005
    
    
    548,730,011
    
    
    
    549
    
    
    
    25,819
    
    
    
    11,452
    
    
    
    (432
    )
    
    
    
    
    
    
    37,388Shares issued upon
conversion of foreign
currency redeemable
convertible bonds
    
    
    9,764,400
    
    
    
    10
    
    
    
    1,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,074Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,499
    
    
    
    
    
    
    
    15,499
    
    
    
    15,499Dividend (including
dividend tax) (Note 18)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (376
    )
    
    
    
    
    
    
    
    
    
    
    (376
    )Unrealized gain on
available-for-sale
securities, net of tax
of Rs. 9 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    19
    
    
    
    19Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    34
    
    
    
    34Unrealized loss on cash
flow hedges, net of tax
of Rs. (67) million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (140
    )
    
    
    (140
    )
    
    
    (140
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,412Balance at March 31, 2006
    
    
    558,494,411
    
    
    
    559
    
    
    
    26,883
    
    
    
    26,575
    
    
    
    (519
    )
    
    
    
    
    
    
    53,498Balance at April 1, 2006
    
    
    558,494,411
    
    
    
    559
    
    
    
    26,883
    
    
    
    26,575
    
    
    
    (519
    )
    
    
    
    
    
    
    53,498Stock split from Rs. 5 par value to Rs. 2
par value resulting in additional issuance
of 2.5 shares per share held (111,738,469
shares to 279,346,173 shares)Stock Split effected in the form of dividend
    
    
    
    
    
    
    558
    
    
    
    (558
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,432
    
    
    
    
    
    
    
    47,432
    
    
    
    47,432Dividend (including dividend tax) (Note 18)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,544
    )
    
    
    
    
    
    
    
    
    
    
    (3,544
    )Unrealized gain on available-for-sale
securities, net of tax of Rs. 24 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    48
    
    
    
    48Loss on sale of conductor division (Note 16)
    
    
    
    
    
    
    
    
    
    
    (105
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13
    
    
    
    13Unrealized loss on cash flow hedges, net of
tax of Rs. (98) million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (382
    )
    
    
    (382
    )
    
    
    (382
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,111Balance at March 31, 2007
    
    
    558,494,411
    
    
    
    1,117
    
    
    
    26,220
    
    
    
    70,463
    
    
    
    (840
    )
    
    
    
    
    
    
    96,960
  F-6




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 AccumulatedEquity shares
    
    
    
    
    
    
    
    
    
    other
    
    
    
    
    
    TotalNo. of
    
    Par
    
    Additional
    
    Retained
    
    comprehensive
    
    Comprehensive
    
    shareholdersshares
    
    value
    
    paid-in-capital
    
    earnings
    
    income/(loss)
    
    income/(loss)
    
    equity
    
    TotalUS dollarsin millions(Note 2)Balance at April 1,
2007
    
    
    558,494,411
    
    
    
    1,117
    
    
    
    26,220
    
    
    
    70,463
    
    
    
    (840
    )
    
    
    
    
    
    
    96,960
    
    
    
    2,422.8Adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    535
    
    
    
    
    
    
    
    
    
    
    
    535
    
    
    
    13.3Share issued
    
    
    150,000,000
    
    
    
    300
    
    
    
    80,206
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,506
    
    
    
    2,011.6Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,600
    
    
    
    
    
    
    
    42,600
    
    
    
    42,600
    
    
    
    1,064.6Unrealized loss on
available-for-sale
securities, net of
tax of Rs. (6)
million ($0.1
million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )
    
    
    (11
    )
    
    
    (0.3
    )Foreign currency
translation
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    315
    
    
    
    315
    
    
    
    315
    
    
    
    7.9Unrealized gain on
cash flow hedges,
net of tax of Rs.
139 million ($3.5
million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218
    
    
    
    218
    
    
    
    218
    
    
    
    5.4Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,122Balance at March
31, 2008
    
    
    708,494,411
    
    
    
    1,417
    
    
    
    106,426
    
    
    
    113,598
    
    
    
    (318
    )
    
    
    
    
    
    
    221,123
    
    
    
    5,525.3Balance at March
31, 2008 in US
dollar in millions
(Note 2)
    
    
    
    
    
    
    35.4
    
    
    
    2,659.3
    
    
    
    2,838.5
    
    
    
    (7.9
    )
    
    
    1,077.5
    
    
    
    5,525.3
  F-7




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
 1.
    
    Background and Operations
         F-8




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
 2.
    
    Significant Accounting Policies
 Basis of preparation
  Basis of consolidation
 Consolidation of Variable Interest Entities
   Cash and cash equivalents
  Investments
 Short-term investments and deposits
   Long-term investments
  F-9




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
    Allowances for doubtful accounts
  Inventories
  
    
    Purchased ore or concentrate is recorded at cost on a first-in, first-out basis;
    
    All other materials including stores and spares are recorded on a weighted average basis;
    
    Finished products are valued at raw material cost plus costs of conversion, comprising
labor costs and an attributable proportion of manufacturing overheads; and
    
    By-products and scrap are valued at the lower of cost and net realizable value. Net
realizable value is determined based on an estimated selling price, less further costs
expected to be incurred for completion and disposal.
  Equity investment in associate
   F-10




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
  Property, plant and equipment
  Mine properties
      Other property, plant and equipment
  F-11




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
 Depreciation, depletion and amortization
   Buildings:Operations
    
    30 yearsAdministration
    
    50 yearsPlant and machinery
    
    10-20 yearsOffice equipment and fixtures
    
    3-20 years
 Impairment
      Assets under construction
  F-12




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
  Business combinations
    Debt
   Capitalization of interest
   Employee benefit schemes
   F-13




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
   Share-based payment
  Earnings per share
   Asset retirement obligations
   Environmental costs and liabilities
  Derivative financial instruments
  F-14




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
  Fair value hedges
  Cash flow hedges
    Foreign currency transactions
  Revenue recognition
    F-15




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
 Income taxes
           Accumulated other comprehensive income
  F-16




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
 Shares issued by subsidiary/affiliate
  Convenience translation
  Use of estimates
    Recently issued accounting pronouncements
 SFAS No. 157, Fair Value Measurements
  SFAS No. 159 The Fair Value Option for Financial Assets and Financial Liabilities
  F-17




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in
millions except share or per share amounts unless otherwise stated)
 SFAS No. 160 Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB
No. 51
  SFAS No. 141 (R) Business Combination
  SFAS No. 161 Disclosures about Derivative Instruments and Hedging Activities  an amendment of
FASB Statement No. 133
  3.
    
    Cash and Cash Equivalents
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsCash in hand
    
    
    5
    
    
    
    5
    
    
    
    0.1Cash at banks
    
    
    1,972
    
    
    
    2,344
    
    
    
    58.6Short-term deposit
    
    
    7,459
    
    
    
    10,014
    
    
    
    250.2Cash and cash equivalents
    
    
    9,436
    
    
    
    12,363
    
    
    
    308.9
 F-18




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 4.
    
    Restricted  Cash, Deposits and Investments
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsDividend, debenture, debenture interest account
    
    
    93
    
    
    
    59
    
    
    
    1.5Short-term investment securities
    
    
    1,000
    
    
    
    1,600
    
    
    
    40.0Restricted  cash, deposits and investments
    
    
    1,093
    
    
    
    1,659
    
    
    
    41.5
   5.
    
    Short-Term and Long-Term Investments
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsShort-term investments and depositsTrading securities and deposits
    
    
    49,800
    
    
    
    150,567
    
    
    
    3,762.3Net
unrealized holding gains
    
    
    1,525
    
    
    
    3,797
    
    
    
    94.9Fair value
    
    
    51,325
    
    
    
    154,364
    
    
    
    3,857.2Long-term investmentsInvestments at cost
    
    
    984
    
    
    
    984
    
    
    
    24.6Available for sale (AFS) securitiesCarrying value
    
    
    83
    
    
    
    52
    
    
    
    1.3Net
unrealized holding gains
    
    
    72
    
    
    
    87
    
    
    
    2.2Fair value
    
    
    155
    
    
    
    139
    
    
    
    3.5Long-term investments
    
    
    1,139
    
    
    
    1,123
    
    
    
    28.1
   F-19




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 6.
    
    Accounts Receivable, net
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsAccounts receivable
    
    
    14,874
    
    
    
    13,352
    
    
    
    333.6Related party receivable
    
    
    910
    
    
    
    2,312
    
    
    
    57.8Total receivables
    
    
    15,784
    
    
    
    15,664
    
    
    
    391.4Allowances for doubtful accounts
    
    
    (15
    )
    
    
    (12
    )
    
    
    (0.3
    )Accounts receivable, net
    
    
    15,769
    
    
    
    15,652
    
    
    
    391.1
 7.
    
    Accounts Payable
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsAccounts payable
    
    
    13,588
    
    
    
    16,761
    
    
    
    418.8Acceptances
    
    
    21,158
    
    
    
    27,104
    
    
    
    677.3Related party payable
    
    
    590
    
    
    
    946
    
    
    
    23.6Accounts payable
    
    
    35,336
    
    
    
    44,811
    
    
    
    1,119.7
  8.
    
    Inventories
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsFinished goods
    
    
    1,414
    
    
    
    1,233
    
    
    
    30.8Work-in-progress
    
    
    9,860
    
    
    
    11,580
    
    
    
    289.4Raw materials
    
    
    14,584
    
    
    
    16,554
    
    
    
    413.6Stores and spares
    
    
    2,787
    
    
    
    3,991
    
    
    
    99.7Inventories
    
    
    28,645
    
    
    
    33,358
    
    
    
    833.5
 F-20




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 9.
    
    Property, Plant and Equipment, net
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsLand  freehold
    
    
    251
    
    
    
    255
    
    
    
    6.4Land development
    
    
    222
    
    
    
    237
    
    
    
    5.8Buildings
    
    
    10,115
    
    
    
    11,093
    
    
    
    277.2Mine properties
    
    
    16,950
    
    
    
    17,215
    
    
    
    430.2Plant and machinery
    
    
    96,970
    
    
    
    114,541
    
    
    
    2,862.1Office equipment and fixtures
    
    
    1,206
    
    
    
    1,365
    
    
    
    34.1Total cost
    
    
    125,714
    
    
    
    144,706
    
    
    
    3,615.8Accumulated depreciation, depletion and amortization
    
    
    (40,194
    )
    
    
    (47,481
    )
    
    
    (1,186.4
    )Property, plant and equipment, net of
depreciation, depletion and amortization before
assets under construction
    
    
    85,520
    
    
    
    97,225
    
    
    
    2,429.4Assets under construction
    
    
    13,993
    
    
    
    24,357
    
    
    
    608.6Property, plant and equipment, net
    
    
    99,513
    
    
    
    121,582
    
    
    
    3,038.0
   10.
    
    Investment in Associate
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsEquity investment in associate
    
    
    3,033
    
    
    
    3,524
    
    
    
    88.1Investment in other securities of associate
    
    
    
    
    
    
    16,000
    
    
    
    399.8Investment in associate
    
    
    3,033
    
    
    
    19,524
    
    
    
    487.9
 F-21




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 11.
    
    Other Current and Non-Current Assets, net
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsAdvances to suppliers
    
    
    3,419
    
    
    
    4,491
    
    
    
    112.1Advances to employees
    
    
    430
    
    
    
    378
    
    
    
    9.5Advances to related parties
    
    
    
    
    
    
    3,890
    
    
    
    97.2Deposits
    
    
    1,302
    
    
    
    1,285
    
    
    
    32.1Prepaid lease rentals
    
    
    260
    
    
    
    468
    
    
    
    11.7Fair value of derivatives  current
    
    
    2,190
    
    
    
    1,627
    
    
    
    40.7Others
    
    
    5,720
    
    
    
    3,780
    
    
    
    94.4Total other current and non-current assets
    
    
    13,321
    
    
    
    15,919
    
    
    
    397.7Allowances for doubtful advances
    
    
    
    
    
    
    (160
    )
    
    
    (4.0
    )Other current and non-current assets, net
    
    
    13,321
    
    
    
    15,759
    
    
    
    393.7Balance sheet classification of the above assets is as follows:Current
    
    
    11,771
    
    
    
    14,138
    
    
    
    353.2Non-current
    
    
    1,550
    
    
    
    1,621
    
    
    
    40.5
 12.
    
    Other Current Liabilities
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsUnclaimed dividend
    
    
    48
    
    
    
    38
    
    
    
    0.9Advances received
    
    
    478
    
    
    
    617
    
    
    
    15.4Interest accrued
    
    
    60
    
    
    
    147
    
    
    
    3.7Payable to related parties
    
    
    183
    
    
    
    50
    
    
    
    1.2Security deposits received
    
    
    1,407
    
    
    
    2,145
    
    
    
    53.6Fair value of derivatives
    
    
    1,236
    
    
    
    639
    
    
    
    16.0Provision for guarantee
    
    
    784
    
    
    
    1,412
    
    
    
    35.3Others
    
    
    3,800
    
    
    
    2,257
    
    
    
    56.4Other current liabilities
    
    
    7,996
    
    
    
    7,305
    
    
    
    182.5
  F-22




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 13.
    
    Other Non-Current Liabilities
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsPayable to related parties
    
    
    3,284
    
    
    
    3,607
    
    
    
    90.1Retirement benefits
    
    
    603
    
    
    
    647
    
    
    
    16.2Provision for asset retirement obligations
    
    
    289
    
    
    
    307
    
    
    
    7.7Others
    
    
    18
    
    
    
    20
    
    
    
    0.5Other non-current liabilities
    
    
    4,194
    
    
    
    4,581
    
    
    
    114.5
 14.
    
    Asset Retirement Obligations
      F-23




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsAsset retirement obligations, beginning of year
    
    
    265
    
    
    
    296
    
    
    
    7.4Accretion expense
    
    
    8
    
    
    
    15
    
    
    
    0.4Revision for changes in estimate
    
    
    
    
    
    
    (3
    )
    
    
    (0.1
    )Settlement and others
    
    
    
    
    
    
    (8
    )
    
    
    (0.2
    )Foreign exchange (gain) loss
    
    
    23
    
    
    
    14
    
    
    
    0.4Asset retirement obligations, end of year
    
    
    296
    
    
    
    314
    
    
    
    7.9Balance sheet classification of the above obligations is as follows:Current
    
    
    7
    
    
    
    7
    
    
    
    0.2Non-current
    
    
    289
    
    
    
    307
    
    
    
    7.7
 15.
    
    Short-Term and Long-Term Debt
  Working capital loans
  Floating rate notes
  Foreign currency loans
  F-24




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
  Term loans
  Buyers credit
  Non-convertible debentures
  F-25




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsShort-term
debt with Banks and financial institutions
    
    
    
    
    
    
    6,119
    
    
    
    152.9Current portion of long-term debt*
    
    
    8,353
    
    
    
    4,071
    
    
    
    101.7Short-term and current portion of long-term debt
    
    
    8,353
    
    
    
    10,190
    
    
    
    254.6Weighted average interest rate on short-term debt
    
    
    
    
    
    
    4.6
    %
    
    
    4.6
    %Unused line
of credit on short-term facilities
    
    
    38,675
    
    
    
    46,393
    
    
    
    1,159.3
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsBank and financial institutions
    
    
    19,319
    
    
    
    12,293
    
    
    
    307.2Non-convertible debentures
    
    
    1,000
    
    
    
    1,000
    
    
    
    25.0Others
    
    
    1,162
    
    
    
    727
    
    
    
    18.1Long-term debt
    
    
    21,481
    
    
    
    14,020
    
    
    
    350.3Less: Current portion of long-term debt
    
    
    (8,353
    )
    
    
    (4,071
    )
    
    
    (101.7
    )Long-term debt, net of current portion
    
    
    13,128
    
    
    
    9,949
    
    
    
    248.6
  US dollarsAs of March 31,
    
    Rs. in millions
    
    in millions2009
    
    
    4,071
    
    
    
    101.72010
    
    
    3,527
    
    
    
    88.12011
    
    
    5,414
    
    
    
    135.32012
    
    
    
    
    
    
    2013
    
    
    
    
    
    
    Thereafter
    
    
    1,008
    
    
    
    25.2Total
    
    
    14,020
    
    
    
    350.3
 
 *
    
    includes debt outstanding to related party of Rs. 281 million ($ 7.0 million) 16.
    
    Business Combinations and Divestures
 a. Call option  HZL
  F-26




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
  b. Call option  BALCO
  c. Divestment of aluminium conductor division of SIIL
   Rs. in millionsFixed assets
    
    
    854Current assets
    
    
    3,806Total assets
    
    
    4,660Debt
    
    
    2,424Current liabilities
    
    
    646Total liabilities
    
    
    3,070
  d. Sterlite Energy Limited
  F-27




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
  Rs. in millionsFixed assets
    
    
    23Current assets
    
    
    284Total assets
    
    
    307Debt
    
    
    281Current liabilities
    
    
    21Total liabilities
    
    
    302
 17.
    
    Accumulated Other Comprehensive Income/(Loss)
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsUnrealized gain on available-for-sale securities
    
    
    70
    
    
    
    58
    
    
    
    1.4Foreign currency translation adjustment
    
    
    (388
    )
    
    
    (72
    )
    
    
    (1.8
    )Unrealized loss on cash flow hedges
    
    
    (522
    )
    
    
    (304
    )
    
    
    (7.5
    )Accumulated other comprehensive loss
    
    
    (840
    )
    
    
    (318
    )
    
    
    (7.9
    )
 18.
    
    Shareholders Equity
 Issued shares
     F-28




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 General reserves
  Debenture redemption reserve
  Preference share redemption reserve
   Dividends
    F-29




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
  
    
    the rate of dividend to be declared shall not exceed the average of the rates at which
dividends were declared in the five years immediately preceding that year or 10.0% of the
companys paid-up share capital, whichever is less;
 
    
    the total amount to be drawn from the accumulated profits earned in previous years and
transferred to the reserves shall not exceed an amount equal to one-tenth of the sum of the
companys paid-up share capital and net reserves, and the amount so drawn shall first be
utilized to set off the losses incurred in the financial year before any dividend in
respect of preference or equity share is declared; and
 
    
    the balance of reserves after such withdrawal shall not fall below 15.0% of the
companys paid-up share capital.
 19.
    
    Financial Instruments
 (a) Derivatives and hedges
     Foreign exchange risk
  F-30




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 Interest rate risk
  Counterparty and concentration of credit risk
  Commodity price risk
  Aluminum
  Copper
  Zinc
  F-31




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 Embedded derivatives
   2007
    
    2008
    
    2008As of March 31,
    
    Asset
    
    Liability
    
    Asset
    
    Liability
    
    Asset
    
    LiabilityRs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollars
    
    US dollarsin millions
    
    in millionsCash flow hedges:Commodity contracts
    
    
    
    
    
    
    479
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    0.5Forward foreign currency contracts
    
    
    
    
    
    
    273
    
    
    
    18
    
    
    
    307
    
    
    
    0.4
    
    
    
    7.6Interest rate swap (floating to fixed)
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value hedges:Commodity contracts
    
    
    184
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    0.8Forward foreign currency contracts
    
    
    34
    
    
    
    9
    
    
    
    183
    
    
    
    283
    
    
    
    4.6
    
    
    
    7.1Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-qualifying hedges:Commodity contracts
    
    
    1,884
    
    
    
    98
    
    
    
    1,426
    
    
    
    
    
    
    
    35.6
    
    
    
    Forward foreign currency contracts
    
    
    77
    
    
    
    377
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest rate swap
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value
    
    
    2,190
    
    
    
    1,236
    
    
    
    1,627
    
    
    
    639
    
    
    
    40.6
    
    
    
    16.0
   Cash flow hedges
  F-32




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
  Fair value hedge
   Non-qualifying/economic hedge
   Accumulated other
    
    Share ofcomprehensive
    
    minoritylosses
    
    interests
    
    Total
    
    TotalRs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsUnrealized derivative loss/(income) as of April 1, 2006
    
    
    140
    
    
    
    (8
    )
    
    
    132Amount recognized in other comprehensive income, net of tax of
Rs. 513 million
    
    
    971
    
    
    
    289
    
    
    
    1,260Amount
reclassified to income statement, net of tax Rs. 414 million
    
    
    (589
    )
    
    
    (227
    )
    
    
    (816
    )Unrealized derivative loss as of March 31, 2007, net of tax
Rs. 166 million
    
    
    522
    
    
    
    54
    
    
    
    576Unrealized derivative loss as of April 1, 2007
    
    
    522
    
    
    
    54
    
    
    
    576
    
    
    
    14.4Amount recognized in other comprehensive income, net of tax of
Rs. 37 million ($0.9 million)
    
    
    (123
    )
    
    
    52
    
    
    
    (71
    )
    
    
    (1.8
    )Amount reclassified to income statement, net of tax Rs. 127
million ($3.2 million)
    
    
    (95
    )
    
    
    (105
    )
    
    
    (200
    )
    
    
    (5.0
    )Unrealized derivative loss as of March 31, 2008, net of tax
Rs. 2 million ($0.1 million)
    
    
    304
    
    
    
    1
    
    
    
    305
    
    
    
    7.6
  F-33




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 (b) Other financial instruments
    2007
    
    2008
    
    2008Carrying
    
    Estimated
    
    Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAs of March 31,
    
    value
    
    fair value
    
    value
    
    fair value
    
    value
    
    fair valueRs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollars
    
    US dollarsin millions
    
    in millionsAssets:Long-term investments
    
    
    1,139
    
    
    
    1,139
    
    
    
    1,123
    
    
    
    1,123
    
    
    
    28.1
    
    
    
    28.1Liabilities:Long-term debt, net of current portion
    
    
    13,128
    
    
    
    12,985
    
    
    
    9,949
    
    
    
    9,873
    
    
    
    248.6
    
    
    
    246.7
 20.
    
    Commitments, Contingencies and Guarantees
 (a) Commitments and contingencies
 Commitments
  Capital commitments
  Export obligations
  F-34




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 Contingencies
    (b) Guarantees and Put Option
      F-35




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
       21.
    
    Income Taxes
 Overview of the Indian direct tax regime
   F-36




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
     
    
    The industrial undertakings exemption Profits of newly constructed industrial
undertakings located in designated areas of India can benefit from a tax holiday. A typical
tax holiday would exempt 100.0% of the profits from the undertaking for five years, and
30.0% for five years thereafter.
    
    The power plants exemption Profits on newly constructed power plants can benefit
from a tax holiday. A typical holiday would exempt 100.0% of profits for ten consecutive
years within the first 15 years of the power plants operation. The start of the exemption
period is at the discretion of a company.
    
    Wind power plants exemption Profits are exempt from income tax for any continuous
block of 10 years in the first 15 years of operations. Accelerated depreciation of 80% is
available in the first year of operations.
    
    Export Oriented Units exemption Profits from units designated as an EOU, from where
goods are exported out of India, are exempt from tax upto March 2010.
   F-37




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
  2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsCurrent tax:Indian income tax
    
    
    7,600
    
    
    
    21,849
    
    
    
    17,620
    
    
    
    440.3Foreign income tax
    
    
    294
    
    
    
    1,343
    
    
    
    790
    
    
    
    19.7Total current tax
    
    
    7,894
    
    
    
    23,192
    
    
    
    18,410
    
    
    
    460.0Deferred tax:Indian income tax
    
    
    1,464
    
    
    
    1,904
    
    
    
    3,046
    
    
    
    76.1Foreign income tax
    
    
    (353
    )
    
    
    63
    
    
    
    168
    
    
    
    4.2Total deferred tax
    
    
    1,111
    
    
    
    1,967
    
    
    
    3,214
    
    
    
    80.3Income taxes for the year
    
    
    9,005
    
    
    
    25,159
    
    
    
    21,624
    
    
    
    540.3Effective income tax rate
    
    
    29.7
    %
    
    
    26.9
    %
    
    
    26.1
    %
    
    
    26.1
    %
  2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsIncome before income taxes, minority interests and equity in
net gain/(loss) of associate
    
    
    30,307
    
    
    
    93,534
    
    
    
    82,826
    
    
    
    2,069.7Indian statutory income tax rate
    
    
    33.7
    %
    
    
    33.7
    %
    
    
    34.0
    %
    
    
    34.0
    %Expected income tax (benefit) expense at statutory tax rate
    
    
    10,201
    
    
    
    31,483
    
    
    
    28,153
    
    
    
    703.5Disallowable expenses
    
    
    528
    
    
    
    325
    
    
    
    550
    
    
    
    13.7Non-taxable income
    
    
    (211
    )
    
    
    (1,016
    )
    
    
    (3,145
    )
    
    
    (78.6
    )Impact of tax rate differences
    
    
    (831
    )
    
    
    (159
    )
    
    
    (78
    )
    
    
    (1.9
    )Tax holiday and similar exemptions
    
    
    (488
    )
    
    
    (5,192
    )
    
    
    (5,855
    )
    
    
    (146.3
    )Minimum alternative tax/wealth tax
    
    
    69
    
    
    
    
    
    
    
    1,227
    
    
    
    30.7Other permanent differences
    
    
    75
    
    
    
    40
    
    
    
    25
    
    
    
    0.5Valuation allowance (reversal)/provision
    
    
    (268
    )
    
    
    (14
    )
    
    
    
    
    
    
    Adjustments to income tax provisions based on tax assessments
    
    
    (70
    )
    
    
    (308
    )
    
    
    747
    
    
    
    18.7Income taxes recognized in the statement of operations
    
    
    9,005
    
    
    
    25,159
    
    
    
    21,624
    
    
    
    540.3
   F-38




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
  2008
    
    2008Rs. in millions
    
    US dollarsin millionsUnrecognized tax benefit, beginning of the year
    
    
    1,219
    
    
    
    30.5Additions for tax positions of prior years
    
    
    58
    
    
    
    1.4Settlements
    
    
    (93
    )
    
    
    (2.3
    )Unrecognized tax benefit, end of the year
    
    
    1,184
    
    
    
    29.6
     2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsDeferred tax asset:Voluntary retirement scheme
    
    
    126
    
    
    
    32
    
    
    
    0.8Accounts receivable, net
    
    
    356
    
    
    
    175
    
    
    
    4.4Employee benefits
    
    
    235
    
    
    
    187
    
    
    
    4.7Minimum alternate tax credit
    
    
    1,044
    
    
    
    1,157
    
    
    
    28.9Others
    
    
    846
    
    
    
    401
    
    
    
    9.9Gross deferred tax asset
    
    
    2,607
    
    
    
    1,952
    
    
    
    48.7Less: Valuation allowance
    
    
    
    
    
    
    (1,157
    )
    
    
    (28.9
    )Net deferred tax asset
    
    
    2,607
    
    
    
    795
    
    
    
    19.8Deferred tax liabilities:Fair valuation of assets and liabilities
    
    
    (1,183
    )
    
    
    (1,059
    )
    
    
    (26.5
    )Property, plant and equipment
    
    
    (13,874
    )
    
    
    (15,849
    )
    
    
    (396.0
    )Others
    
    
    (407
    )
    
    
    (226
    )
    
    
    (5.6
    )Total deferred tax liabilities
    
    
    (15,464
    )
    
    
    (17,134
    )
    
    
    (428.1
    )Net deferred tax liabilities
    
    
    (12,857
    )
    
    
    (16,339
    )
    
    
    (408.3
    )
 F-39




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsDeferred tax assetsCurrent
    
    
    1,152
    
    
    
    421
    
    
    
    10.5Non-current
    
    
    1,455
    
    
    
    374
    
    
    
    9.3Total
    
    
    2,607
    
    
    
    795
    
    
    
    19.8Deferred tax liabilitiesCurrent
    
    
    1,479
    
    
    
    765
    
    
    
    19.1Non-current
    
    
    13,985
    
    
    
    16,369
    
    
    
    409.0Total
    
    
    15,464
    
    
    
    17,134
    
    
    
    428.1
  22.
    
    Employee Benefits
    Defined contribution plans
  Central provident fund
  Superannuation
  F-40




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 Australian pension scheme
   Defined benefit plans
 Gratuity plan
    2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsChange in projected benefit obligation:Projected benefit obligation, beginning of year
    
    
    1,106
    
    
    
    1,200
    
    
    
    1,359
    
    
    
    33.9Service cost
    
    
    62
    
    
    
    65
    
    
    
    75
    
    
    
    1.9Interest cost
    
    
    82
    
    
    
    89
    
    
    
    104
    
    
    
    2.6Actuarial (gain) loss
    
    
    (22
    )
    
    
    56
    
    
    
    1
    
    
    
    Benefits paid
    
    
    (28
    )
    
    
    (51
    )
    
    
    (55
    )
    
    
    (1.4
    )Projected benefit obligation, end of the year
    
    
    1,200
    
    
    
    1,359
    
    
    
    1,484
    
    
    
    37.0Change in plan assets:Fair value of plan assets, beginning of year
    
    
    697
    
    
    
    720
    
    
    
    783
    
    
    
    19.6Actual return on plan assets
    
    
    47
    
    
    
    54
    
    
    
    71
    
    
    
    1.8Company contributions
    
    
    9
    
    
    
    60
    
    
    
    71
    
    
    
    1.8Benefits paid
    
    
    (33
    )
    
    
    (51
    )
    
    
    (55
    )
    
    
    (1.4
    )Fair value of plan assets, end of the year
    
    
    720
    
    
    
    783
    
    
    
    870
    
    
    
    21.8Shortfall of plan assets, over benefit obligation
    
    
    (480
    )
    
    
    (576
    )
    
    
    (614
    )
    
    
    (15.2
    )Accrued pension cost
    
    
    (480
    )
    
    
    (576
    )
    
    
    (614
    )
    
    
    (15.2
    )Accumulated benefit obligation
    
    
    756
    
    
    
    1,256
    
    
    
    1,132
    
    
    
    28.3
  F-41




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
   2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsService cost
    
    
    62
    
    
    
    65
    
    
    
    75
    
    
    
    1.9Interest cost
    
    
    82
    
    
    
    89
    
    
    
    104
    
    
    
    2.6Expected return on plan assets
    
    
    (47
    )
    
    
    (56
    )
    
    
    (69
    )
    
    
    (1.7
    )Recognized net actuarial (gain) loss
    
    
    (21
    )
    
    
    57
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    
    76
    
    
    
    155
    
    
    
    110
    
    
    
    2.8
  2006
    
    2007
    
    2008Discount rate
    
    
    7.5
    %
    
    
    7.5%-8
    %
    
    
    7.5%-7.8
    %Rate of increase in compensation level of covered employees
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %Expected return on assets
    
    
    8.0
    %
    
    
    8.0
    %
    
    
    7.5%-9.1
    %
  US dollarsYear Ended March 31,
    
    Rs. in millions
    
    in millions2009
    
    
    81
    
    
    
    2.02010
    
    
    122
    
    
    
    3.02011
    
    
    150
    
    
    
    3.82012
    
    
    179
    
    
    
    4.52013
    
    
    194
    
    
    
    4.8Thereafter for five years
    
    
    1,072
    
    
    
    26.8
 23.
    
    Share-Based Compensation Plans
  The Vedanta Resources Long-Term Incentive Plan (the LTIP)
  F-42




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
     24.
    
    Other Income/Expenses
     F-43




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 25.
    
    Earnings per Share (EPS)
  2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsNet income from continuing operations
    
    
    15,130
    
    
    
    47,346
    
    
    
    42,600
    
    
    
    1,064.6Net income from discontinued operations
    
    
    369
    
    
    
    86
    
    
    
    
    
    
    
    Net income
    
    
    15,499
    
    
    
    47,432
    
    
    
    42,600
    
    
    
    1,064.6Weighted average number of ordinary shares for earnings per share
    
    
    553,216,634
    
    
    
    558,494,411
    
    
    
    674,478,018
    
    
    
    674,478,018Earnings per share:Income from continuing operations
    
    
    27.35
    
    
    
    84.78
    
    
    
    63.16
    
    
    
    1.58Income from discontinued operations
    
    
    0.67
    
    
    
    0.15
    
    
    
    
    
    
    
    Earnings per share
    
    
    28.02
    
    
    
    84.93
    
    
    
    63.16
    
    
    
    1.58
  26.
    
    Related Party Transactions
  Enterprises where principal shareholders have control or significant influence
 
    
    Vedanta Resources plc (Vedanta)
    
    Twin Star Holdings Limited (Twin Star)
    
    The Madras Aluminium Company Limited (MALCO)
    
    Sterlite Technologies Limited (STL)
    
    Sterlite Gold Limited/Ararat Gold Recovery Company Limited (SGL)/(AGRC)*
    
    Konkola Copper Mines Plc (KCM)
    
    Monte Cello Corporation NV (MCNV)
    
    Sterlite Foundation
 F-44




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 
    
    Vedanta Foundation/Anil Agarwal Foundation
    
    Political and Public Awareness Trust
    
    Volcan Investments Limited (Volcan)
    
    Duratube
    
    Brockway Inc.
    
    Vedanta Resource Cyprus Limited
    
    Sesa Goa Limited (Sesa Goa)
    
    Sesa Industries Limited (Sesa Industries)
 Associate
  Associate of Vedanta Resources plc
  
 *
    
    With the disposal of holding in SGL in September 2007, these are no more the related party of the
Company.  For the Year Ended March 31,
    
    2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsSalesSTL
    
    
    154
    
    
    
    2,320
    
    
    
    3,268
    
    
    
    81.7IFL
    
    
    1,510
    
    
    
    1,988
    
    
    
    1,417
    
    
    
    35.4MALCO
    
    
    
    
    
    
    13
    
    
    
    7
    
    
    
    0.1Vedanta Aluminium
    
    
    
    
    
    
    202
    
    
    
    
    
    
    
    PurchasesSTL
    
    
    
    
    
    
    50
    
    
    
    11
    
    
    
    0.3MALCO
    
    
    364
    
    
    
    349
    
    
    
    
    
    
    
    Sesa Industries
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    0.1
 F-45




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 For the Year Ended March 31,
    
    2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsInterest and dividend income/(expense)Vedanta
    
    
    (242
    )
    
    
    (212
    )
    
    
    
    
    
    
    MALCO
    
    
    (15
    )
    
    
    (13
    )
    
    
    
    
    
    
    Vedanta Aluminium
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    1.0IFL
    
    
    21
    
    
    
    11
    
    
    
    
    
    
    
    Other (payments)/receiptsVedanta
    
    
    (275
    )
    
    
    (272
    )
    
    
    (201
    )
    
    
    (5.0
    )Sterlite Foundation and Anil Agarwal Foundation
    
    
    (32
    )
    
    
    (30
    )
    
    
    (24
    )
    
    
    (0.6
    )Political & charitable trusts
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    MALCO
    
    
    54
    
    
    
    117
    
    
    
    
    
    
    
    KCM
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    AGRC
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    STL
    
    
    
    
    
    
    2
    
    
    
    1
    
    
    
    Vedanta Aluminium
    
    
    
    
    
    
    (313
    )
    
    
    (1,797
    )
    
    
    (44.9
    )Investment during the yearVedanta Aluminium
    
    
    
    
    
    
    1,315
    
    
    
    16,000
    
    
    
    399.8Loans during the yearVedanta Aluminium
    
    
    
    
    
    
    
    
    
    
    3,890
    
    
    
    97.2Sale of assets/ businessSTL
    
    
    
    
    
    
    1,485
    
    
    
    
    
    
    
    Guarantees outstanding*MALCO
    
    
    1,100
    
    
    
    
    
    
    
    
    
    
    
    Vedanta Aluminium
    
    
    4,571
    
    
    
    6,144
    
    
    
    18,733
    
    
    
    468.1IFL
    
    
    1,820
    
    
    
    1,820
    
    
    
    1,820
    
    
    
    45.5
 
 *
    
    Maximum guarantee amount and does not represent actual liability.  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsInvestmentsVedanta Aluminium
    
    
    2,972
    
    
    
    18,972
    
    
    
    474.1Receivable from/(payable to)IFL
    
    
    353
    
    
    
    369
    
    
    
    9.2STL
    
    
    481
    
    
    
    827
    
    
    
    20.7MCNV
    
    
    (3,284
    )
    
    
    (3,607
    )
    
    
    (90.1
    )Vedanta
    
    
    (765
    )
    
    
    (996
    )
    
    
    (24.9
    )MALCO
    
    
    (8
    )
    
    
    
    
    
    
    KCM
    
    
    58
    
    
    
    131
    
    
    
    3.3AGRC
    
    
    18
    
    
    
    
    
    
    
    Twinstar Infrastructure Limited
    
    
    (281
    )
    
    
    (281
    )
    
    
    (7.0
    )Vedanta Resources Cyprus Limited
    
    
    (456
    )
    
    
    
    
    
    
    Vedanta Aluminium
    
    
    
    
    
    
    4,872
    
    
    
    121.7Sesa Goa
    
    
    
    
    
    
    3
    
    
    
    0.1
 F-46




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 27.
    
    Segment Information
  Copper
  Zinc
  Aluminum
  Corporate and others
  (a) Business segments
  F-47




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
  CorporateFor the Year Ended March 31, 2006
    
    Copper
    
    Zinc
    
    Aluminum
    
    and others
    
    Elimination
    
    TotalRs. in millionsNet sales to external customers
    
    
    67,921
    
    
    
    38,573
    
    
    
    16,297
    
    
    
    
    
    
    
    
    
    
    
    122,791Inter-segment sales
    
    
    
    
    
    
    
    
    
    
    1,424
    
    
    
    
    
    
    
    (1,424
    )
    
    
    Segment sales
    
    
    67,921
    
    
    
    38,573
    
    
    
    17,721
    
    
    
    
    
    
    
    (1,424
    )
    
    
    122,791Segment profit
    
    
    8,982
    
    
    
    23,216
    
    
    
    4,752
    
    
    
    (8
    )
    
    
    
    
    
    
    36,942Depreciation, depletion and amortization
    
    
    (1,323
    )
    
    
    (1,929
    )
    
    
    (1,256
    )
    
    
    (3
    )
    
    
    
    
    
    
    (4,511
    )Guarantees, impairment of investment and loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,300
    )
    
    
    
    
    
    
    (1,300
    )Operating income (loss)
    
    
    7,659
    
    
    
    21,287
    
    
    
    3,496
    
    
    
    (1,311
    )
    
    
    
    
    
    
    31,131Interest and dividend income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,873Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,238
    )Net realized and unrealized investment gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    541Income before income taxes, minority
interests and equity in net loss of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,307Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,005
    )Income after income taxes, before minority
interests and equity in net loss of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,302Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,073
    )Equity in net loss of associate, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (99
    )
    
    
    
    
    
    
    (99
    )Net income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,130Income from divested business, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    369Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,499
 F-48




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 CorporateFor the Year Ended March 31, 2007
    
    Copper
    
    Zinc
    
    Aluminum
    
    and others
    
    Elimination
    
    TotalRs. in millionsNet sales to external customers
    
    
    115,192
    
    
    
    85,963
    
    
    
    40,091
    
    
    
    
    
    
    
    
    
    
    
    241,246Inter-segment sales
    
    
    
    
    
    
    
    
    
    
    911
    
    
    
    
    
    
    
    (911
    )
    
    
    Segment sales
    
    
    115,192
    
    
    
    85,963
    
    
    
    41,002
    
    
    
    
    
    
    
    (911
    )
    
    
    241,246Segment profit
    
    
    17,689
    
    
    
    65,129
    
    
    
    15,765
    
    
    
    (2
    )
    
    
    
    
    
    
    98,581Depreciation, depletion and amortization
    
    
    (1,440
    )
    
    
    (2,124
    )
    
    
    (2,394
    )
    
    
    (1
    )
    
    
    
    
    
    
    (5,959
    )Voluntary retirement scheme expenses
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )Gain on sale of real estate
    
    
    986
    
    
    
    
    
    
    
   
    
    
    
    
    
    
    
    
    
    
    
    986Operating income (loss)
    
    
    17,235
    
    
    
    62,908
    
    
    
    13,371
    
    
    
    (3
    )
    
    
    
    
    
    
    93,511Interest and dividend income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,072Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,329
    )Net realized and unrealized investment gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,280Income before income taxes, minority interests
and equity in net income of associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,534Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,159
    )Income after income taxes, before minority
interests and equity in net income of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,375Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,053
    )Equity in net income of associate, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    24Net income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,346Income from divested business, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,432AssetsSegment assets
    
    
    66,653
    
    
    
    95,508
    
    
    
    54,043
    
    
    
    6,644
    
    
    
    
    
    
    
    222,848Investment in associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,033
    
    
    
    
    
    
    
    3,033Total assets
    
    
    66,653
    
    
    
    95,508
    
    
    
    54,043
    
    
    
    9,677
    
    
    
    
    
    
    
    225,881Additions to property, plant and equipment
    
    
    2,023
    
    
    
    11,125
    
    
    
    1,388
    
    
    
    6,153
    
    
    
    
    
    
    
    20,689
 F-49




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 CorporateFor the Year Ended March 31, 2008
    
    Copper
    
    Zinc
    
    Aluminum
    
    and others
    
    Elimination
    
    Total
    
    TotalRs. in millions
    
    US dollarsin millionsNet sales to external customers
    
    
    126,276
    
    
    
    78,222
    
    
    
    41,596
    
    
    
    320
    
    
    
    
    
    
    
    246,414
    
    
    
    6,157.2Inter-segment sales
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    (99
    )
    
    
    
    
    
    
    Segment sales
    
    
    126,276
    
    
    
    78,222
    
    
    
    41,695
    
    
    
    320
    
    
    
    (99
    )
    
    
    246,414
    
    
    
    6,157.2Segment profit
    
    
    12,650
    
    
    
    55,563
    
    
    
    14,244
    
    
    
    384
    
    
    
    
    
    
    
    82,841
    
    
    
    2,070.0Depreciation, depletion and amortization
    
    
    (1,613
    )
    
    
    (2,371
    )
    
    
    (2,663
    )
    
    
    (413
    )
    
    
    
    
    
    
    (7,060
    )
    
    
    (176.4
    )Guarantees, impairment of investment and loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (628
    )
    
    
    
    
    
    
    (628
    )
    
    
    (15.7
    )Operating income (loss)
    
    
    11,037
    
    
    
    53,192
    
    
    
    11,581
    
    
    
    (657
    )
    
    
    
    
    
    
    75,153
    
    
    
    1,877.9Interest and dividend income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,548
    
    
    
    163.6Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,386
    )
    
    
    (84.6
    )Net realized and unrealized investment gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,511
    
    
    
    112.8Income before income taxes, minority interests
and equity in net income of associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,826
    
    
    
    2,069.7Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,624
    )
    
    
    (540.3
    )Income after income taxes, before minority
interests and equity in net income of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,202
    
    
    
    1,529.4Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,093
    )
    
    
    (477.1
    )Equity in net income of associate, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    491
    
    
    
    
    
    
    
    491
    
    
    
    12.3Net income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,600
    
    
    
    1,064.6Income from divested business, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,600
    
    
    
    1,064.6AssetsSegment assets
    
    
    144,694
    
    
    
    133,233
    
    
    
    57,146
    
    
    
    21,582
    
    
    
    
    
    
    
    356,655
    
    
    
    8,911.8Investment in associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,524
    
    
    
    
    
    
    
    19,524
    
    
    
    487.9Total assets
    
    
    144,694
    
    
    
    133,233
    
    
    
    57,146
    
    
    
    41,106
    
    
    
    
    
    
    
    376,179
    
    
    
    9,399.7Additions to property, plant and equipment
    
    
    1,120
    
    
    
    12,499
    
    
    
    3,923
    
    
    
    11,604
    
    
    
    
    
    
    
    29,146
    
    
    
    728.3
  F-50




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 (b) Geographical segmental analysis
  2006
    
    2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsIndia
    
    
    68,852
    
    
    
    114,222
    
    
    
    140,503
    
    
    
    3,510.8Far East(1)
    
    
    22,654
    
    
    
    69,624
    
    
    
    62,303
    
    
    
    1,556.8Other(2)
    
    
    31,285
    
    
    
    57,400
    
    
    
    43,608
    
    
    
    1,089.6Net sales
    
    
    122,791
    
    
    
    241,246
    
    
    
    246,414
    
    
    
    6,157.2
 
 (1)
    
    Far East includes a number of countries, including China, South Korea, Singapore and
Thailand.(2)
    
    Other includes Kenya, Nigeria, Ethiopia, Algeria, Sudan, Morocco, Namibia, Egypt, Oman,
United Arab Emirates, Turkey, Qatar, Saudi Arabia, Syria, Israel, Bangladesh, Sri Lanka,
Pakistan, Belgium, France, Germany, Italy, Jordan, UK, The Netherlands, Luxembourg, Rotterdam,
Spain, Sweden, Switzerland, Australia, Cameroon, Malawi and Iran.  2007
    
    2008
    
    2008Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsIndia
    
    
    98,576
    
    
    
    120,793
    
    
    
    3,018.3Australia
    
    
    937
    
    
    
    789
    
    
    
    19.7Long-lived assets
    
    
    99,513
    
    
    
    121,582
    
    
    
    3,038.0
 28.
    
    Subsequent Event
  F-51




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##### Table of Contents



Charged toBalance at
    
    Revenue,
    
    
    
    
    
    
    
    
    
    Balance atbeginning of
    
    Costs or
    
    Other
    
    
    
    
    
    end ofperiod
    
    Expenses
    
    Additions
    
    Deductions
    
    PeriodAs of March 31, 2007 ( in Rs. in millions);Valuation Allowance
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    Allowances for doubtful accounts receivables
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15As of March 31, 2008 ( in Rs. in millions);Valuation Allowance
    
    
    
    
    
    
    1,157
    
    
    
    
    
    
    
    
    
    
    
    1,157Allowances for doubtful accounts receivables
    
    
    15
    
    
    
    160
    
    
    
    
    
    
    
    (3
    )
    
    
    172As of March 31, 2008 ( in US dollars in millions);Valuation Allowance
    
    
    
    
    
    
    28.9
    
    
    
    
    
    
    
    
    
    
    
    28.9Allowances for doubtful accounts receivables
    
    
    0.3
    
    
    
    4.0
    
    
    
    
    
    
    
    
    
    
    
    4.3
  Note:One of the Companys subsidiaries had set up a deferred tax asset, for
the Minimum Alternate Tax (MAT) paid which is available as a set off
against regular income tax payable in the immediately succeeding seven
years. During the year ended March 31, 2008, due to the increased income
tax benefits expected to be available from its power generation activity
and due to the expected reduction in the regular income taxes, the
Company expects that it would not be able to utilize the MAT credit and
has therefore established a valuation allowance against the MAT credit. F-52