##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 FORM 20-F
 (Mark One)
 o
    
    Registration statement pursuant to section12(b)or12(g)of the Securities Exchange Act
of 1934
 or
 þ
    
    Annual report pursuant to section 13 or15(d)of the Securities Exchange Act of 1934
 For the fiscal year ended March 31, 2010
 or
 o
    
    Transition report pursuant to section 13 or15(d)of the Securities Exchange Act of 1934
 For the transition period fromto
 or
 o
    
    Shell company report pursuant to section 13 or15(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)
 SIPCOT Industrial Complex,
Madurai Bypass Road, T. V.Puram P.O.,Tuticorin  628002,Republic of India
    
    Tamil Nadu, India(Jurisdiction of Incorporation or Organization)
    
    (Address of Principal Executive Offices)
 (Name, Telephone, E-mail and/or facsimile number and Address of Company Contact Person)
  American Depositary SharesPrior to June 25, 2010, each represent one equity share,par value Rs. 2 per equity share.
    
    New York Stock ExchangeEffective June 25, 2010, each represent four equityshares, par value Re. 1 per equity share.(Title of Class)
    
    (Name of Exchange On Which Registered)
 None  (Title of Class)
  None  (Title of Class)
  As of March 31, 2010, 840,400,422 equity shares, par value Rs. 2 per equity share, were issued
and outstanding, of which 124,992,080 equity shares were held in the form of 124,992,080 American
Depositary Shares, or ADSs. Effective June 25, 2010, following the split of each of the Rs. 2 shares
into two equity shares of par value Re. 1 each and the bonus issue of one equity share in the ratio
of 1:1, 3,361,207,534 equity shares, par value Re. 1 per equity share, were issued and outstanding,
of which 483,366,416 equity shares were held in the form of 120,841,604 American Depository Shares
or ADSs. Effective June 25, 2010, each ADS represents four equity shares.
  þ o
  o þ
  þ o
  o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
  U.S. GAAP o
    
    International Financial Reporting Standards as issued
by the International Accounting Standards Board þ
    
    Other o
  o o
  o þ




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##### 



TABLE OF CONTENTS
 PAGEPART I
    
    
    3ITEM 1.
    
    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
    
    
    3ITEM 2.
    
    OFFER STATISTICS AND EXPECTED TIMETABLE
    
    
    3ITEM 3.
    
    KEY INFORMATION
    
    
    3ITEM 4.
    
    INFORMATION ON THE COMPANY
    
    
    28ITEM 4A.
    
    UNRESOLVED STAFF COMMENTS
    
    
    118ITEM 5.
    
    OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    
    
    118ITEM 6.
    
    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
    
    
    149ITEM 7.
    
    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
    
    
    159ITEM 8.
    
    FINANCIAL INFORMATION
    
    
    167ITEM 9.
    
    THE OFFER AND LISTING
    
    
    172ITEM 10.
    
    ADDITIONAL INFORMATION
    
    
    174ITEM 11.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    215ITEM 12.
    
    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
    
    
    217PART II
    
    
    218ITEM 13.
    
    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
    
    
    218ITEM 14.
    
    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
    
    
    218ITEM 15.
    
    CONTROLS AND PROCEDURES
    
    
    219ITEM 16A.
    
    AUDIT COMMITTEE FINANCIAL EXPERT
    
    
    221ITEM 16B.
    
    CODE OF ETHICS
    
    
    222ITEM 16C.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    222ITEM 16D.
    
    EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
    
    
    222ITEM 16E.
    
    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
    
    
    223ITEM 16F.
    
    CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
    
    
    223ITEM 16G.
    
    CORPORATE GOVERNANCE
    
    
    223PART III
    
    
    225ITEM 17.
    
    FINANCIAL STATEMENTS
    
    
    225ITEM 18.
    
    FINANCIAL STATEMENTS
    
    
    225ITEM 19.
    
    EXHIBITS
    
    
    225SIGNATURES
    
    
    232INDEX TO FINANCIAL
STATEMENTS
    
    
    F-1EX-8.1 List of subsidiaries of Sterlite Industries (India) LimitedEX-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 2002EX-12.2 Certification of the Chief Financial Officer pursuant to 17 CFR 240. 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002EX-13.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002EX-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 2002Ex-15.1 Consent of Independent Registered Public Accounting Firm
  i




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CONVENTIONS USED IN THIS ANNUAL REPORT
      1




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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    a decline or volatility in the prices of or demand for copper, zinc, aluminum or
power;
    
    events that could cause a decrease in our production of copper, zinc, aluminum or
power;
    
    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;
    
    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, aluminum or power 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;
 2




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
    
    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
    3




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##### Table of Contents



Amount in conformity with IFRS
 Year ended March 31,2009
    
    2010
    
    2010(US dollars) (in(Rs.) (in millions,
    
    (Rs.) (in millions,
    
    millions, exceptexcept shares and
    
    except shares and
    
    shares and perper share data)
    
    per share data)
    
    share data)Revenue
    
    
    212,192
    
    
    
    244,903
    
    
    
    5,448.3Cost of sales
    
    
    (165,097
    )
    
    
    (181,928
    )
    
    
    (4,047.3
    )Gross profit
    
    
    47,095
    
    
    
    62,975
    
    
    
    1,401.0Other operating income
    
    
    3,750
    
    
    
    1,907
    
    
    
    42.4Distribution expenses
    
    
    (3,388
    )
    
    
    (3,022
    )
    
    
    (67.2
    )Administration expenses
    
    
    (4,367
    )
    
    
    (8,026
    )
    
    
    (178.6
    )Operating profit
    
    
    43,090
    
    
    
    53,834
    
    
    
    1,197.6Investment and other income
    
    
    18,772
    
    
    
    13,811
    
    
    
    307.3Finance and other costs
    
    
    (6,244
    )
    
    
    214
    
    
    
    4.8Share in consolidated (loss)/profit of associate
    
    
    (3,160
    )
    
    
    2,051
    
    
    
    45.6Profit before taxes
    
    
    52,458
    
    
    
    69,910
    
    
    
    1,555.3Income Tax expense
    
    
    (7,782
    )
    
    
    (13,247
    )
    
    
    (294.7
    )Profit
for the year
    
    
    44,676
    
    
    
    56,663
    
    
    
    1,260.6Profit attributable to:Equity holders of the parent
    
    
    32,228
    
    
    
    39,263
    
    
    
    873.5Minority interest
    
    
    12,448
    
    
    
    17,400
    
    
    
    387.1Earnings
per share (Refer to Note 29 to consolidated financial statements)Basic
    
    
    11.37
    
    
    
    12.27
    
    
    
    0.3Diluted
    
    
    11.37
    
    
    
    12.03
    
    
    
    0.3Weighted average number of equity shares used in
computing earnings per shareBasic
    
    
    2,833,583,490
    
    
    
    3,199,826,061
    
    
    
    3,199,826,061Diluted
    
    
    2,833,583,490
    
    
    
    3,236,000,281
    
    
    
    3,236,000,281Dividend declared per share (1)(2)
    
    
    3.50
    
    
    
    3.75
    
    
    
    0.08
 
 Notes:(1)
    
    The dividend for fiscal 2009 was recommended by our board of directors on April 28, 2009 and
approved by our shareholders at the general meeting held on September 19, 2009 and a final
dividend of Rs.3.75 ($0.08) per equity for fiscal 2010 was recommended by our board of
directors on April 26, 2010 and approved by our shareholders at the general meeting held on
June 11, 2010.(2)
    
    On June 11, 2010, our shareholders approved the sub-division of our equity shares from Rs.2
each to Re.1 each. Our shareholders also approved the bonus issue in the ratio of one equity
share of Re. 1
each for one equity share of Re.1. With effect from June 25, 2010, the equity shares have a par
value of Re.1 each. 4




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As of March 31,2009
    
    2010
    
    2010(in millions)Consolidated Financial Position Data:Cash and cash equivalents
    
    Rs.
    2,701
    
    
    Rs.
    2,021
    
    
    $
    45.0Restricted Cash and cash equivalents
    
    
    2,011
    
    
    
    60
    
    
    
    1.3Total assets
    
    
    444,578
    
    
    
    606,854
    
    
    
    13,500.6Net assets
    
    
    320,603
    
    
    
    451,988
    
    
    
    10,055.3Long-term borrowings
    
    
    14,384
    
    
    
    43,578
    
    
    
    969.4Short-term borrowings
    
    
    20,202
    
    
    
    19,121
    
    
    
    425.4Total shareholders equity
    
    
    250,533
    
    
    
    365,172
    
    
    
    8123.9
 Year Ended March 31,2009
    
    
    2010(in millions)Cash Flow Data:Net cash provided by (used in):Operating activities
    
    Rs.
    72,585
    
    
    Rs.
    14,249
    
    
    $
    317.1Investing activities
    
    
    (95,295
    )
    
    
    (117,582
    )
    
    
    (2,615.9
    )Financing activities
    
    
    13,442
    
    
    
    102,322
    
    
    
    2,276.3Other Consolidated Financial Data:Revenue :Copper
    
    Rs.
    116,525
    
    
    Rs.
    130,608
    
    
    $
    2905.6Zinc
    
    
    55,724
    
    
    
    79,434
    
    
    
    1,767.2Aluminum
    
    
    39,170
    
    
    
    28,289
    
    
    
    629.3Power
    
    
    773
    
    
    
    6,572
    
    
    
    146.2Others
    
    
    
    
    
    
    
    
    
    
    Total
    
    Rs.
    212,192
    
    
    Rs.
    244,903
    
    
    $
    5,448.3Operating profit:Copper
    
    Rs.
    11,121
    
    
    Rs.
    3,138
    
    
    $
    69.8Zinc
    
    
    25,158
    
    
    
    44,071
    
    
    
    980.4Aluminum
    
    
    6,494
    
    
    
    3,189
    
    
    
    70.9Power
    
    
    323
    
    
    
    3,445
    
    
    
    76.6Others
    
    
    (6
    )
    
    
    (9
    )
    
    
    (0.2
    )Total
    
    Rs.
    43,090
    
    
    Rs.
    53,834
    
    
    $
    1,197.6Segment profit:(1)Copper
    
    Rs.
    13,312
    
    
    Rs.
    5,120
    
    
    $
    113.9Zinc
    
    
    27,773
    
    
    
    47,124
    
    
    
    1,048.3Aluminum
    
    
    9,103
    
    
    
    5,499
    
    
    
    122.3Power
    
    
    931
    
    
    
    4,160
    
    
    
    92.5Others
    
    
    (5
    )
    
    
    (8
    )
    
    
    (0.2
    )Total
    
    Rs.
    51,114
    
    
    Rs.
    61,895
    
    
    $
    1,376.9
 
 Notes:(1)
    
    Segment profit is calculated by adjusting operating profit for depreciation and amortization.
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 IFRS. 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 revenue to segment profit for the periods indicated: Year ended March 31,2009
    
    
    2010
    
    
    2010(in millions)Copper:Operating profit
    
    Rs.
    11,121
    
    
    Rs.
    3,138
    
    
    $
    69.8Plus:
 5




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Year ended March 31,2009
    
    
    2010
    
    
    2010(in millions)Depreciation and amortization
    
    
    2,191
    
    
    
    1,982
    
    
    
    44.1Segment profit
    
    Rs.
    13,312
    
    
    Rs.
    5,120
    
    
    $
    113.9Zinc:Operating profit
    
    Rs.
    25,158
    
    
    Rs.
    44,071
    
    
    $
    980.4Plus:Depreciation and amortization
    
    
    2,615
    
    
    
    3,053
    
    
    
    68.0Segment profit
    
    Rs.
    27,773
    
    
    Rs.
    47,124
    
    
    $
    1048.4Aluminum:Operating profit
    
    Rs.
    6,494
    
    
    Rs.
    3,189
    
    
    $
    71.0Plus:Depreciation and amortization
    
    
    2,609
    
    
    
    2,310
    
    
    
    51.4Segment profit
    
    Rs.
    9,103
    
    
    Rs.
    5,499
    
    
    $
    122.3Power:Operating profit
    
    Rs.
    323
    
    
    Rs.
    3,445
    
    
    $
    76.6Plus:Depreciation and amortization
    
    
    608
    
    
    
    715
    
    
    
    15.9Segment profit
    
    Rs.
    931
    
    
    Rs.
    4,160
    
    
    $
    92.5Others:Operating profit
    
    Rs.
    (6
    )
    
    Rs.
    (9
    )
    
    $
    (0.2
    )Plus:Depreciation and amortization
    
    
    1
    
    
    
    1
    
    
    
    Segment profit
    
    Rs.
    (5
    )
    
    Rs.
    (8
    )
    
    $
    (0.2
    )
 
 (2)
    
    Cost of production is not a recognized measure under IFRS. 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 IFRS. 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. 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 31,2009
    
    
    2010(in millions, except Production output and Cost of production)Copper:Segment sales
    
    Rs.
    116,670
    
    
    Rs.
    130,608Less:Segment profit
    
    
    (13,312
    )
    
    
    (5,120
    )Segment cost
    
    
    103,358
    
    
    
    125,488Less:Purchased concentrate/rock
    
    
    (94,873
    )
    
    
    (114,923
    )By-product/free copper net sale
    
    
    (4,337
    )
    
    
    (1,981
    )Cost for downstream products
    
    
    (1,613
    )
    
    
    (1,543
    )Others, net
    
    
    (1,556
    )
    
    
    (3,386
    )Total expenses
    
    Rs.
    979
    
    
    Rs.
    3,655Production output (in tons)
    
    
    312,833
    
    
    
    334,202Cost of
production(a)
    
    
    3.1
    ¢/lb
    
    
    10.46
    ¢/lbZinc:Segment sales
    
    Rs.
    55,724
    
    
    Rs.
    79,434Less:
 6




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Year Ended March 31,2009
    
    
    2010(in millions, except Production output and Cost of production)Segment profit
    
    
    (27,773
    )
    
    
    (47,124
    )Segment cost
    
    
    27,951
    
    
    
    32,310Less:Cost of tolling including raw material cost
    
    
    (409
    )
    
    
    Cost of intermediary product sold
    
    
    (1,301
    )
    
    
    (3,060
    )By-product revenue
    
    
    (4,848
    )
    
    
    (1,871
    )Cost of lead metal sold
    
    
    (2,079
    )
    
    
    (2,652
    )Others, net
    
    
    (1,312
    )
    
    
    (1,406
    )Total expenses
    
    Rs.
    18,002
    
    
    Rs.
    23,321Production output (in tons)
    
    
    551,724
    
    
    
    578,411Cost of
production (per ton)(a)
    
    $
    710
    
    
    $
    850Aluminum:Segment sales
    
    Rs.
    39,336
    
    
    Rs.
    28,367Less:Segment profit
    
    
    (9,103
    )
    
    
    (5,499
    )Segment cost
    
    
    30,233
    
    
    
    22,868Less: Cost of intermediary product sold
    
    
    
    
    
    
    (304
    )By-product revenue
    
    
    (328
    )
    
    
    (126
    )Cost for downstream products
    
    
    (1,966
    )
    
    
    (1,767
    )Others, net
    
    
    (314
    )
    
    
    (1,455
    )Total expenses
    
    Rs.
    27,625,
    
    
    Rs.
    19,216Production output (hot metal) (in tons)
    
    
    355,733
    
    
    
    262,760Cost of
production (per ton)(a)
    
    $
    1,700
    
    
    $
    1,542
 
 (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, 2009 and 2010 of Rs. 45.91 per
$1.00 and Rs. 47.42 per $1.00, respectively. (3)
    
    Cost of production relates only to our custom smelting and refining operations and consists
of the cost of converting copper concentrate into copper cathodes, including the cost of
freight of copper anodes from Tuticorin to Silvassa and excluding the benefit of the
phosphoric acid plant. Revenue 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)
    
    Our zinc operations are fully integrated. As a result, cost of production of zinc consists of
the total direct cost of producing zinc from the mines and smelters, including extracting ore
from the mines, converting the ore into zinc concentrate and smelting to produce zinc ingots.
Our zinc segment includes lead and silver. Silver is a by-product of lead and accordingly,
there are no additional processing costs for silver. Revenue earned from the sale of silver is
reported as profit in this segment. 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 for BALCOs 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. 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 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. In response to the recent global
economic conditions and a decline in commodity prices, starting in February 2009, BALCO
suspended part of its operations at its 100,000 tons per annum, or tpa, aluminum smelter and
ceased operations at this smelter on June 5, 2009. 7




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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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##### Table of Contents



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
245,000 tpa aluminum smelter at Korba (Korba smelter) in May 2006, and as a result
of this interruption the Korba smelter did not become fully operational again until
November 2006. Similarly, our Tuticorin copper refining and smelting facility had a
four-day delay in ramp-up following a scheduled maintenance shutdown between April and
May 2008 due to stabilization issues faced during the post-shutdown ramp-up and an
unscheduled 34-day interruption in production between November and December 2008 due
to damage in a cooling tower as a result of the collapse of its foundation. CMTs Mt.
Lyell processing plant was disrupted and experienced a 68 days shutdown due to a mud
slide at the mine resulting from high rainfall in end August 2009. The losses from
these interruptions include 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 utilize higher-priced imported coal and coal from
non-linkage sources, which resulted in higher power generation costs. In fiscal 2010,
98.0 per cent of the allocated coal was supplied.
    
    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 commenced on May 18, 2009 and are ongoing. 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, inland water transport, rail, trucking, overland conveyor and other systems
to transport 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.
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
    
    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 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 the trade unions may not be
renewed on terms favorable to us, or at all. The wage settlement agreement with HZL
was executed on November 13, 2009 for a period of 5 years with effect from July 1,
2007. The wage settlement agreement entered into by BALCO with the union expired on
April 1, 2009. We are currently in negotiations with the union to renew the wage
settlement agreement. 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.
 11




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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.
  Our offer to acquire the operating assets of Asarco LLC (Asarco) has been rejected by the US
District Court and we have appealed against that decision. In addition, Asarco has filed a
complaint alleging that we and Sterlite USA had breached our prior agreement to acquire Asarco. Any
adverse judgment or settlement may have a material adverse effect on our business, results or
operations, financial condition and prospects.
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We are developing our 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.
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
    
    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.
    
    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, the
Tata Power Company Limited, or Tata Power, and Reliance Energy Limited, with
significant resources and many years of experience in the commercial power generation
business.
    
    We may face constraints related to the availability of water which is a critical
requirement for power generation.
  If any power facilities we build and operate as part of our 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 revenue
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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Our option to purchase the Government of Indias remaining shares in HZL may be challenged.
    The Government of India has disputed our exercise of the call option to purchase its remaining
49.0% ownership interest in BALCO.
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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.
     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.
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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.
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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.
  Changes in tariffs, royalties, customs duties and government assistance may reduce our Indian
market domestic premium, which would adversely affect our profitability and results of operations.
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Regulation of greenhouse gas emissions effects and climate change issues may adversely affect our
operations and markets.
    Risks Relating to Our Relationship with Vedanta
 We
are controlled by Vedanta and our other shareholders' 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 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 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;
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
    
    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.
   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, Global Economic Conditions and International
Operations
 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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Recent global economic conditions have been unprecedented and challenging and have had, and
continue to have, an adverse effect on the Indian financial markets and the Indian economy in
general, which has had, and may continue to have, a material adverse effect on our business, our
financial performance and the prices of our equity shares and ADSs.
   As the domestic Indian market constitutes the major source of our revenue, the downturn in the rate
of economic growth in India due to the unprecedented and challenging global market and economic
conditions, or any other such downturn for any other reason, will be detrimental to our results of
operations.
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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 revenue 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.
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If Indias inflation worsens or the prices of oil or other raw materials 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.
   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.
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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.
  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.
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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
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29




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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 & Associates Ltd, or Brook
Hunt, (a Wood Mackenzie company) 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, 2006-07, 2007-08 and 2009-10), the Central Electricity Authority of Indias General
Review (2004-05 and 2007-08), and the Ministry of Power website. The data may have been
re-classified for the purpose of presentation. Unless 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
   30




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
    
    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
    Year Ended December 31,2006
    
    2007
    
    2008
    
    2009Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Rest of
Asia(1)
    
    
    4,246
    
    
    
    24.3
    %
    
    
    4,182
    
    
    
    23.3
    %
    
    
    4,153
    
    
    
    23.1
    %
    
    
    3,713
    
    
    
    21.5
    %Western Europe
    
    
    3,923
    
    
    
    22.4
    
    
    
    3,661
    
    
    
    20.4
    
    
    
    3,413
    
    
    
    19.0
    
    
    
    2,687
    
    
    
    15.5China
    
    
    3,967
    
    
    
    22.7
    
    
    
    4,600
    
    
    
    25.7
    
    
    
    5,014
    
    
    
    27.9
    
    
    
    6,520
    
    
    
    37.7North America
    
    
    2,408
    
    
    
    13.8
    
    
    
    2,395
    
    
    
    13.4
    
    
    
    2,200
    
    
    
    12.2
    
    
    
    1,705
    
    
    
    9.8CEE(2)
and CIS
    
    
    1,210
    
    
    
    6.9
    
    
    
    1,251
    
    
    
    7.0
    
    
    
    1,240
    
    
    
    6.9
    
    
    
    806
    
    
    
    4.6Latin America
    
    
    895
    
    
    
    5.1
    
    
    
    863
    
    
    
    4.8
    
    
    
    906
    
    
    
    5.0
    
    
    
    781
    
    
    
    4.5India
    
    
    458
    
    
    
    2.6
    
    
    
    568
    
    
    
    3.2
    
    
    
    598
    
    
    
    3.3
    
    
    
    607
    
    
    
    3.6Africa
    
    
    243
    
    
    
    1.4
    
    
    
    275
    
    
    
    1.5
    
    
    
    295
    
    
    
    1.6
    
    
    
    340
    
    
    
    2.0Oceania
    
    
    143
    
    
    
    0.8
    
    
    
    148
    
    
    
    0.8
    
    
    
    144
    
    
    
    0.8
    
    
    
    143
    
    
    
    0.8Total
    
    
    17,493
    
    
    
    100.0
    %
    
    
    17,943
    
    
    
    100.0
    %
    
    
    17,963
    
    
    
    100.0
    %
    
    
    17,302
    
    
    
    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 2010. 31




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Copper Supply
     Year Ended December 31,2006
    
    2007
    
    2008
    
    2009Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Latin America
    
    
    3,906
    
    
    
    22.6
    %
    
    
    3,953
    
    
    
    22.0
    %
    
    
    4,070
    
    
    
    22.2
    %
    
    
    4,184
    
    
    
    22.8
    %Rest of Asia(1)
    
    
    2,953
    
    
    
    17.1
    
    
    
    2,995
    
    
    
    16.6
    
    
    
    2,927
    
    
    
    15.9
    
    
    
    2,766
    
    
    
    15.1China
    
    
    3,003
    
    
    
    17.4
    
    
    
    3,497
    
    
    
    19.4
    
    
    
    3,779
    
    
    
    20.6
    
    
    
    4,110
    
    
    
    22.4CEE(2) and CIS
    
    
    2,173
    
    
    
    12.6
    
    
    
    2,123
    
    
    
    11.8
    
    
    
    2,087
    
    
    
    11.4
    
    
    
    1,992
    
    
    
    10.9North America
    
    
    1,758
    
    
    
    10.2
    
    
    
    1,786
    
    
    
    9.9
    
    
    
    1,733
    
    
    
    9.4
    
    
    
    1,538
    
    
    
    8.4Western Europe
    
    
    1,877
    
    
    
    10.9
    
    
    
    1,846
    
    
    
    10.3
    
    
    
    1,945
    
    
    
    10.6
    
    
    
    1,816
    
    
    
    9.8Africa
    
    
    567
    
    
    
    3.3
    
    
    
    638
    
    
    
    3.5
    
    
    
    645
    
    
    
    3.5
    
    
    
    751
    
    
    
    4.1Australia
    
    
    430
    
    
    
    2.5
    
    
    
    443
    
    
    
    2.5
    
    
    
    502
    
    
    
    2.7
    
    
    
    458
    
    
    
    2.5India
    
    
    629
    
    
    
    3.6
    
    
    
    722
    
    
    
    4.0
    
    
    
    683
    
    
    
    3.7
    
    
    
    721
    
    
    
    4.0Total
    
    
    17,296
    
    
    
    100.0
    %
    
    
    18,003
    
    
    
    100.0
    %
    
    
    18,371
    
    
    
    100.0
    %
    
    
    18,336
    
    
    
    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 2010. Pricing
  32




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Year Ended December 31,2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009($ per ton, except percentages)LME Cash Price($)
    
    
    1,814
    
    
    
    1,577
    
    
    
    1,557
    
    
    
    1,779
    
    
    
    2,869
    
    
    
    3,683
    
    
    
    6,729
    
    
    
    7,124
    
    
    
    6,966
    
    
    
    5,170% Change
    
    
    15.3
    
    
    
    (13.1
    )
    
    
    (1.3
    )
    
    
    14.3
    
    
    
    61.2
    
    
    
    28.4
    
    
    
    82.7
    
    
    
    5.9
    
    
    
    (2.2
    )
    
    
    (25.7
    )
 
 Source: LME.     Year Ended December 31,2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009(US cents per lb, except percentages)TcRc(1)
    
    
    15.9
    
    
    
    17.4
    
    
    
    15.5
    
    
    
    13.9
    
    
    
    13.0
    
    
    
    29.6
    
    
    
    45.9
    
    
    
    15.4
    
    
    
    11.5
    
    
    
    19.5% Change
    
    
    3.9
    
    
    
    9.4
    
    
    
    (10.9
    )
    
    
    (10.3
    )
    
    
    (6.5
    )
    
    
    127.7
    
    
    
    55.1
    
    
    
    (66.4
    )
    
    
    (24.7
    )
    
    
    69.6
 
 Note:(1)
    
    Includes price participation, if any.Source: Brook Hunt Copper Metal Service Report. Indian Copper Market
 Background
  33




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Consumption Pattern
  Pricing and Tariff
  Market Outlook
 Global Copper Outlook
     Indian Copper Outlook
  34




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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
    Year Ended December 31,2006
    
    2007
    
    2008
    
    2009Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Europe
    
    
    2,843
    
    
    
    25.5
    %
    
    
    2,894
    
    
    
    25.2
    %
    
    
    2,592
    
    
    
    23.1
    %
    
    
    1,973
    
    
    
    19.4
    %China
    
    
    3,166
    
    
    
    28.4
    
    
    
    3,531
    
    
    
    30.8
    
    
    
    3,795
    
    
    
    33.9
    
    
    
    4,061
    
    
    
    40.0India
    
    
    428
    
    
    
    3.8
    
    
    
    469
    
    
    
    4.1
    
    
    
    479
    
    
    
    4.3
    
    
    
    495
    
    
    
    4.8Rest of Asia(1)
    
    
    2,190
    
    
    
    19.6
    
    
    
    2,149
    
    
    
    18.7
    
    
    
    2,075
    
    
    
    18.5
    
    
    
    1,677
    
    
    
    16.5North America
    
    
    1,409
    
    
    
    12.6
    
    
    
    1,275
    
    
    
    11.1
    
    
    
    1,131
    
    
    
    10.1
    
    
    
    1,028
    
    
    
    10.0Latin America
    
    
    647
    
    
    
    5.8
    
    
    
    673
    
    
    
    5.9
    
    
    
    671
    
    
    
    6.0
    
    
    
    559
    
    
    
    5.5Oceania
    
    
    273
    
    
    
    2.4
    
    
    
    284
    
    
    
    2.5
    
    
    
    284
    
    
    
    2.5
    
    
    
    226
    
    
    
    2.2
 35




---



##### Table of Contents



Year Ended December 31,2006
    
    2007
    
    2008
    
    2009Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Africa
    
    
    193
    
    
    
    1.7
    
    
    
    198
    
    
    
    1.7
    
    
    
    178
    
    
    
    1.6
    
    
    
    164
    
    
    
    1.6Total
    
    
    11,149
    
    
    
    100.0
    %
    
    
    11,473
    
    
    
    100.0
    %
    
    
    11,205
    
    
    
    100.0
    %
    
    
    10,183
    
    
    
    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 2010
 Zinc Supply
     Year Ended December 31,2006
    
    2007
    
    2008
    
    2009Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Europe
    
    
    2,436
    
    
    
    23.3
    %
    
    
    2,474
    
    
    
    22.2
    %
    
    
    2,454
    
    
    
    21.3
    %
    
    
    2,068
    
    
    
    18.5
    %China
    
    
    3,163
    
    
    
    30.2
    
    
    
    3,728
    
    
    
    33.4
    
    
    
    3,909
    
    
    
    34.0
    
    
    
    4,246
    
    
    
    38.0India
    
    
    410
    
    
    
    3.9
    
    
    
    444
    
    
    
    4.0
    
    
    
    595
    
    
    
    5.2
    
    
    
    646
    
    
    
    5.8Rest of Asia(1)
    
    
    1,907
    
    
    
    18.2
    
    
    
    1,893
    
    
    
    17.0
    
    
    
    1,944
    
    
    
    16.9
    
    
    
    1,784
    
    
    
    16.0North America
    
    
    1,079
    
    
    
    10.3
    
    
    
    1,057
    
    
    
    9.5
    
    
    
    1,018
    
    
    
    8.8
    
    
    
    888
    
    
    
    8.0Latin America
    
    
    766
    
    
    
    7.3
    
    
    
    778
    
    
    
    7.0
    
    
    
    802
    
    
    
    7.0
    
    
    
    754
    
    
    
    6.7Australia
    
    
    461
    
    
    
    4.4
    
    
    
    501
    
    
    
    4.5
    
    
    
    506
    
    
    
    4.4
    
    
    
    514
    
    
    
    4.6Africa
    
    
    256
    
    
    
    2.4
    
    
    
    286
    
    
    
    2.6
    
    
    
    280
    
    
    
    2.4
    
    
    
    273
    
    
    
    2.4Total
    
    
    10,475
    
    
    
    100.0
    %
    
    
    11,162
    
    
    
    100.0
    %
    
    
    11,541
    
    
    
    100.0
    %
    
    
    11,173
    
    
    
    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 2010.
 36




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Pricing
     Year Ended December 31,Zinc Prices
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009($ per ton, except percentages)LME Cash Price
    
    
    1,128
    
    
    
    885
    
    
    
    778
    
    
    
    827
    
    
    
    1,047
    
    
    
    1,381
    
    
    
    3,274
    
    
    
    3,240
    
    
    
    1,874
    
    
    
    1,655% Change
    
    
    4.8
    
    
    
    (21.5
    )
    
    
    (12.1
    )
    
    
    6.3
    
    
    
    26.6
    
    
    
    31.9
    
    
    
    137.0
    
    
    
    (1.0
    )
    
    
    (42.2
    )
    
    
    (11.7
    )
 
 Source: LME. Indian Zinc Market
 Background
  Consumption Pattern
  37




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##### Table of Contents



Market Outlook
 Global Zinc Outlook
  Indian Zinc Outlook
  Aluminum
 Global Aluminum Market
 Background
  Aluminum Consumption
   Year Ended December 31,20092006
    
    2007
    
    2008
    
    2009Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %North America
    
    
    7,219
    
    
    
    20.9
    %
    
    
    6,698
    
    
    
    17.6
    %
    
    
    6,049
    
    
    
    16.0
    %
    
    
    4705
    
    
    
    13.0
    %Western Europe
    
    
    6,796
    
    
    
    19.8
    
    
    
    7,160
    
    
    
    18.9
    
    
    
    6882
    
    
    
    18.0
    %
    
    
    5560
    
    
    
    16.0
    %China
    
    
    8,790
    
    
    
    25.6
    
    
    
    12,300
    
    
    
    32.4
    
    
    
    12,560
    
    
    
    33.0
    %
    
    
    13879
    
    
    
    39.0
    %Rest of Asia(1)
    
    
    6,299
    
    
    
    18.3
    
    
    
    6,260
    
    
    
    16.5
    
    
    
    6,275
    
    
    
    17.0
    %
    
    
    5411
    
    
    
    15.0
    %CEE(2)
    
    
    1,972
    
    
    
    5.7
    
    
    
    1,918
    
    
    
    5.0
    
    
    
    1,967
    
    
    
    5.0
    %
    
    
    1638
    
    
    
    5.0
    %Latin America
    
    
    1,364
    
    
    
    4.0
    
    
    
    1,502
    
    
    
    4.0
    
    
    
    1681
    
    
    
    4.0
    %
    
    
    1513
    
    
    
    4.0
    %India
    
    
    1,080
    
    
    
    3.1
    
    
    
    1,207
    
    
    
    3.2
    
    
    
    1312
    
    
    
    3.0
    %
    
    
    1439
    
    
    
    4.0
    %Oceania
    
    
    422
    
    
    
    1.2
    
    
    
    444
    
    
    
    1.2
    
    
    
    463
    
    
    
    1.0
    %
    
    
    443
    
    
    
    1.0
    %Africa
    
    
    466
    
    
    
    1.3
    
    
    
    492
    
    
    
    1.3
    
    
    
    641
    
    
    
    2.0
    %
    
    
    558
    
    
    
    2.0
    %Total
    
    
    34,408
    
    
    
    100.0
    %
    
    
    37,981
    
    
    
    100.0
    %
    
    
    37,830
    
    
    
    100.0
    %
    
    
    35,146
    
    
    
    100.0
    %
 38




---



##### Table of Contents



Notes:(1)
    
    Rest of Asia is Asia excluding China and India, but including the Middle East.(2)
    
    Central and Eastern Europe. Source: Brook Hunt Aluminium Metal Service Report, Q1 2010.
 Aluminum Supply
   Year Ended December 31,2006
    
    2007
    
    2008
    
    2009Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %China
    
    
    9,349
    
    
    
    27.6
    %
    
    
    12,588
    
    
    
    33.0
    %
    
    
    13177
    
    
    
    33.0
    %
    
    
    12965
    
    
    
    35.0
    %North America
    
    
    5,333
    
    
    
    15.7
    
    
    
    5,643
    
    
    
    14.8
    
    
    
    5781
    
    
    
    15.0
    %
    
    
    4759
    
    
    
    13.0
    %CEE(2)
    
    
    4,678
    
    
    
    13.8
    
    
    
    4,899
    
    
    
    12.8
    
    
    
    5101
    
    
    
    13.0
    %
    
    
    4425
    
    
    
    12.0
    %Western Europe
    
    
    4,174
    
    
    
    12.3
    
    
    
    4,321
    
    
    
    11.3
    
    
    
    4625
    
    
    
    12.0
    %
    
    
    3728
    
    
    
    10.0
    %Latin America
    
    
    2,493
    
    
    
    7.4
    
    
    
    2,559
    
    
    
    6.7
    
    
    
    2660
    
    
    
    7.0
    %
    
    
    2507
    
    
    
    7.0
    %Oceania
    
    
    2,274
    
    
    
    6.7
    
    
    
    2,316
    
    
    
    6.1
    
    
    
    2297
    
    
    
    6.0
    %
    
    
    2211
    
    
    
    6.0
    %Rest of Asia(1)
    
    
    2,626
    
    
    
    7.7
    
    
    
    2,763
    
    
    
    7.2
    
    
    
    2944
    
    
    
    7.0
    %
    
    
    3257
    
    
    
    9.0
    %Africa
    
    
    1,865
    
    
    
    5.5
    
    
    
    1,815
    
    
    
    4.8
    
    
    
    1699
    
    
    
    4.0
    %
    
    
    1681
    
    
    
    5.0
    %India
    
    
    1,115
    
    
    
    3.3
    
    
    
    1,222
    
    
    
    3.2
    
    
    
    1296
    
    
    
    3.0
    %
    
    
    1474
    
    
    
    4.0
    %Total
    
    
    33,907
    
    
    
    100.0
    %
    
    
    38,127
    
    
    
    100.0
    %
    
    
    39,580
    
    
    
    100.0
    %
    
    
    37,007
    
    
    
    100.0
    %
 
 Notes:(1)
    
    Rest of Asia is Asia excluding China and India, but including the Middle East.(2)
    
    Central and Eastern Europe. Source:  Brookhunt: Metals Market Service  Long Term Outlook, June 2010
 Alumina
  39




---



##### Table of Contents



Year Ended December 312005
    
    2006
    
    2007
    
    2008
    
    2009Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Oceania
    
    
    17,918
    
    
    
    26.93
    %
    
    
    18,607
    
    
    
    25.17
    %
    
    
    19,249
    
    
    
    23.84
    %
    
    
    19,728
    
    
    
    22.71
    %
    
    
    20,263
    
    
    
    26.01
    %Latin America
    
    
    13,189
    
    
    
    19.82
    %
    
    
    14,872
    
    
    
    20.11
    %
    
    
    15,110
    
    
    
    18.72
    %
    
    
    15,768
    
    
    
    18.15
    %
    
    
    13,274
    
    
    
    17.04
    %China
    
    
    8,536
    
    
    
    12.83
    %
    
    
    13,740
    
    
    
    18.58
    %
    
    
    20,900
    
    
    
    25.89
    %
    
    
    25,370
    
    
    
    29.20
    %
    
    
    23,792
    
    
    
    30.54
    %North America
    
    
    6,929
    
    
    
    10.41
    %
    
    
    6,799
    
    
    
    9.20
    %
    
    
    6,076
    
    
    
    7.53
    %
    
    
    6,160
    
    
    
    7.09
    %
    
    
    4,279
    
    
    
    5.49
    %Western Europe
    
    
    6,560
    
    
    
    9.86
    %
    
    
    6,747
    
    
    
    9.13
    %
    
    
    6,809
    
    
    
    8.43
    %
    
    
    6,951
    
    
    
    8.00
    %
    
    
    4,664
    
    
    
    5.99
    %CEE(2)
    
    
    6,699
    
    
    
    10.07
    %
    
    
    6,657
    
    
    
    9.00
    %
    
    
    5,828
    
    
    
    7.22
    %
    
    
    5,630
    
    
    
    6.48
    %
    
    
    4,729
    
    
    
    6.07
    %India
    
    
    3,065
    
    
    
    4.61
    %
    
    
    2,991
    
    
    
    4.05
    %
    
    
    3,178
    
    
    
    3.94
    %
    
    
    3,625
    
    
    
    4.17
    %
    
    
    3,687
    
    
    
    4.73
    %Rest of Asia(1)
    
    
    2,904
    
    
    
    4.36
    %
    
    
    2,996
    
    
    
    4.05
    %
    
    
    3,056
    
    
    
    3.79
    %
    
    
    3,058
    
    
    
    3.52
    %
    
    
    2,686
    
    
    
    3.45
    %Africa
    
    
    736
    
    
    
    1.11
    %
    
    
    530
    
    
    
    0.72
    %
    
    
    526
    
    
    
    0.65
    %
    
    
    593
    
    
    
    0.68
    %
    
    
    530
    
    
    
    0.68
    %Total
    
    
    66,536
    
    
    
    100.00
    %
    
    
    73,939
    
    
    
    100.00
    %
    
    
    80,732
    
    
    
    100.00
    %
    
    
    86,883
    
    
    
    100.00
    %
    
    
    77,904
    
    
    
    100.00
    %
 
 Notes:(1)
    
    Rest of Asia is Asia excluding China and India.(2)
    
    Central and Eastern Europe. Source: Brook Hunt Aluminium Metal Service Report, April, 2010.
   Year Ended December 31,2005
    
    2006
    
    2007
    
    2008
    
    2009(thousands of tons)Global Alumina Surplus/(Deficit)
    
    
    (1,657
    )
    
    
    1,704
    
    
    
    156
    
    
    
    3,528
    
    
    
    1,249
 
 Source: Brook Hunt Aluminium Metal Service Report, April, 2010 Bauxite
  Pricing
   40




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Year Ended December 31,2009Aluminum
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008
    
    2009$ per ton, except percentages)LME Cash Price(1)
    
    $
    1,549
    
    
    $
    1,444
    
    
    $
    1,349
    
    
    $
    1,432
    
    
    $
    1,716
    
    
    $
    1,897
    
    
    $
    2,566
    
    
    $
    2,639
    
    
    $
    2,571
    
    
    $
    1664% Change
    
    
    13.8
    
    
    
    (6.8
    )
    
    
    (6.6
    )
    
    
    6.1
    
    
    
    19.9
    
    
    
    10.5
    
    
    
    35.3
    
    
    
    2.8
    
    
    
    (2.6
    )
    
    
    (35.0
    )AluminaSpot Price(2)
    
    $
    284
    
    
    $
    149
    
    
    $
    148
    
    
    $
    283
    
    
    $
    420
    
    
    $
    468
    
    
    $
    420
    
    
    $
    353
    
    
    $
    362
    
    
    $
    245% Change
    
    
    39.9
    
    
    
    (47.5
    )
    
    
    (0.7
    )
    
    
    91.2
    
    
    
    48.4
    
    
    
    11.4
    
    
    
    (10.3
    )
    
    
    (16.0
    )
    
    
    2.5
    
    
    
    (32.0
    )Alumina/Aluminum (%)
    
    
    18.3
    %
    
    
    10.3
    %
    
    
    11.0
    %
    
    
    `19.8
    %
    
    
    24.5
    %
    
    
    24.7
    %
    
    
    16.4
    %
    
    
    13.4
    %
    
    
    14.1
    %
    
    
    14.7
    %
 
 (1)
    
    Source: LME.(2)
    
    Source: Bloomberg, Metal Bulletin; alumina metallurgical grade spot Free on Board, or FOB,
average for the year. Indian
Aluminium Market
 Background
   Supply and Demand
   Pricing and Tariff
  41




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##### Table of Contents



Market Outlook
 Global Aluminum Outlook
  Indian Aluminum Outlook
  Commercial Power Generation Business
 Industry Overview
   Installed Capacities
  MW
    
    Central
    
    State
    
    Private
    
    Total
    
    Share of Total(MW)Thermal
    
    
    37,867
    
    
    
    49,626
    
    
    
    14,961
    
    
    
    102,454
    
    
    
    64.3
    %Hydro
    
    
    8,565
    
    
    
    27,065
    
    
    
    1,233
    
    
    
    36,863
    
    
    
    23.1
    %Nuclear
    
    
    4,560
    
    
    
    
    
    
    
    
    
    
    
    4,560
    
    
    
    2.9
    %Renewable Energy Source
    
    
    
    
    
    
    2,701
    
    
    
    12,820
    
    
    
    15,521
    
    
    
    9.7
    %Total
    
    
    50,992
    
    
    
    79,392
    
    
    
    29,014
    
    
    
    159,398
    
    
    
    100.0
    %
 
 Source: Central Electricity Authority of India. 42




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##### Table of Contents



Indian states with more than 8 billion tons of coal reserves
    
    Total Coal Reserves(in billion tons)Jharkhand
    
    
    76.7Orissa
    
    
    65.2Charttisgarh
    
    
    44.5West Bengal
    
    
    28.3Madhya Pradesh
    
    
    21.0Andhra Pradesh
    
    
    18.9Maharashtra
    
    
    10.2
 
 Source: Ministry of Coal of the Government of India. Future Capacity Additions
     Transmission and Distribution
  43




---



##### Table of Contents



Consumption
  Power: Demand and Supply
 
 44




---



##### Table of Contents



Power: Peak Demand and Supply
 
 
 Note: * Up-to January 2010.Source: Ministry of Power of the Government of India.   Power: Category-wise Consumption (2005-06)
 
 
 Source: Central Electricity Authority of India.  45




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##### Table of Contents



Source: Central Electricity Authority of India (Seventeenth Electric Power Survey).   Per Capita World Consumption (2006)
 
 
 Note:(1)
    
    Countries that are members of the Organization for Economic Co-operation and Development, or
OECD (http://www.oecd.org).Source: International Energy Agency, Key World Energy Statistics 2008 (2006 data). 46




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##### Table of Contents



India Growth Pattern Over Years
 
 
 Source: Ministry of Power of the Government of India. Power Trading
  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.
  47




---



##### Table of Contents



Government Initiatives
    OUR BUSINESS
 Overview
   48




---



##### Table of Contents



49




---



##### Table of Contents



Competitive Strengths
  High quality assets and resources making us a low-cost producer
  
    
    our Tuticorin smelter was one of the top fifteen custom copper smelters worldwide in
2009, and one of the largest in India by production volume in fiscal 2009, according to
Brook Hunt;
    
    our zinc business operations are fully integrated with its own mining and captive
power generation capacities. HZL is Indias leading zinc
producer with a 74.0% market
share of the Indian zinc market in fiscal 2010, according to the
ILZDA;
    
    our aluminum business operations are fully integrated with respect to their power
requirements through their captive power plants. BALCOs 245,000 tpa Korba aluminum
smelter was in the ninth position in terms of all aluminum smelter operations
worldwide in 2010, according to Brook Hunt. In November 2007, BALCO received a coal
block allocation of 211.0 million tons for use in its captive power plants. These
allocated coal blocks are regarded as non-reserve coal deposits;
    
    we are seeking to further lower our costs across all our operations. Factors
contributing to our success in lowering our costs of production
include:
    
    our focus on continually reducing mining and 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.
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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 33.0% primary market share
in India in fiscal 2010, according to ICPCI;
    
    HZL is Indias only integrated zinc producer and had a
74.0% market share by
production volume in India in fiscal 2010, according to ILZDA; and
    
    BALCO is one of the four primary producers of aluminum in India and had a 22.0%
primary market share by production volume in India in fiscal 2010, according to AAI.
   Ideally positioned to capitalize on Indias growth and resource potential
  
    
    Indias large mineral reserves.According to the Ministry of Mines Annual Report
2009-2010, the total copper ore, lead-zinc ore, and bauxite resources of India are
estimated at 1.4 billion tons, 0.5 billion tons, and 3.3 billion tons, respectively.
According to the Ministry of Coal, the total coal resources of India are 267.2 billion
tons as of April 1, 2009, 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. In addition, according to the Investment Commission of India,
Indias bauxite reserves are the fourth largest in the world with total recoverable
reserves estimated at 2.4 billion tons.
    
    Indias economic growth and proximity to other growing economies.India is one of
the fastest growing large economies in the world with a real gross domestic product
growth of 6.7% in fiscal 2009 and an expected growth in real gross domestic product of
7.2% in fiscal 2010, according to the Government of India, Economic
Survey (2009-2010). The Government of India plans to spend approximately $514 billion on infrastructure
between 2007 and 2012, including approximately $167 billion on the power segment,
according to the Government of Indias Eleventh Five-Year Plan (2007-2012) (exchange
rate used in the plan for calculating infrastructure and power segments spending was
Rs. 40 = $1.00). As such, we believe that our focus on the metals and power segments
will allow us to directly benefit from demand in India and from the 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.
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Strong pipeline of growth projects
  
    
    Copper segment:we have Rs. 22,900 million
($509.5 million) of ongoing expansion projects
to increase our total copper capacity to 800,000 tpa with a 160 MW coal based
thermal captive power plant. These projects are expected to be commissioned by
mid-2011. We have incurred Rs 2,459 million ($54.7 Million) on these projects as of
March 31, 2010. The funding for these projects are mainly from proceeds of the
convertible senior notes issued in fiscal 2010.
    
    Zinc segment:HZL has Rs. 19,200 million ($427.1 million) of expansion projects to
increase its total lead-zinc capacity to 1,064,000 tpa with fully integrated mining
and captive power generation capacities. These projects include:
 
    
    establishing one brownfield lead smelter which is expected to increase the
production capacity of lead by approximately 100,000 tons at HZLs Rajpura Dariba
complex in the State of Rajasthan, which is expected to be completed by mid-2011;
    
    setting up an associated captive power plant with a capacity of 160 MW at
Rajpura Dariba, which is expected to be completed by mid-2011;
    
    expanding ore production capacity at the Sindesar Khurd mine from approximately
0.3 million tpa to 1.5 million tpa, which is scheduled to be progressively
completed from mid-2011. The ramp portal connecting the Sindesar Khurd mine
surface to the ore body has been completed and resources have been mobilized to
achieve accelerated mine development;
    
    HZL is expected to start mining activity at the Kayar mine progressively from
mid-2011, with the mine expected to have a production capacity of 360,000 tpa; and
    
    increasing silver production from the current levels of approximately 180 tpa
to approximately 500 tpa, primarily from the Sindesar Khurd mine.
  
    
    Aluminum segment:Our aluminum segment projects are being undertaken both at our
subsidiary, BALCO, and by Vedanta Aluminium, a 70.5%-owned subsidiary of Vedanta in
which we have 29.5% ownership interest:
 
    
    In order to enhance aluminum production capacity to 1.0 million tons, BALCO entered
into a memorandum of understanding with the State Government of Chhattisgarh on
August 8, 2007, for a potential investment to build an aluminum smelter with a
capacity of 650,000 tpa at Chhattisgarh, at an estimated cost of Rs. 81,000 million
($1,802.0 million). BALCO has commenced the implementation process of the first
phase of expansion for setting up a 325,000 tpa aluminum smelter at an estimated
cost of Rs 38,000 million ($845.4 million) which uses pre-baked technology from the
Guiyang Aluminium  Magnesium Design & Research Institute, or GAMI, of China. The
first production stream from the 325,000 tpa aluminum smelter is expected in the
fourth quarter of fiscal 2011. In addition, BALCO is building a 1,200 MW coal-based
captive power plant in Chhattisgarh at an estimated cost of Rs. 46,500 million
($1,034.5 million). The first unit of 300 MW is expected to be synchronized by the
third quarter of fiscal 2011 and the remaining three units, progressively by the
second quarter of fiscal 2012.
    
    Vedanta Aluminium has completed the construction of a greenfield 500,000 tpa
aluminum smelter, together with an associated 1,215 MW coal-based captive power
plant, in Jharsuguda in the State of Orissa. The project has been implemented in two
phases of 250,000 tpa each. Phase 1 was completed on November 30, 2009. In Phase 2,
228 pots (out of 304 pots) with the associated carbon and cast house facilities have
been commissioned from March 1, 2010 in stages. The remaining 76 pots have been commissioned in June 2010.
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All nine units of 135 MW have
been commissioned. The smelter production for fiscal 2010 was 269,083 tons including
trial run production whereas net generation of captive power plant was 5,085 MU. As
of March 31, 2010, Vedanta Aluminium had spent an amount of Rs. 223,743 million
($4,977.6 million) on all the projects at Lanjigarh and Jharsuguda.
 
    
    Power segment: We have executed 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
at an estimated cost of Rs. 82,000 million ($1,824.2 million). The first unit was
successfully lighted on June 30, 2010 and commercial operation is expected to
commence in the later part of 2010. The remaining three units will be progressively
commenced by the end of fiscal 2011. We have obtained coal block allocations of
112.2 million tons from the Ministry of Coal to support this facility. These
allocated coal blocks are regarded as non-reserve coal deposits. We have also
received provisional coal linkage of 2.57 mtpa which will be sufficient for the
generation of a substantial portion of the power in the first 600 MW unit. Coal
linkage is a long-term supply contract for the delivery of coal meeting contract
specifications. Following our application to the Ministry of Coal for a coal linkage
to meet the substantial portion of the remaining coal requirement for the balance
three units, Mahanadi Coal Fields Limited on July 14, 2010 issued a
letter of assurance for another 6.94 million tons.Further, in July 2008, Sterlite Energy was awarded the tender for a project to build
a 1,980 MW thermal coal-based commercial power plant at Talwandi Sabo, in the State
of Punjab, India, by the Government of Punjab. The project is expected to be
completed by the second quarter of fiscal 2014.
 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.
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
    
    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 578,411 tpa of zinc ingots and
682,772 tpa of zinc mined metal content in fiscal 2010, representing an increase of 236
% and 218.4%, respectively, by increasing the production of HZLs original two
hydrometallurgical zinc smelters, one lead-zinc smelter and four lead-zinc mines;
    
    increasing BALCOs production from 101,183 tpa of rods and 61,693 tpa of rolled
products in fiscal 2008 to 148,279 tpa of rods and 65,973 tpa of rolled products in
fiscal 2010.
  
    
    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 300,000 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 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 two hydro 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 6.0 million tpa of ore to supply the brownfield zinc smelter
expansion at Chanderiya between 2003 and 2010;
    
    completing our wind power plants at Gujarat and Karnataka with a total power
generation capacity of 123.2 MW between 2007 and July 2008;
    
    commissioning a third concentrator at Rampura Agucha in May 2008 and an 80 MW
captive power plant at Zawar in December 2008 which has lowered our power generation
costs, as we have replaced relatively higher cost purchases from the local SEB with our
own power generation facilities;
    
    increasing the capacity of HZLs Debari smelter from 80,000 tpa to 88,000 tpa
through a project commissioned in April 2008 to improve operational efficiencies; and
    
    commissioning a fourth concentrator at the Rampura Agucha mines and a
hydrometallurgical zinc smelter with a capacity of 210, 000 tpa at Rajpura Dariba in
March 2010.
 Ability and capacity to finance world-class projects
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Strategy
  Continuing focus on asset optimization and reducing the cost of production
  
    
    seeking improvements in operations to maximize throughput, mining and plant
availability to achieve production increases at our existing facilities with minimum
capital expenditures to optimize our asset utilization;
    
    reducing logistics costs through various initiatives;
    
    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;
    
    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, which are long-term supply contracts for delivery of coal for use in power
plants, such as the coal block allocations of 211.0 million tons we received from the
Ministry of Coal for use in BALCOs captive power plants 31.5 million tons we received
from the Madanpur Coal Block for use in HZLs captive power plants and 112.2 million
tons from the Ministry of Coal to support Sterlite Energys plants. These allocated
coal blocks are regarded as non-reserve coal deposits;
    
    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 utilizing
waste gases of the roaster plant at one of our zinc smelters at Chanderiya, a project
from which we have 22,744 voluntary emission reduction credits from July 1, 2005 until March 30, 2007 and received 15,614 carbon
emission reduction credits from March 31, 2007 until February 29, 2008 and 29,514 carbon
emission reduction credits from March 2008 until May 31, 2009. Our two wind power
projects have also been registered for carbon emission reduction credits.
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
    
    increased copper and zinc production volumes from fiscal 2009 to fiscal 2010;
    
    an increase in reserves at HZLs Rampura Agucha mine from 67.9 million tons as of
March 31, 2009 to 75.7 million tons as of March 31, 2010; and
    
    stable cost of production in most of our businesses notwithstanding inflationary
cost pressures across the metals and mining 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
  Seeking further growth and acquisition opportunities that leverage our transactional, project
execution and operational skills and experience
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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 Ore Reserves
    57




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Our Copper Business
 Overview
    Principal Products
 Copper Cathode
  Copper Rods
  Sulphuric Acid
  Phosphoric Acid
  58




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Doré Anodes
  Other By-products
  59




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Our Production Process
  
 Supply of Copper Concentrate
  60




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Tuticorin Smelter
  Tuticorin Acid Plants
  Silvassa and Tuticorin Refineries
  Silvassa and Tuticorin Copper Rod Plants
  Doré Anode Plant
  Precious Metal Refinery
  Delivery to Customers
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Principal Facilities
 Overview
  
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Our Copper Mine
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Proven Reserve
    
    Probable Reserve
    
    Total Proven and Probable ReservesMine
    
    Source
    
    Quantity
    
    Copper Grade
    
    Quantity
    
    Copper Grade
    
    Quantity
    
    Copper Grade(million tons)
    
    (%)
    
    (million tons)
    
    (%)
    
    (million tons)
    
    (%)Mt. Lyell
    
    In-situ ore
    
    
    3.0
    
    
    
    1.34
    
    
    
    1.2
    
    
    
    1.42
    
    
    
    4.2
    
    
    
    1.36Secondary ore
    
    
    
    
    
    
    
    
    
    
    5.2
    
    
    
    1.13
    
    
    
    5.2
    
    
    
    1.13Surface stockpile
    
    
    0.1
    
    
    
    1.25
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    1.25Total
    
    
    
    
    
    
    3.1
    
    
    
    1.34
    
    
    
    6.4
    
    
    
    1.18
    
    
    
    9.5
    
    
    
    1.24
 Our Smelter and Refineries
 Overview
  CapacityFacility
    
    Copper Anode(1)
    
    Copper Cathode(2)
    
    Copper Rods(2)
    
    Sulphuric Acid(3)
    
    Phosphoric Acid(3)
    
    Captive Power(tpa)
    
    (tpa)
    
    (tpa)
    
    (tpa)
    
    (tpa)
    
    (MW)Tuticorin
    
    
    400,000
    
    
    
    205,000
    
    
    
    90,000
    
    
    
    1,300,000
    
    
    
    230,000
    
    
    
    46.5Silvassa
    
    
    
    
    
    
    195,000
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    400,000
    
    
    
    400,000
    
    
    
    240,000
    
    
    
    1,300,000
    
    
    
    230,000
    
    
    
    46.5
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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. Tuticorin
    Silvassa
  Fujairah
  67




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Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    2008
    
    2009
    
    2010(tons)Tuticorin
    
    Copper anode(1)
    
    
    335,652
    
    
    
    313,284
    
    
    
    333,924Sulphuric acid(2)
    
    
    1,027,771
    
    
    
    987,511
    
    
    
    1,036,353Phosphoric acid(2)
    
    
    152,401
    
    
    
    163,607
    
    
    
    205,844Copper cathode(3)
    
    
    162,940
    
    
    
    139,706
    
    
    
    154,177Copper rods(3)
    
    
    81,698
    
    
    
    76,292
    
    
    
    55,893Silvassa
    
    Copper cathode(3)
    
    
    176,354
    
    
    
    173,127
    
    
    
    179,997Copper rods(3)
    
    
    143,060
    
    
    
    143,587
    
    
    
    140,989Total
    
    Copper anode
    
    
    335,652
    
    
    
    313,284
    
    
    
    333,924Copper cathode
    
    
    339,294
    
    
    
    312,833
    
    
    
    334,174Copper rods
    
    
    224,758
    
    
    
    219,879
    
    
    
    196,882Sulphuric acid
    
    
    1,027,771
    
    
    
    987,511
    
    
    
    1,036,353Phosphoric acid
    
    
    152,401
    
    
    
    163,607
    
    
    
    205,844
 
 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.  Year Ended March 31,Mine (Type of Mine)
    
    Product
    
    2008
    
    2009
    
    2010(tons, except for percentages)Mt. Lyell (Underground)
    
    Ore mined
    
    
    2,545,504
    
    
    
    2,558,094
    
    
    
    1,875,969Ore grade
    
    
    1.2
    %
    
    
    1.5
    %
    
    
    1.3
    %Copper recovery
    
    
    90.9
    %
    
    
    90.2
    %
    
    
    91.1
    %Copper concentrate
    
    
    99,388
    
    
    
    98,761
    
    
    
    84,227Copper in concentrate
    
    
    27,952
    
    
    
    27,421
    
    
    
    23,777
 Principal Raw Materials
 Overview
  Copper Concentrate
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Rock Phosphate
  Power
  Distribution, Logistics and Transport
   Sales and Marketing
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Market Share and Competition
   Projects and Developments
  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;
    
    benefiting from low-cost production available from one of its
hydrometallurgical zinc smelters with capacity of 210,000 tpa at Rajpura Dariba
smelting complex, which was commissioned in March 2010;
    
    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;
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
    
    reducing power costs;
    
    reducing the size of its workforce including through a voluntary retirement
plan; and
    
    increasing productivity and upgrading existing technology.
     Principal Products
 Zinc
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Lead
   Sulphuric Acid
  Silver
  72




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Our Production Process
  
 Lead-Zinc Mines
  73




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Zinc Smelters
    Lead Smelters
    Delivery to Customers
  74




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Principal Facilities
 Overview
  
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Mines
 Rampura Agucha
    78




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Rajpura Dariba
      80




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Zawar
      82




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Summary of Mine Reserves
  Proven Reserve
    
    Probable Reserve
    
    Total Proven and Probable ReservesMine
    
    Quantity
    
    ZincGrade
    
    LeadGrade
    
    SilverGrade
    
    Quantity
    
    ZincGrade
    
    LeadGrade
    
    SilverGrade
    
    Quantity
    
    ZincGrade
    
    LeadGrade
    
    SilverGrade(million tons)
    
    (%)
    
    (%)
    
    (g/t Ag)
    
    (milliontons)
    
    (%)
    
    (%)
    
    (g/t Ag)
    
    (million tons)
    
    (%)
    
    (%)
    
    (g/t Ag)Rampura Agucha
    
    
    10.90
    
    
    
    13.50
    
    
    
    2.17
    
    
    
    70
    
    
    
    64.81
    
    
    
    14.36
    
    
    
    1.96
    
    
    
    66
    
    
    
    75.71
    
    
    
    14.23
    
    
    
    1.99
    
    
    
    61RajpuraDariba
    
    
    3.83
    
    
    
    5.59
    
    
    
    0.94
    
    
    
    98
    
    
    
    3.96
    
    
    
    6.90
    
    
    
    1.84
    
    
    
    64
    
    
    
    7.79
    
    
    
    6.25
    
    
    
    1.40
    
    
    
    81Sindesar Khurd
    
    
    1.59
    
    
    
    5.63
    
    
    
    2.70
    
    
    
    129
    
    
    
    9.15
    
    
    
    5.42
    
    
    
    2.99
    
    
    
    168
    
    
    
    10.74
    
    
    
    5.45
    
    
    
    2.95
    
    
    
    162Zawar
    
    
    3.74
    
    
    
    4.05
    
    
    
    1.96
    
    
    
    37
    
    
    
    4.11
    
    
    
    3.31
    
    
    
    1.94
    
    
    
    35
    
    
    
    7.85
    
    
    
    3.66
    
    
    
    1.95
    
    
    
    36Total
    
    
    20.06
    
    
    
    9.60
    
    
    
    1.94
    
    
    
    74
    
    
    
    82.03
    
    
    
    12.45
    
    
    
    2.07
    
    
    
    76
    
    
    
    102.09
    
    
    
    11.89
    
    
    
    2.04
    
    
    
    76
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Smelters
 Overview
  CapacityFacility
    
    Zinc
    
    Lead
    
    Silver
    
    Sulphuric Acid
    
    Captive Power(tpa)
    
    (tpa)
    
    (tpa)
    
    (tpa)
    
    (MW)Chanderiya
    
    
    525,000
    
    
    
    85,000
    
    
    
    180
    
    
    
    828,500
    
    
    
    248.5Debari
    
    
    88,000
    
    
    
    
    
    
    
    
    
    
    
    419,000
    
    
    
    14.5Vizag
    
    
    56,000
    
    
    
    
    
    
    
    
    
    
    
    91,000
    
    
    
    Zawar
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86.0Dariba
    
    
    210,000
    
    
    
    
    
    
    
    
    
    
    
    306,000
    
    
    
    Total
    
    
    879,000
    
    
    
    85,000
    
    
    
    180
    
    
    
    1,644,500
    
    
    
    349.0
 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;
    
    associated 154 MW and 80 MW coal-based captive power plants commissioned in
May 2005 and April 2008, respectively;
    
    a 14.5 MW fuel based captive power plant transferred from Debari in March
2009 and which was originally commissioned at Debari in March 2003;
    
    two sulphuric acid plants with a total capacity of 828,500 tpa of sulphuric
acid; and
    
    a silver refinery with a capacity of 180 tpa silver ingots.
  84




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Debari
  Vizag
  Haridwar
  Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    2008
    
    2009
    
    2010(tons, except for silver which is in kgs)ChanderiyaISP(TM) pyrometallurgical lead-zinc smelter
    
    Zinc
    
    
    86,080
    
    
    
    79,569
    
    
    
    93,480Lead(2)
    
    
    16,265
    
    
    
    18,938
    
    
    
    21,550First hydrometallurgical zinc smelter(1)
    
    Zinc
    
    
    165,391
    
    
    
    181,377
    
    
    
    175,602Second hydrometallurgical zinc smelter
    
    Zinc
    
    
    42,070
    
    
    
    152,511
    
    
    
    167,827Ausmelt(TM) lead smelter
    
    Lead
    
    
    41,982
    
    
    
    41,385
    
    
    
    42,769Silver refinery
    
    Silver
    
    
    80,405
    
    
    
    105,055
    
    
    
    138,550Sulphuric acid plants
    
    Sulphuric acid
    
    
    576,493
    
    
    
    611,871
    
    
    
    641,313DebariHydrometallurgical zinc smelter
    
    Zinc
    
    
    78,511
    
    
    
    85,191
    
    
    
    87,318Sulphuric acid plant
    
    Sulphuric acid
    
    
    105,485
    
    
    
    267,463
    
    
    
    290,188VizagHydrometallurgical zinc smelter
    
    Zinc
    
    
    54,271
    
    
    
    53,076
    
    
    
    54,184
 85




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##### Table of Contents



Year Ended March 31,Facility
    
    Product
    
    2008
    
    2009
    
    2010(tons, except for silver which is in kgs)Sulphuric acid plant
    
    Sulphuric acid
    
    
    71,989
    
    
    
    74,935
    
    
    
    74,945Total
    
    Zinc
    
    
    426,323
    
    
    
    551,724
    
    
    
    578,411Lead(2)
    
    
    58,247
    
    
    
    60,232
    
    
    
    64,319Silver
    
    
    80,405
    
    
    
    105,055
    
    
    
    138,550Sulphuric acid
    
    
    753,966
    
    
    
    954,269
    
    
    
    1,006,446
 
 Notes:(1)
    
    Includes production capitalized in fiscal 2008 of 1,154 tons.(2)
    
    Excludes lead containing a high content of silver (High Silver lead) produced from the
pyrometallurgical lead-zinc smelter for captive use, which was 5,319 tons, 5,009 tons and
7,308 tons in fiscal 2008, 2009 and 2010, respectively.  Year Ended March 31,Mine (Type of Mine)
    
    Product
    
    2008
    
    2009
    
    2010(tons, except percentages)Rampura Agucha (Open-pit)
    
    Ore mined
    
    
    4,068,215
    
    
    
    4,953,110
    
    
    
    5,135,625Ore grade  Zinc
    
    
    13.0
    %
    
    
    13.4
    %
    
    
    12.9
    %Lead
    
    
    1.9
    %
    
    
    1.9
    %
    
    
    1.8
    %Recovery  Zinc
    
    
    92.2
    %
    
    
    92.0
    %
    
    
    92.1
    %Lead
    
    
    61.2
    %
    
    
    60.6
    %
    
    
    59.3
    %Zinc concentrate
    
    
    914,917
    
    
    
    1,114,048
    
    
    
    1,155,849Lead concentrate
    
    
    74,874
    
    
    
    92,151
    
    
    
    89,205Rajpura Dariba/Sindesar Khurd (Underground)
    
    Ore mined
    
    
    813,249
    
    
    
    783,288
    
    
    
    945,997Ore grade  Zinc
    
    
    4.9
    %
    
    
    5.8
    %
    
    
    5.4
    %Lead
    
    
    2.1
    %
    
    
    2.1
    %
    
    
    1.9
    %Recovery  Zinc
    
    
    81.4
    %
    
    
    81.8
    %
    
    
    82.2
    %Lead
    
    
    71.6
    %
    
    
    74.3
    %
    
    
    76.2
    %Zinc concentrate
    
    
    66,235
    
    
    
    59,672
    
    
    
    74,872Lead concentrate
    
    
    23,706
    
    
    
    17,745
    
    
    
    20,828Bulk concentrate(1)
    
    
    
    
    
    
    8,687
    
    
    
    15,535Zawar (Underground)
    
    Ore mined
    
    
    901,635
    
    
    
    944,300
    
    
    
    1,020,250Ore grade  Zinc
    
    
    3.7
    %
    
    
    3.8
    %
    
    
    3.0
    %Lead
    
    
    2.4
    %
    
    
    2.0
    %
    
    
    1.9
    %Recovery  Zinc
    
    
    89.0
    %
    
    
    89.4
    %
    
    
    90.8
    %Lead
    
    
    85.2
    %
    
    
    87.3
    %
    
    
    90.8
    %Zinc concentrate
    
    
    54,676
    
    
    
    29,257
    
    
    
    Lead concentrate
    
    
    27,175
    
    
    
    15,049
    
    
    
    Bulk concentrate(1)
    
    
    
    
    
    
    29,924
    
    
    
    73,048Total
    
    Ore mined
    
    
    5,783,099
    
    
    
    6,680,698
    
    
    
    7,101,872Zinc concentrate
    
    
    1,035,828
    
    
    
    1,202,977
    
    
    
    1,230,721Lead concentrate
    
    
    125,755
    
    
    
    124,945
    
    
    
    110,033Bulk concentrate(1)
    
    
    
    
    
    
    38,611
    
    
    
    88,583
 
 Note:(1)
    
    Bulk concentrate is concentrate that contains both zinc and lead. Principal Raw Materials
  86




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Zinc and Lead Concentrates
  Power
   Metallurgical Coke
  Distribution, Logistics and Transport
  Sales and Marketing
    Projects and Developments
  87




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
    
    establishing one brownfield lead smelter which is expected to increase the
production capacity of lead by approximately 100,000 tons at HZLs Rajpura Dariba
complex in the State of Rajasthan, which is expected to be completed by mid-2011;
    
    setting up an associated captive power plant with a capacity of 160 MW at
Rajpura Dariba, which is expected to be completed by mid-2011;
    
    expanding ore production capacity at the Sindesar Khurd mine from
approximately 0.3 million tpa to 1.5 million tpa, which is scheduled to be
progressively completed from mid-2011. The ramp portal connecting the Sindesar Khurd
mine surface to the ore body has been completed and resources have been mobilized to
achieve accelerated mine development;
    
    HZL is expected to start mining activity at the Kayar mine progressively
from mid-2011, with the mine expected to have a production capacity of 360,000 tpa;
and
    
    increasing silver production from the current levels of approximately 180
tpa to approximately 500 tpa, primarily from the Sindesar Khurd mine.
  Market Share and Competition
    Our Aluminum Business
 Overview
   88




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Principal Products
 Primary Aluminum
  Rolled Products
  By-products
  89




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Production Process
  
 
 *
    
    In response to recent global economic conditions and a decline in commodity prices, starting in
February 2009, BALCO suspended part of its operations at the 100,000 tpa aluminum smelter.
Operations at this aluminum smelter ceased on June 5, 2009. At this aluminum smelter, alumina from the refinery was dissolved
in an electrolytic bath in a large carbon or graphite lined steel pot. An electric current was
passed through it to produce aluminum metal using VSS technology. 90




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##### Table of Contents



Bauxite Mines
  Alumina Refinery
  Additional Supply of Alumina
  Aluminum Smelters
   Fabrication Facility
  91




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##### Table of Contents



Delivery to Customers
  Principal Facilities
 Overview
  
 92




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Bauxite Mines
 Chhattisgarh Mines
    93




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94




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##### Table of Contents



Summary of Bauxite Mine Reserves
  Proven Reserves
    
    Probable Reserves
    
    Total Proven and Probable ReservesMine
    
    Quantity
    
    Oxide
    
    Quantity
    
    Oxide
    
    Quantity
    
    Oxide(million tons)
    
    (%)
    
    (million tons)
    
    (%)
    
    (million tons)
    
    (%)Mainpat
    
    
    3.0
    
    
    
    46.4
    
    
    
    
    
    
    
    
    
    
    
    3.0
    
    
    
    46.4Bodai-Daldali
    
    
    3.1
    
    
    
    46.1
    
    
    
    0.4
    
    
    
    46.1
    
    
    
    3.5
    
    
    
    46.1Total
    
    
    6.1
    
    
    
    46.2
    
    
    
    0.4
    
    
    
    46.1
    
    
    
    6.5
    
    
    
    46.2
 Korba Facility
 Overview
  CapacityFacility
    
    Alumina
    
    Aluminum
    
    Captive Power(tpa)
    
    (tpa)
    
    (MW)Korba
    
    
    200,000
    
    
    
    245,000
    
    
    
    810
 Refinery
  Smelters
  95




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Fabrication Facility
  Cast House
  Sheet Rolling Shop
  Captive Power Plants
  Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    2008
    
    2009
    
    2010(tons)Korba
    
    Alumina(1)
    
    
    217,185
    
    
    
    197,947
    
    
    
    42,893Ingots
    
    
    195,795
    
    
    
    172,263
    
    
    
    54,173Rods
    
    
    101,183
    
    
    
    127,120
    
    
    
    148,279Rolled products
    
    
    61,693
    
    
    
    57,399
    
    
    
    65,973Total(2)
    
    
    
    
    358,671
    
    
    
    356,782
    
    
    
    268,425
 
 Notes:(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)
    
    Reflects total of ingots, rods and rolled products. 96




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##### Table of Contents



Year Ended March 31,Mine (Type of Mine)
    
    Product
    
    2008
    
    
    2009
    
    
    2010(tons, except for percentages)Mainpat (Open-pit)
    
    Bauxite ore mined
    
    
    628,925
    
    
    
    571,422
    
    
    
    486,429Ore grade
    
    
    45.2
    %
    
    
    44.7
    %
    
    
    46.4
    %Bodai-Daldali (Open-pit)
    
    Bauxite ore mined
    
    
    520,109
    
    
    
    300,250
    
    
    
    300,000Ore grade
    
    
    49.5
    %
    
    
    49.1
    %
    
    
    46.1
    %Total
    
    
    
    
    1,149,034
    
    
    
    871,672
    
    
    
    786,429
 Principal Raw Materials
  Bauxite
  Alumina
  Power
  Water
  97




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Carbon
   Caustic Soda
  Other Raw Materials
  Distribution, Logistics and Transport
  Sales and Marketing
     98




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Projects and Developments
    Market Share and Competition
   Vedanta Aluminium
 Overview
    99




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##### Table of Contents



Projects and Developments
 Lanjigarh Alumina Refinery
     res judicata
 100




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##### Table of Contents



Jharsuguda Aluminum Smelter
 500,000 tpa Aluminum Smelter
  1,250,000 tpa Aluminum Smelter
    Our Commercial Power Generation Business
 Overview
  101




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Our Experience with Captive Power Plants
   Fiscal Year Commissioned
    
    Capacity
    
    Location
    
    Fuel Used(MW)1988(1)
    
    
    270
    
    
    Korba
    
    
    Thermal coal1997
    
    
    24
    
    
    Tuticorin
    
    
    Liquid fuel2003
    
    
    14.5
    
    
    Debari
    
    
    Liquid fuel2003
    
    
    6
    
    
    Zawar
    
    
    Liquid fuel2003
    
    
    14.5
    
    
    Chanderiya
    (2)
    
    Liquid fuel2005
    
    
    22.5
    
    
    Tuticorin
    
    
    Liquid fuel2005
    
    
    154
    
    
    Chanderiya
    
    
    Thermal coal2006
    
    
    540
    
    
    Korba
    
    
    Thermal coal2007
    
    
    75
    (3)
    
    Lanjigarh
    
    
    Thermal coal2007
    
    
    107.2
    
    
    Gujarat and Karnataka
    
    
    Wind
    (4)2008
    
    
    80
    
    
    Chanderiya
    
    
    Thermal coal2009
    
    
    80
    
    
    Zawar
    
    
    Thermal coal2009
    
    
    16
    
    
    Gujarat and Karnataka
    
    
    Wind
    (4)2009
    
    
    675
    (3)
    
    Jharsuguda
    
    
    Thermal coal2010
    
    
    540
    (3)
    
    Jharsuguda
    
    
    Thermal coal2,618.7
 
 Notes:(1)
    
    Commissioned by BALCO prior to our acquisition of BALCO in 2001 which is not being used for
captive purposes at present due to the closure of operations at the 100,000 tpa aluminum
smelter.(2)
    
    Transferred from Debari to Chanderiya in March 2009.(3)
    
    Captive power plant of Vedanta Aluminium, our 29.5%-owned subsidiary that is 70.5%-owned and
controlled by Vedanta. The Lanjigarh captive power plant is expandable to 90 MW, subject to
government approvals.(4)
    
    Our wind power plants are not for captive use.  
    
    HZLs 160 MW coal-based captive power plant at the Rajpura Dariba mines which is
currently under construction and which is expected to be commissioned in mid-2011;
    
    SIILs 160 MW coal-based thermal captive power plant at Tuticorin which is currently
under construction and which is expected to be commissioned in mid-2011;
    
    BALCOs 1,200 MW thermal coal-based captive power plant in the State of Chhattisgarh
which is expected to be completed by the second quarter of 2012;
 102




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
    
    Sterlite Energys 2,400 MW thermal coal-based power plant in Jharsuguda in the State
of Orissa. The first unit was lighted on June 30, 2010 and commercial operation is
expected to commence in September 2010. The remaining three units are expected to be
progressively commenced by the end of fiscal 2011; and
    
    Sterlite Energys 1,980 MW thermal coal-based commercial power plant at Talwandi
Sabo, in the State of Punjab, India, is expected to be
completed by the second quarter of fiscal 2014.
  Our Plans for Commercial Power Generation
 Sterlite Energy  Orissa
    103




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##### Table of Contents



(i)
    
    a fixed capacity charge which shall be determined by the OERC as per the terms
and conditions of tariff issued from time to time and will be related to target
availability. Recovery of fixed capacity charges below the level of target availability
shall be done on a pro rata basis and calculated proportionately to the capacity
requisitioned to GridCo; and(ii)
    
    a variable energy charge, which shall comprise fuel cost and shall be
calculated on the basis of the ex-bus energy scheduled to be sent out from the
generating station. The energy charges shall be calculated as per the methodology
prescribed by the OERC from time to time.
   Sterlite Energy  Talwandi Sabo
  104




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Other Opportunities in Power
    Risks in Commercial Power Business
  Exploration and Development Activities
   105




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##### Table of Contents



Options to Increase Interests in HZL and BALCO
 Call Options Over Shares in HZL
        106




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##### Table of Contents



Call Option Over Shares in BALCO
    
    
    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) ($1.1 per share) together with
interest at a rate of 14.0% 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.
   107




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##### Table of Contents



Employees
  Company
    
    Location
    
    Primary Company Function
    
    Total EmployeesCopperSterlite Industries (India) Limited
    
    India
    
    Copper smelting and refining
    
    1,280Copper Mines of Tasmania Pty Ltd.
    
    Australia
    
    Copper mining
    
    97Fujairah Gold FZE
    
    UAE
    
    Precious metal refinery
    
    46ZincHindustan Zinc Limited
    
    India
    
    Zinc and lead production
    
    6,986AluminumBharat Aluminium Company Limited
    
    India
    
    Aluminum production
    
    4,973Power Sterlite Energy Limited
    
    India
    
    Commercial power generation
    
    155Talwandi Sabo Power Limited
    
    India
    
    Commercial power generation
    
    22
   108




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##### Table of Contents



Insurance
   Regulatory Matters
 Mining Laws
   Grant of a Mining Lease
  109




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##### Table of Contents



Protection of the Environment
  Labor Conditions
  Royalties
  110




---



##### Table of Contents



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) and the Forest Conservation Rules, 2003
  Hazardous Wastes (Management and Handling) Rules, 1989 (Hazardous Wastes Rules)
  Water (Prevention and Control of Pollution) Act, 1974 (Water Act)
  111




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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)
   112




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##### Table of Contents



Employee State Insurance Act, 1948 (ESIA)
  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)
  113




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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)
  114




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##### Table of Contents



C.
    
    Corporate Structure
  
 115




---



##### Table of Contents



*
    
    The corporate structure does not include our non-operating subsidiaries, Sterlite Infra
Limited (formally known as Sterlite Paper Limited), Thalanga Copper Mines Pty. Ltd., and
Sterlite (USA), Inc.**
    
    MALCO was delisted from the NSE and BSE on June 19, 2009.#
    
    Vedanta Resources Holdings Limited owns 100 % of Vedanta Resources Finance Limited, or VRFL,
and in turn VRFL holds 100% in Vedanta Resources Cyprus Limited, or VRCL. VRCL own 100% of
Welter Trading Limited.
 
 Notes:(1)
    
    Volcan is owned and controlled by the Anil Agarwal Discretionary Trust. Onclave, is the
trustee of the Anil Agarwal Discretionary Trust and controls all voting and investment
decisions of the Anil Agarwal Discretionary Trust. As a result, shares beneficially owned by
Volcan may be deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in
turn, by Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the
Agarwal family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman
of Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary
Trust, may be deemed to have deemed beneficial ownership of shares that are beneficially owned
by the Anil Agarwal Discretionary Trust.(2)
    
    SOVL has exercised the second call option to acquire the Government of Indias remaining
ownership interest in HZL although the exercise is currently subject to dispute. 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.  
    
    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 57.1% of our issued share capital
and has management control of us. Vedantas 57.1% ownership interest in us is equal to
the sum of Twin Stars 54.0% ownership interest in us plus 94.5% of the 3.1% ownership
interest in us of MALCO (reflecting Vedantas 94.5% 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, or LIC, and other institutional
and public shareholders (42.9%). 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.
 116




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
    
    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. SOVL has exercised the second call option
to acquire the Government of Indias remaining ownership interest in HZL although the
exercise is currently subject to dispute. 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 Tuticorin, State of 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 Anil Agarwal Discretionary Trust. Onclave is
the trustee of the Anil Agarwal Discretionary Trust and controls all voting and
investment decisions of the Anil Agarwal Discretionary Trust. Mr. Anil Agarwal, the
Executive Chairman of Vedanta and our Non-Executive Chairman, controls the Anil Agarwal
Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust, Onclave and
Mr. Anil Agarwal are parties to a relationship agreement that regulates the ongoing
relationship among them. Volcan owns approximately 60.5% of the issued ordinary share
capital of Vedanta.
    
    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. Volcans ownership interest in Vedanta is 60.5%
as of March 31, 2010. 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 was delisted from the NSE and
BSE on June 19, 2009. Vedanta has management control of MALCO.
    
    We also have an associate company, Vedanta Aluminium, which is incorporated in the
State of Maharashtra, India, and is 70.5%-owned by Vedanta through Twin Star and Welter
Trading Limited, following a Rs. 4,421 million investment in March 2005. In September
2008, Twin Star sold 25.0% of its interest in Vedanta Aluminium to Welter Trading Limited, a wholly-owned subsidiary
of Twin Star. We own the remaining 29.5% minority interest in Vedanta Aluminium. Vedanta
Aluminium is part of Vedantas consolidated group of companies but is not part of our
consolidated group of companies. See  B. Business Overview  Our Business  Overview.
 117




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##### Table of Contents



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. Our consolidated financial
statements and the financial information discussed below, have been prepared in accordance with
IFRS. Since these are our first consolidated financial statements prepared in accordance with IFRS,
pursuant to the transitional relief granted by the SEC in respect of the first time adoption of
IFRS, the following is limited to a discussion of our financial condition and results of operations
for the years ended March 31, 2010 and 2009 and no comparative data for the year ended March 31,
2008 has been included.
 Overview
    
    
    the revenue for each of our business segments as a percentage of our revenue on a
consolidated basis;
    
    the operating profit for each of our business segments as a percentage of our
operating profit on a consolidated basis; and
    
    the segment profit, calculated by adjusting operating income for depreciation and
amortization for each of our business segments as a percentage of our segment profit on
a consolidated basis.
 118




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##### Table of Contents



Year Ended March 31,2009
    
    2010(In percentages)Revenue:Copper
    
    
    54.9
    
    
    
    53.3Zinc
    
    
    26.3
    
    
    
    32.4Aluminum
    
    
    18.5
    
    
    
    11.6Power
    
    
    0.3
    
    
    
    2.7Others
    
    
    
    
    
    
    Total
    
    
    100.0
    
    
    
    100.0Operating Profit:Copper
    
    
    25.8
    
    
    
    5.8Zinc
    
    
    58.4
    
    
    
    81.9Aluminum
    
    
    15.1
    
    
    
    5.9Power
    
    
    0.7
    
    
    
    6.4Others
    
    
    
    
    
    
    Total
    
    
    100.0
    
    
    
    100.0Segment Profit(1) :Copper
    
    
    26.0
    
    
    
    8.3Zinc
    
    
    54.4
    
    
    
    76.1Aluminum
    
    
    17.8
    
    
    
    8.9Power
    
    
    1.8
    
    
    
    6.7Others
    
    
    
    
    
    
    Total
    
    
    100.0
    
    
    
    100.0
 
 Note:(1)
    
    Segment profit is calculated by adjusting operating profit for depreciation and amortization.
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 IFRS. 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 profit to segment profit for the periods presented: Year Ended March 31,2009
    
    
    2010
    
    
    2010Copper:Operating profit
    
    Rs.
    11,121
    
    
    Rs.
    3,138
    
    
    $
    69.8Plus:Depreciation and amortization
    
    
    2,191
    
    
    
    1,982
    
    
    
    44.1Segment profit
    
    Rs.
    13,312
    
    
    Rs.
    5,120
    
    
    $
    113.9Zinc:Operating profit
    
    Rs.
    25,158
    
    
    Rs.
    44,071
    
    
    $
    980.4Plus:Depreciation and amortization
    
    
    2,615
    
    
    
    3,053
    
    
    
    68.0Segment profit
    
    Rs.
    27,773
    
    
    Rs.
    47,124
    
    
    $
    1,048.4Aluminum:Operating profit
    
    Rs.
    6,494
    
    
    Rs.
    3,189
    
    
    $
    71.0Plus:Depreciation and amortization
    
    
    2,609
    
    
    
    2,310
    
    
    
    51.4Segment profit
    
    Rs.
    9,103
    
    
    Rs.
    5,499
    
    
    $
    122.3Power:Operating profit
    
    Rs.
    323
    
    
    Rs.
    3,445
    
    
    $
    76.6Plus:Depreciation and amortization
    
    
    608
    
    
    
    715
    
    
    
    15.9Segment profit
    
    Rs.
    931
    
    
    Rs.
    4,160
    
    
    $
    92.5Others:Operating profit
    
    Rs.
    (6
    )
    
    Rs.
    (9
    )
    
    $
    (0.2
    )Plus:Depreciation and amortization
    
    
    1
    
    
    
    1
    
    
    
    Segment profit
    
    Rs.
    (5
    )
    
    Rs.
    (8
    )
    
    $
    (0.2
    )
 119




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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, a copper rod
plant, a doré anode plant and two captive power plants 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, and a
precious metal refinery in Fujairah in the UAE. Our primary products are copper
cathodes and copper rods. Revenue from our copper business for fiscal 2010 had
increased from Rs. 116,525 million to Rs. 130,608 million ($2,905.6 million)
representing a increase of 12.1% and a decrease in operating profit from Rs.11,121
million to Rs. 3,138 million ($69.8 million) representing a
decrease of 71.8%.
    
    Zinc.Our zinc business is owned and operated by HZL, Indias leading zinc producer
with a 74.0% market share by volume of the Indian zinc market in fiscal 2010, 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 four lead-zinc mines,
four hydrometallurgical zinc smelters, one lead smelter, one lead zinc smelter, four
sulphuric acid plants, a silver refinery and five captive power plants in the State of
Rajasthan in Northwest India, one hydrometallurgical zinc smelter and a sulphuric acid
plant in the state of Andhra Pradesh in Southeast India, and a zinc ingot melting and
casting plant at Haridwar in the State of Uttarakhand in North India. HZLs primary
products are zinc and lead ingots. Revenue and operating profit of our zinc business
have increased from Rs. 55,724 million and Rs. 25,158 million in fiscal 2009 to
Rs. 79,434 million ($1,767.2 million) and Rs. 44,071 million ($980.4 million) in
fiscal 2010, representing increases of 42.5% and 75.2%, 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 and two captive power
plants. Operations at the older 100,000 tpa aluminum smelter was partially suspended
from February 2009 and ceased on June 5, 2009. Following the shut down of the 100,000
tpa aluminum smelter, the 270 MW captive power is now used for commercial purpose as
power generated by the power plant is sold to third parties. BALCOs primary products
are aluminum ingots, rods and rolled products. Revenue and operating profit of our
aluminum business have decreased from Rs. 39,170 million and Rs. 6,494 million in
fiscal 2009 to Rs. 28,289 million ($629.3 million) and Rs. 3,189 million ($70.9
million) in fiscal 2010, representing decreases of 27.8% and 50.9%, respectively.
    
    Power.Our commercial power generation business includes the 123.2 MW of wind power
plants commissioned by HZL and a 270 MW power plant at BALCOs Korba facility which was
previously used for captive use before the shut down of the 100,000 tpa aluminum smelter at
Korba on June 5, 2009. Our power business is still under
development. Sterlite Energys first power project, a 2,400 MW
thermal coal-based power facility (comprising four units of 600 MW each) in Jharsuguda
in the State of Orissa, is expected to be progressively commissioned in the second
quarter of fiscal 2011, with full completion anticipated by the fourth quarter of
fiscal 2011. We have obtained coal block allocations of 112.2 million tons from the
Ministry of Coal of the Government of India to support this facility.
 120




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These allocated
coal blocks are regarded as non-reserve coal deposits. Further, in July 2008, Sterlite
Energy was awarded the tender for a project to build a 1,980 MW thermal coal-based
commercial power plant at Talwandi Sabo, in the State of Punjab, India, by the
Government of Punjab. The project is expected to be completed by second quarter of
2014. On October 30, 2009, Sterlite Energy filed an initial offering document with the
Securities and Exchange Board of India for a proposed initial public offering of its
equity shares for an estimated offering size of Rs. 51,000 million ($1,134.6 million).
Revenue and operating profit of our Power business have increased from Rs. 773 million
and Rs. 323 million in fiscal 2009 to Rs. 6,572 million ($146.2 million) and Rs.
3,445 million ($76.6 million) in fiscal 2010.
    
    Others.Our other business segment primarily includes our equity investment in
Vedanta Aluminium. 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
 Asarco Acquisition
    121




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Bonus Issue and Split
  Vizag
  122




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##### Table of Contents



Central Excise
  Tuticorin
Smelter  Madras High Court Order
  Factors Affecting Results of Operations
  Metal Prices and Copper TcRc
 Overview
   Copper
  123




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##### Table of Contents



Year Ended March 31,2008
    
    2009
    
    2010(in US cents per pound)Copper TcRc
    
    
    15.7¢
    
    
    
    11.7¢
    
    
    
    13.6¢
  Year Ended March 31,2008
    
    2009
    
    2010(in US dollars per ton)Copper LME
    
    $
    7,588
    
    
    $
    5,885
    
    
    $
    6,112
 Zinc and Aluminum
  Year Ended March 31,2008
    
    2009
    
    2010(in US dollars per ton)Zinc LME
    
    $
    2,992
    
    
    $
    1,563
    
    
    $
    1,936Aluminum LME
    
    
    2,620
    
    
    
    2,234
    
    
    
    1,868
 India Market Premium
  124




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Hedging
  Cost of Production
      125




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##### Table of Contents



Year Ended March 31,2009
    
    2010(in US dollars per ton, except as indicated)Treatment charge and refining charge (TcRc):(1)
    
    
    11.7
    ¢/lb
    
    
    13.6
    ¢/lbCost of production:(2)Copper smelting and refining(3)
    
    
    3.1
    ¢/lb
    
    
    10.4
    ¢/lbZinc(4)
    
    $
    710
    
    
    $
    850Aluminum(5)
    
    
    1,700
    
    
    
    1,542
 
 Notes:(1)
    
    Represents our average realized TcRc for the period.(2)
    
    Cost of production is not a recognized measure under IFRS. 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 IFRS. 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. 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 31,2009
    
    
    2010(in millions, except Production output and Cost of production)Copper:Segment sales
    
    Rs.
    116,670
    
    
    Rs.
    130,608Less:Segment profit
    
    
    (13,312
    )
    
    
    (5,120
    )Segment cost
    
    
    103,358
    
    
    
    125,488Less:Purchased concentrate/rock
    
    
    (94,873
    )
    
    
    (114,923
    )By-product/free copper net sale
    
    
    (4,337
    )
    
    
    (1,981
    )Cost for downstream products
    
    
    (1,613
    )
    
    
    (1,543
    )Others, net
    
    
    (1,556
    )
    
    
    (3,386
    )Total expenses
    
    Rs.
    979
    
    
    Rs.
    3,655Production output (in tons)
    
    
    312,833
    
    
    
    334,202Cost of production(a)
    
    
    3.1
    ¢/lb
    
    
    10.46
    ¢/lbZinc:Segment sales
    
    Rs.
    55,724
    
    
    Rs.
    79,434Less:Segment profit
    
    
    (27,773
    )
    
    
    (47,124
    )Segment cost
    
    
    27,951
    
    
    
    32,310Less:Cost of tolling including raw material cost
    
    
    (409
    )
    
    
    Cost of intermediary product sold
    
    
    (1,301
    )
    
    
    (3,060
    )
 126




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Year Ended March 31,2009
    
    
    2010(in millions, except Production output and Cost of production)By-product revenue
    
    
    (4,848
    )
    
    
    (1,871
    )Cost of lead metal sold
    
    
    (2,079
    )
    
    
    (2,652
    )Others, net
    
    
    (1,312
    )
    
    
    (1,406
    )Total expenses
    
    Rs.
    18,002
    
    
    Rs.
    23,321Production output (in tons)
    
    
    551,724
    
    
    
    578,411Cost of production (per ton)(a)
    
    $
    710
    
    
    $
    850Aluminum:Segment sales
    
    Rs.
    39,336
    
    
    Rs.
    28,367Less:Segment profit
    
    
    (9,103
    )
    
    
    (5,499
    )Segment cost
    
    
    30,233
    
    
    
    22,868Less: Cost of intermediary product sold
    
    
    
    
    
    
    (304
    )By-product revenue
    
    
    (328
    )
    
    
    (126
    )Cost for downstream products
    
    
    (1,966
    )
    
    
    (1,767
    )Others, net
    
    
    (314
    )
    
    
    (1,455
    )Total expenses
    
    Rs.
    27,625
    
    
    Rs.
    19,216Production output (hot metal) (in tons)
    
    
    355,733
    
    
    
    262,760Cost of production (per ton)(a)
    
    $
    1,700
    
    
    $
    1,542
 
 (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, 2009 and 2010 was Rs. 45.91 per
$1.00 and Rs. 47.42 per $1.00 respectively.  (3)
    
    Cost of production relates only to our custom smelting and refining operations and consists
of the cost of converting copper concentrate into copper cathodes, including the cost of
freight of copper anodes from Tuticorin to Silvassa and excluding 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)
    
    Our zinc operations are fully integrated. As a result, cost of production of zinc consists of
the total direct cost of producing zinc from the mines and smelters, including extracting ore
from the mines, converting the ore into zinc concentrate and smelting to produce zinc ingots.
Our zinc segment includes lead and silver. Silver is a by-product of lead and accordingly,
there are no additional processing costs for silver. Revenue earned from the sale of silver is
reported as profit in this segment. 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. HZLs cost of production in the last month of fiscal 2010, or its exit
cost of production for fiscal 2010, was $792 per ton.(5)
    
    Cost of production of aluminum for BALCOs 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. 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 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. In response to recent global
economic conditions and a decline in commodity prices, starting in February 2009, BALCO
suspended part of its operations at its 100,000 tpa aluminum smelter and ceased operations at
this smelter on June 5, 2009. As the 100,000 tpa aluminum smelter had a higher cost of
production than the newer (and remaining) 245,000 tpa smelter, and partly as a result of efforts
by BALCO to decrease its operating costs in response to the recent global economic conditions,
BALCOs exit cost of production for fiscal 2010 was $1,615 per ton. 127




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Production Volume and Mix
  Year Ended March 31,Product
    
    2008
    
    2009
    
    2010(tons)Copper
    
    Copper cathode(1)
    
    
    339,294
    
    
    
    312,833
    
    
    
    334,202Copper rods
    
    
    224,758
    
    
    
    219,879
    
    
    
    196,882Zinc
    
    Zinc(2)
    
    
    426,323
    
    
    
    551,724
    
    
    
    578,411Lead
    
    
    58,247
    
    
    
    60,323
    
    
    
    64,319Aluminum
    
    Ingots
    
    
    195,795
    
    
    
    172,263
    
    
    
    54,173Rods
    
    
    101,183
    
    
    
    127,120
    
    
    
    148,279Rolled Products
    
    
    61,693
    
    
    
    57,399
    
    
    
    65,973Total Aluminum
    
    
    358,671
    
    
    
    356,782
    
    
    
    268,425
 
 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 2008 of 1,154 tons.   Government Policy
 India Customs Duties
  January 22, 2007
    
    April 29, 2008 to
    
    January 3, 2009to April 28, 2008
    
    January 2, 2009
    
    to presentCopper
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %Copper concentrate
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    2.0
    %Zinc
    
    
    5.0
    %
    
    
    0.0
    %
    
    
    5.0
    %Aluminum
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
 128




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Export Incentives
   July 15, 2006
    
    September 1, 2008to August 31, 2008
    
    to present(percentage of FOB value of exports)Copper cathode
    
    
    2.2
    %(1)
    
    
    2.2
    %(3)Copper rods
    
    
    2.2
    %(2)
    
    
    2.2
    %(4)
 
 Notes:(1)
    
    Subject to a cap of Rs. 7,500 per ton.(2)
    
    Subject to a cap of Rs. 7,760 per ton.(3)
    
    Subject to a cap of Rs. 7,000 per ton.(4)
    
    Subject to a cap of Rs. 9,800 per ton.  October 9, 2007
    
    
    
    
    
    November 5, 2008 toto November 3, 2008
    
    November 4, 2008
    
    Present(percentage of FOB value of exports)Zinc concentrate
    
    
    3.0
    %
    
    
    2.0
    %
    
    
    3.0
    %Zinc ingots
    
    
    5.0
    %
    
    
    4.0
    %
    
    
    5.0
    %Lead concentrate
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    3.0
    %
 129




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##### Table of Contents



October 9, 2007 to Present(percentage of FOB value of exports)Aluminum ingots
    
    
    3.0
    %Aluminum rods
    
    
    5.0
    %Aluminum rolled products
    
    
    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;
 130




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
    
    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.
  Exchange Rates
  Power Business
  Critical Accounting Estimates
  Mine properties
    131




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Useful Economic Lives of Assets and Impairment
   Contingencies and Commitments
  Income Tax
  132




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Results of Operations
 Overview
 Consolidated Statement of Income
  Year Ended March 31,2009
    
    2010(In percentages)Consolidated Statement of Income:Revenue
    
    
    100.0
    
    
    
    100.0Other operating income
    
    
    1.8
    
    
    
    0.8Total revenue
    
    
    101.8
    
    
    
    100.8Cost of sales
    
    
    (77.8
    )
    
    
    (74.3
    )Distribution expenses
    
    
    (1.6
    )
    
    
    (1.2
    )Administration expenses
    
    
    (2.1
    )
    
    
    (3.3
    )Operating profit
    
    
    20.3
    
    
    
    22.0Investment and other income
    
    
    8.8
    
    
    
    5.6Finance and other costs
    
    
    (2.9
    )
    
    
    0.1Share in profit/(loss) of associates
    
    
    (1.5
    )
    
    
    0.8Profit before taxes
    
    
    24.7
    
    
    
    28.5Income Tax expense
    
    
    (3.7
    )
    
    
    (5.4
    )Profit for the period
    
    
    21.0
    
    
    
    23.1Profit attributable to:Equity holders of the parent
    
    
    15.2
    
    
    
    16.1Minority interest
    
    
    5.8
    
    
    
    7.0
 Net revenue by Geographic Location
  Year Ended March 31,2009
    
    2010(in millions, except percentages)Revenue
    
    % of Revenue
    
    Revenue
    
    Revenue
    
    % of RevenueIndia
    
    Rs.
    140,330
    
    
    
    66.0
    %
    
    Rs.
    155,218
    
    
    $
    3,453.1
    
    
    
    63.0
    %Far East(1)
    
    
    41,563
    
    
    
    20.0
    %
    
    
    43,242
    
    
    
    962.0
    
    
    
    18.0
    %Other(2)
    
    
    30,299
    
    
    
    14.0
    %
    
    
    46,443
    
    
    
    1,033.2
    
    
    
    19.0
    %Total
    
    Rs.
    212,192
    
    
    
    100.0
    %
    
    Rs.
    244,903
    
    
    $
    5,448.3
    
    
    
    100.0
    %
 
 Notes:(1)
    
    Far East includes a number of countries, primarily China, South Korea, Singapore and
Thailand.(2)
    
    Other includes Kenya, Nigeria, Ethiopia, Algeria, Sudan, Morocco, Namibia, Egypt, Oman, UAE,
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. 133




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Customer Concentration
  
    
    the percentage of our revenue accounted for by our ten largest customers on a
consolidated basis; and
    
    for each of our three primary businesses, the percentage of the revenue of such
business accounted for by the ten largest customers of such business.
 Year Ended March 31,2009
    
    2010Consolidated
    
    
    32.4
    %
    
    
    29.1
    %Copper
    
    
    32.5
    
    
    
    27.2Zinc
    
    
    23.6
    
    
    
    32.3Aluminum
    
    
    44.6
    
    
    
    28.9
  Comparison of Years Ended March 31, 2009 and March 31, 2010
  Revenue, Other Operating Income and Operating Profit
 Consolidated
    134




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
    
    cost of sales increased from Rs. 165,097 million in fiscal 2009 to Rs. 181,928
million ($4,047.3 million) in fiscal 2010, an increase of Rs. 16,831 million, or 10.2%.
Cost of sales increased primarily due to higher input prices, higher production volumes
in our copper and zinc business and increase in capacity of zinc business. Cost of
sales as a percentage of revenue decreased from 77.8% in fiscal 2009 to 74.3% in fiscal
2010 due to the higher daily average copper and zinc LME prices in fiscal 2010.
    
    distribution expenses decreased slightly from Rs. 3,388 million in fiscal 2009 to
Rs. 3,022 million ($67.2 million) in fiscal 2010, a decrease of Rs. 366 million, or
10.8%. As a percentage of revenue, however, selling and distribution expenses also
decreased from 1.6% in fiscal 2009 to 1.2% in fiscal 2010.
    
    administration expenses increased from Rs. 4,367 million in fiscal 2009 to Rs. 8,026
million ($178.6 million) in fiscal 2010, an increase of Rs. 3,659 million, or 83.8%,
primarily as a result of the drawing of letter of credit of $50 million by
Asarco, impairment of assets held for sale at BALCO and increase in exploration and
technical consultancy costs at HZL. As a percentage of revenue, administration
expenses increased from 2.1% in fiscal 2009 to 3.3% in fiscal 2010. These expenses
increased primarily in our zinc and aluminum business as a result of an increase in
capacities and the scale of our operations.
 Copper
  
    
    copper cathode production increased from 312,833 tons in fiscal 2009 to 334,202 tons
in fiscal 2010, a increase of 6.8%. The production in the fiscal 2009 was lower as
compared to the fiscal 2010, primarily due to the planned bi-annual plant maintenance
shut down for 26 days in May and June 2008 and stabilization issues faced during post
shut down ramp-up. Copper cathode sales increased from 92,163 tons in fiscal 2009 to
136,362 tons in fiscal 2010, a increase of 47.9%, due to increased production.
    
    production of copper rods decreased from 219,879 tons in fiscal 2009 to 196,882 tons
in fiscal 2010, a decrease of 10.5%. Copper rod sales decreased from 220,409 tons in
fiscal 2009 to 196,883 tons in fiscal 2010, a decrease of 10.7%. The decrease in sales
was due to the decrease in production.
    
    sales of copper in the Indian market increased from 198,457 tons in fiscal 2009 to
206,150 tons in fiscal 2010, an increase of 3.9%, and our exports increased from
114,115 tons in fiscal 2009 to 127,095 tons in fiscal 2010, an increase of 11.4%. 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
decreased from 63.5% in fiscal 2009 to 61.9% in fiscal 2010.
    
    the daily average copper cash settlement price on the LME increased from $5,885 per
ton in fiscal 2009 to $6,112 per ton in fiscal 2010, an increase of 3.9%.
  135




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
    
    TcRc rates increased from an average of 11.7¢/lb realized in fiscal 2009 as compared
to an average of 13.6¢/lb realized in fiscal 2010 as a result of a global improvement
of the TcRc market resulting in a significant increase in the market TcRc rate.
    
    cost of production, which consists of cost of smelting and refining costs, increased
significantly from 3.1¢/lb in fiscal 2009 to 10.4¢/lb in fiscal 2010, primarily due to
lower realization on the sale of sulphuric acid by-product.
    
    drawing of $50 million letter of credit by Asarco after the rejection of the plan
proposed by us for the acquisition of Asarco.
 Zinc
  
    
    zinc ingot production increased from 551,724 tons in fiscal 2009 to 578,411 tons in
fiscal 2010, an increase of 4.8%, due to ramp-up of production from our first
hydrometallurgical zinc smelter at Chanderiya and improved operational efficiencies.
Zinc ingot sales increased from 552,328 tons in fiscal 2009 to 577,685 tons in fiscal
2010, an increase of 4.6%, enabled by the higher production and strong market demand in
India as well as in the rest of Asia.
    
    zinc ingot sales in the domestic market increased from 331,704 tons in fiscal 2009
to 385,881 tons in fiscal 2010, an increase of 16.3%. Our domestic sales as a
percentage of total sales increased from 60.1% in fiscal 2009 to 66.8% in fiscal 2010
due to higher production and strong market demand in India. Export sales decreased from
220,627 tons of zinc in fiscal 2009 to 191,805 tons of zinc in fiscal 2010, a decrease
of 13.1% due to better realization and demand in the domestic market.
    
    the daily average zinc cash settlement price on the LME increased from $1,563 per
ton in fiscal 2009 to $1,936 per ton in fiscal 2010, an increase of 23.9%.
    
    zinc concentrate sales increased from 76,261 dmt in fiscal 2009 to 223,489 dmt in
fiscal 2010. This increase was primarily due to lower captive consumption. We sold
surplus lead concentrate of 56,487 dmt in fiscal 2009 and 30,929 dmt in fiscal 2010 to
third parties. This decrease was primarily due to the non-availability of surplus lead
concentrate as a result of higher consumption of lead concentrate to produce metal with
a higher concentration of lead at the ISPTM pyrometallurgical smelter.
    
    lead ingot production increased from 60,323 tons in fiscal 2009 to 64,319 tons in
fiscal 2010, an increase of 6.6%, as a result of improved production of lead from the
pyrometallurgical process. Lead ingot sales increased from 60,564 tons in fiscal 2009
to 64,391 tons in fiscal 2010, an increase of 6.3%, enabled by the increase in
production.
    
    silver ingot production increased from 105,555 kg in fiscal 2009 to 138,550 kg in
fiscal 2010, an increase of 31.3%, primarily due to higher silver content in the mined
ore. The daily average silver London Bullion Metal Association, or LBMA, price
increased by 14.4% in fiscal 2010 as compared to fiscal 2009. Sale of silver ingots
increased from 103,126 kg in fiscal 2009 to 139,130 kg in fiscal 2010, an increase of
34.9% enabled by the increase in production.
    
    the daily average lead cash settlement price on the LME increased from $1,660 per
ton in fiscal 2009 to $1,990 per ton in fiscal 2010, a increase of 19.9%.
 136




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Aluminum
  
    
    aluminum production decreased from 356,782 tons in fiscal 2009 to 268,425
tons in fiscal 2010, a decrease of 24.8%, primarily due to the complete ramp down of
the old 100,000 tpa smelter at Korba. Production from the new smelter at Korba
slightly decreased by 0.4% from 250,499 tons in fiscal 2009 to 249,552 tons in fiscal
2010.
    
    aluminum sales decreased from 356,512 tons in fiscal 2009 to 267,802 tons
in fiscal 2010, a decrease of 24.9%, due to lower production as a result of the phased
shut down of the old 100,000 tpa Korba smelter commencing in February 2009 which
ceased operations on June 5, 2009 due to higher operational costs. Sales of aluminum
ingots decreased from 172,173 tons in fiscal 2009 to 54,144 tons in fiscal 2010, a
decrease of 68.6%, as a result of the phased shutdown of the old Korba smelter. Wire
rod sales increased from 127,019 tons in fiscal 2009 to 148,239 tons in fiscal 2010,
an increase of 16.7%, as a result of increased production and increased demand for
this product, particularly in the electrical sector, and reflects our continued focus
on the sale of value-added products. Rolled product sales increased from 57,399 tons
in fiscal 2009 to 65,419 tons in fiscal 2010, an increase of 14.0%, primarily due to
increased demand in the construction and the transport sector.
    
    aluminum sales in the domestic market decreased from 289,991 tons in fiscal
2009 to 250,970 tons in fiscal 2010, a decrease of 13.5%, due to lower production as a
result of the phased shut down of the old 100,000 tpa Korba smelter commencing in
February 2009 which ceased operations on June 5, 2009. Our aluminum exports decreased
from 66,523 tons in fiscal 2009 to 16,832 tons in fiscal 2010, as a result of higher
premiums in the domestic market. 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 81.3% in fiscal 2009 to
93.7% in fiscal 2010, due to the increased demand of the value added product in the
domestic market, particularly in the power market.
    
    the daily average aluminum cash settlement price on the LME declined from
$2,234 per ton in fiscal 2009 to $1,868 per ton in fiscal 2010, a decrease of 16.38%.
  Power
  137




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Others
  Investment and Other income
  Finance costs
  Share in profit / loss of associate
  Tax expense
  Minority interest
  138




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Liquidity and Capital Resources
 Liquidity
  Capital Requirements
  
    
    capital expenditures, towards expansion of capacities in existing
businesses including modernization of facilities;
    
    the establishment of our commercial power generation business;
    
    consolidation of our ownership in our various subsidiaries; and
    
    acquisitions of complementary businesses that we determine to be attractive
opportunities.
     139




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Capital Resources
  140




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##### Table of Contents



Net Cash Provided by Operating Activities
  Net Cash Used in Investing Activities
  Net Cash Provided by Financing Activities
    Outstanding Loans
  Working capital loans
  141




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Foreign currency loans
   Term loans
      142




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##### Table of Contents



Buyers credit
      143




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##### Table of Contents



Non-convertible debentures
    Convertible notes
 Convertible Senior Notes (Convertible Notes) due 2014
    Export Obligations
  144




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##### Table of Contents



Guarantees
  
    
    Guarantees on the issuance of customs and excise duty bonds amounting to Rs. 879
million and Rs. 757 million ($16.8 million) for import of goods, including capital
equipment at concessional rates of duty as of March 31, 2009 and 2010, respectively.
We do not anticipate any liability on these guarantees.
    
    Corporate guarantee of Rs. 21,000 million and Rs. 34,000 million ($756.4 million)
on behalf of Vedanta Aluminium for obtaining credit facilities as of March 31, 2009
and 2010 respectively. We also issued corporate guarantees of Rs. 14,704 million and
Rs. 14,386 million ($320 million) for importing capital equipment at concessional
rates of duty under the Export Promotion Capital Goods Scheme enacted by the
Government of India for the same periods. Vedanta Aluminium is obliged 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. As of March 31, 2010, we determined that we have no liability on
these corporate guarantees.
    
    Bank guarantee of AUD 5.0 million (Rs. 207 million or $ 4.6 million) as of March
31, 2010, in favor of the Ministry for Economic Development, Energy and Resources, as
a security against rehabilitation liabilities on behalf of CMT. This guarantee is
backed up by the issuance of a corporate guarantee of Rs. 320 million ($7.1 million).
These liabilities have been fully recognized in the consolidated financial statements.
We do not anticipate any liability on these guarantees.
    
    Bank indemnity guarantees amounting to AUD 2.9 million (Rs. 119 million or $2.6
million) as of March 31, 2010, 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
the consolidated financial statements. We do not anticipate any liability on these
guarantees.
    
    Performance bank guarantees amounting to Rs. 2,809 million and Rs. 2,201 million
($49.0 million) as of March 31, 2009 and 2010 respectively. 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 amounting to Rs. 1,203 million ($26.8 million). We have also issued
bank guarantees in the normal course of business for an aggregate value of Rs. 493
million and Rs. 515 million ($11.4 million) for litigation, against provisional
valuation and for other liabilities as of March 31, 2009 and 2010 respectively. We do
not anticipate any liability on these guarantees.
  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.
    40,473
    
    
    $
    900.4
    
    
    Rs.
    19,121
    
    
    $
    425.4
    
    
    Rs.
    5,956
    
    
    $
    132.5
    
    
    Rs.
    10,296
    
    
    $
    229.1
    
    
    Rs.
    5,100
    
    
    $
    113.5Convertible Notes
    
    
    22,226
    
    
    
    494.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,226
    
    
    
    494.4
    
    
    
    
    
    
    
    Capital commitments
    
    
    123,305
    
    
    
    2,743.2
    
    
    
    40,258
    
    
    
    895.6
    
    
    
    83,040
    
    
    
    1,847.4
    
    
    
    7
    
    
    
    0.2
    
    
    
    
    
    
    
    Total
    
    Rs.
    186,004
    
    
    $
    4138.0
    
    
    Rs.
    59,379
    
    
    $
    1,321.0
    
    
    Rs.
    88,996
    
    
    $
    1,979.9
    
    
    Rs.
    35,529
    
    
    $
    723.7
    
    
    Rs.
    5,100
    
    
    $
    113.5
 145




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Off-Balance Sheet Arrangements
  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 31,2009
    
    2010(in millions)Capital Expenditures
    
    $
    798.6
    
    
    $
    1,376.5
  Contingencies
  146




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Recent Accounting Pronouncements
   Improvements to IFRSs issued in April 2009 approved amendments to:
 IFRS 5, Non-current Assets Held for Sale and Discontinued Operations
 IFRS 8, Operating Segments
 IAS 1 (Revised 2007), Presentation of Financial Statements
 IAS 7, Statement of Cash Flows
 IAS 17, Leases
 IAS 18, Revenue
 IAS 36, Impairment of Assets
 IAS 38, Intangible Assets
 IAS 39, Financial Instruments: Recognition and Measurement
 IFRIC Interpretation 9, Reassessment of Embedded Derivatives
 Improvements to IFRSs issued in May 2010 approved amendments to:
 IFRS 3 (Revised 2008) Business Combinations
 IFRS 7 Financial Instruments: Disclosures
 IAS 1(Revised 2007) Presentation of Financial Statements
 IAS 27 (Revised 2008) Consolidated and Separate Financial Statements
 IAS 34 Interim Financial Reporting
 147




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IFRS 3(Revised 2008), Business Combinations
  
    
    establishes the principle that a change in control is a significant economic event.
Accordingly, acquisition accounting is applied only at the date that control is achieved.
Consequently, goodwill is identified and net assets remeasured to fair value only in
respect of the transaction that achieves control, and not in respect of any earlier or
subsequent acquisitions of equity interests.
    
    requires the measurement of contingent consideration at fair value on the acquisition
date. Subsequent changes in the fair value, except in certain situations, are recorded
through the statement of income.
    
    provides an explicit option on an acquisition by acquisition basis, to measure any
minority interest in an entity acquired at fair value of their proportion of identifiable
assets and liabilities or at full fair value.
    
    requires transactions in subsidiary equity interests between the parent and
non-controlling interests (both acquisitions and disposals that do not result in a loss of
control) to be accounted for as equity transactions.
  IFRS 9, Financial Instruments
   IAS 27 (Revised 2008), Consolidated and Separate Financial Statements
   148




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Amendment to standards early adopted
 IFRS 7, Financial Instruments-disclosures
  
 ITEM 6.
    
    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 A.
    
    Directors and Senior Management
   Name
    
    Age
    
    PositionDirectorsAnil Agarwal(1)
    
    
    57
    
    
    Non-Executive ChairmanNavin Agarwal(2)
    
    
    49
    
    
    Executive Vice-ChairmanDindayal Jalan(2)(3)(4)(5)
    
    
    53
    
    
    Whole Time DirectorBerjis MinooDesai(1)(4)(5)(6)(7)(8)
    
    
    53
    
    
    Non-Executive DirectorGautam Bhailal Doshi(1)(5)(6)(7)(9)
    
    
    57
    
    
    Non-Executive DirectorSandeep H. Junnarkar(4)(6)(7)(10)
    
    
    58
    
    
    Non-Executive DirectorExecutive OfficersMahendra Singh Mehta
    
    
    54
    
    
    Group Chief Executive OfficerRajagopal Kishore Kumar(11)
    
    
    47
    
    
    Chief Executive Officer, SIIL and Chief Executive
Officer, Copper and Zinc DivisionsTarun Jain(13)
    
    
    50
    
    
    Director of FinanceVinod Bhandawat(12)
    
    
    42
    
    
    Chief Financial OfficerA.Thirunavukkarasu
    
    
    49
    
    
    Group Head of Corporate Human ResourceDilip Golani
    
    
    44
    
    
    President and Group Head of Management AssuranceOther Significant EmployeesCopper BusinessJeyakumar Janakaraj
    
    
    39
    
    
    Chief Executive Officer, CMTRamesh Nair
    
    
    40
    
    
    Chief Operating Officer,Puneet Jagatramka
    
    
    38
    
    
    Chief Marketing Officer, Copper and Zinc DivisionsZinc BusinessAkhilesh Joshi(2)
    
    
    56
    
    
    Chief Operating Officer and Whole Time Director, HZLShyam Lal Bajaj
    
    
    56
    
    
    Chief Financial Officer, HZLAluminum BusinessMansoor Siddiqi (2)
    
    
    56
    
    
    Chief Executive Officer, Aluminum Division and Whole Time Director, Vedanta Aluminium.V. Ramanathan
    
    
    50
    
    
    Chief Financial Officer, Aluminum DivisionPramod Suri (2) (14)
    
    
    52
    
    
    Chief Executive Officer  Operations, Aluminum
Division and Whole Time Director, Sterlite EnergyGunjan Gupta(2)
    
    
    43
    
    
    Chief Executive Officer and Whole Time Director, BALCOPower BusinessPankaj Khanna
    
    
    44
    
    
    Executive Director  Jharsuguda
 
 Notes:(1)
    
    Member of the Remuneration Committee. 149




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(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. Dindayal Jalan, Akhilesh
Joshi, Mansoor Siddiqi, Pramod Suri and Gunjan Gupta, Mr. Navin Agarwal is
also considered to be a Whole Time Director.(3)
    
    Appointed as a Whole Time Director with effect from December 24, 2008. In
addition, Mr. Jalan was our Chief Financial Officer prior to June 15, 2009.(4)
    
    Member of the Shareholders and Investors Grievance Committee.(5)
    
    Member of the Share and Debenture Transfer Committee.(6)
    
    Member of the Audit Committee.(7)
    
    Independent director.(8)
    
    Chairman of the Remuneration Committee.(9)
    
    Chairman of the Audit Committee.(10)
    
    Chairman of the Shareholders and Investors Grievance Committee.(11)
    
    Appointed as Chief Executive Officer of SIIL with effect from October 1, 2008.(12)
    
    Appointed as our Chief Financial Officer with effect from June 15, 2009.(13)
    
    Resigned as Whole Time Director with effect from March 31, 2009, following
which he is no longer a director of our company. However, he remains an
executive officer of the company as our Director of Finance.(14)
    
    Ceased to be Whole Time Director of BALCO with effect from October 1, 2009
and appointed as Whole Time Director of SEL with effect from October 5, 2009. Directors
 Anil Agarwal
 Navin Agarwal
 150




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##### Table of Contents



Dindayal Jalan
 Berjis Minoo Desai
 Gautam Bhailal Doshi
 Sandeep H. Junnarkar
 151




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##### Table of Contents



Executive Officers
 Mahendra Singh Mehta
 Rajagopal Kishore Kumar
 Tarun Jain
 Vinod Bhandawat
 A. Thirunavukkarasu
 Dilip Golani
 152




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##### Table of Contents



Other Significant Employees
 Copper Business
 Jeyakumar Janakaraj
 Ramesh Nair
 Puneet Jagatramka
 Zinc Business
 Akhilesh Joshi
 Shyam Lal Bajaj
 Aluminum Business
 Mansoor Siddiqi
 153




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##### Table of Contents



V. Ramanathan
 Pramod Suri
 Gunjan Gupta
 Power Business
 Pankaj Khanna
 B.
    
    Compensation
 Compensation of Directors and Executive Officers
  154




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Salary, Bonuses,
    
    Fair Value of Share
    
    Contribution toAllowances and
    
    Options granted under
    
    Provident andName
    
    Perquisites
    
    the Vedanta LTIP
    
    Superannuation Funds(in million)Rs.
    
    Rs.
    
    Rs.Navin Agarwal
    
    
    60.10
    
    
    
    15.01
    
    
    
    6.68Dindayal Jalan
    
    
    16.61
    
    
    
    4.99
    
    
    
    1.32Mahendra Singh Mehta
    
    
    16.20
    
    
    
    5.80
    
    
    
    1.16Tarun Jain
    
    
    34.37
    
    
    
    9.72
    
    
    
    3.31Kishore Kumar
    
    
    
    
    
    
    4.26
    
    
    
    A.Thirunavukkarasu
    
    
    9.40
    
    
    
    3.05
    
    
    
    0.44Vinod Bhandawat
    
    
    5.68
    
    
    
    3.13
    
    
    
    0.37Dilip Golani
    
    
    10.99
    
    
    
    3.55
    
    
    
    0.61
   Outstanding Awards or Options
  Employee Benefit Plans
  Provident Fund
  Gratuity
  155




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Superannuation Fund
  Compensated Absence
  Vedanta Long-Term Incentive Plan
      Limitations on Liability and Indemnification Matters
   156




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##### Table of Contents



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;
    
    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
 157




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##### Table of Contents




    
    to provide an open avenue of communication among the independent accountants,
financial and senior management and the board of directors.
   Remuneration Committee
   Share and Debenture Transfer Committee
   Shareholders and Investors Grievance Committee
   D.
    
    Employees
  158




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E.
    
    Share Ownership for Directors and Executive Officers :
  Equity Shares Beneficially OwnedName
    
    Number
    
    PercentAnil Agarwal(1)
    
    
    1,939,086,376
    
    
    
    57.69
    %Navin Agarwal
    
    
    
    
    
    
    Tarun Jain
    
    
    
    
    
    
    Dindayal Jalan
    
    
    
    
    
    
    Berjis Minoo Desai
    
    
    
    
    
    
    Gautam Bhailal Doshi
    
    
    
    
    
    
    Sandeep H. Junnarkar
    
    
    72,000
    
    
    
    *Mahendra Singh Mehta
    
    
    1,000
    
    
    
    *Rajagopal Kishore Kumar
    
    
    2,800
    
    
    
    Vinod Bhandawat
    
    
    
    
    
    
    A.Thirunavukkarasu
    
    
    
    
    
    
    Dilip Golani
    
    
    1,000
    
    
    
    *All our directors and executive officers as a group (12 persons)
    
    
    1,939,163,176
    
    
    
    57.69
    %
 
 Notes:*
    
    Represents beneficial ownership of less than 1.0%.(1)
    
    Consists of 1,939,086,376 equity shares beneficially owned by Vedanta. Volcan owns 60.5 % of
the issued ordinary share capital of Vedanta. Volcan is 100% owned and controlled by the Anil
Agarwal Discretionary Trust. Onclave is the trustee of the Anil Agarwal Discretionary Trust and controls all voting
and investment decisions of the Anil Agarwal Discretionary Trust. As a result, shares
beneficially owned by Volcan may be deemed to be beneficially owned by the Anil Agarwal
Discretionary Trust and, in turn, by Onclave. The beneficiaries of the Anil Agarwal
Discretionary Trust are members of the Agarwal family, who are related to Mr. Anil Agarwal. Mr.
Anil Agarwal, the Executive Chairman of Vedanta and our Non-Executive Chairman, as protector of
the Anil Agarwal Discretionary Trust, may be deemed to have deemed beneficial ownership of
shares that are beneficially owned by the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the
Anil Agarwal Discretionary Trust, 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  B. Related Party Transactions  Related Parties  Vedanta. As
a result of this agreement, Volcan, the Anil Agarwal Discretionary Trust, Onclave and Mr. Anil
Agarwal disclaim beneficial ownership of the shares beneficially owned by Vedanta. 159




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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)
    
    
    478,736,892
    
    
    
    57.1
    %
 
 Note:(1)
    
    Vedanta has beneficial ownership of 478,736,892 equity shares, consisting of 411,751,529
equity shares held by Twin Star and 41,371,963 ADSs held by Twin Star and 25,613,400 equity
shares held by MALCO. Twin Star is the owner of 94.5 % 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 60.5 % of the issued ordinary share capital of
Vedanta. Volcan is 100.0%
owned and controlled by the Anil Agarwal Discretionary Trust. Onclave is the trustee of the
Anil Agarwal Discretionary Trust and controls all voting and investment decisions of the Anil
Agarwal Discretionary Trust. As a result, securities beneficially owned by Volcan may be
deemed to be beneficially owned by the Anil Agarwal Discretionary Trust and, in turn, by
Onclave. The beneficiaries of the Anil Agarwal Discretionary Trust are members of the Agarwal
family, who are related to Mr. Anil Agarwal. Mr. Anil Agarwal, the Executive Chairman of
Vedanta and our Non-Executive Chairman, as protector of the Anil Agarwal Discretionary Trust,
may be deemed to have deemed beneficial ownership of shares that may be beneficially owned by
the Anil Agarwal Discretionary Trust. Vedanta, Volcan, the Anil Agarwal Discretionary Trust,
Onclave and Mr. Anil Agarwal are parties to a relationship agreement that regulates the
ongoing relationship among them. See B. Related Party Transactions  Related Parties 
Vedanta. As a result of this agreement, Volcan, the Anil Agarwal Discretionary Trust, Onclave
and Mr. Anil Agarwal disclaim beneficial ownership of the shares beneficially owned by
Vedanta.  B.
    
    Related Party Transactions
  Related Parties
 Volcan and the Agarwal Family
  160




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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 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;
 161




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
    
    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 5.0% 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 Limited, Vedanta and Sterlite
   
    
    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;
 162




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
    
    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 20.0%; and
    
    allow only 25.0% 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
  Issuance of Equity Shares by Vedanta Aluminium  Sterlite, Twin Star and Vedanta Aluminium
  163




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Issuance of Debentures by Vedanta Aluminium  Sterlite and Vedanta Aluminium
    Loan Agreement  Sterlite and Vedanta Aluminium
     164




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Guarantees  Sterlite, CMT, TCM and Vedanta Aluminium
  Acquisition of Sterlite Energy  Twin Star Infrastructure Limited, Mr. Anil Agarwal, Mr. Dwarka
Prasad Agarwal and Sterlite
  Issuance of Debentures by Sterlite Energy  Sterlite and Sterlite Energy
  Sponsor Support Agreement  Sterlite and Sterlite Energy
  165




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##### Table of Contents



Payable to Monte Cello Corporation NV  Monte Cello Corporation NV and CMT
  Conflicts of Interest and Allocations of Business Opportunities
    166




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##### Table of Contents



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.
  167




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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.
   168




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##### Table of Contents



res
judicata
 BALCO is involved in various litigations in relation to the alleged encroachment of land on which
the Korba smelter is situated and the State Government of Chhattisgarh has issued notices to BALCO
alleging that BALCO had encroached on state-owned land.
      169




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BALCO is involved in arbitration proceedings relating to a power purchase agreement with the
CSEB and has initiated arbitration proceedings against the
CSEB.
  Demands against HZL by Department of Mines and Geology.
   170




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##### Table of Contents



Asarco has commenced proceedings against Sterlite and Sterlite USA in the US Bankruptcy Court
claiming breach of our May 2008 agreement.
  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
    171




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##### Table of Contents




    
    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.
    B.
    
    Significant Changes
  
 ITEM 9.
    
    THE OFFER AND LISTING
 A.
    
    Offer and Listing Details
    172




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
    
    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, all as adjusted to reflect the five-for-two stock
split on May 5, 2006.
 AverageNYSE
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    AverageDaily
    
    
    
    
    
    
    
    
    
    NSE Daily
    
    
    
    
    
    
    
    
    
    BSE DailyADS
    
    NSE Price
    
    Equity
    
    BSE Price
    
    Equity ShareNYSE Price Per ADS
    
    Trading
    

Per Equity Share
    
    Share Trading
    
    Per Equity Share
    
    TradingHigh
    
    Low
    
    Volume
    
    High
    
    Low
    
    Volume
    
    High
    
    Low
    
    VolumeFiscal Year2005
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    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
    
    
    
    1,807,316
    
    
    
    29.18
    
    
    
    10.23
    
    
    
    1,443,249
    
    
    
    28.73
    
    
    
    10.23
    
    
    
    331,8332009
    
    
    23.00
    
    
    
    3.12
    
    
    
    1,227,508
    
    
    
    23.06
    
    
    
    3.40
    
    
    
    2,420,215
    
    
    
    22.24
    
    
    
    3.39
    
    
    
    746,9602010
    
    
    20.10
    
    
    
    6.70
    
    
    
    1,930,177
    
    
    
    18.40
    
    
    
    7.71
    
    
    
    2,979,722
    
    
    
    18.38
    
    
    
    7.69
    
    
    
    663,9562011(2)(3)
    
    
    19.92
    
    
    
    12.58
    
    
    
    1,585,553
    
    
    
    18.72
    
    
    
    3.33
    
    
    
    5,200,853
    
    
    
    18.78
    
    
    
    3.32
    
    
    
    1,266,42120091st Quarter
    
    
    23.00
    
    
    
    15.89
    
    
    
    914,672
    
    
    
    23.06
    
    
    
    15.37
    
    
    
    1,060,814
    
    
    
    22.24
    
    
    
    15.38
    
    
    
    222,1752nd Quarter
    
    
    16.20
    
    
    
    8.07
    
    
    
    1,325,088
    
    
    
    15.58
    
    
    
    8.62
    
    
    
    2,190,515
    
    
    
    15.54
    
    
    
    8.64
    
    
    
    668,4353rd Quarter
    
    
    9.10
    
    
    
    3.12
    
    
    
    1,377,791
    
    
    
    9.07
    
    
    
    3.40
    
    
    
    3,099,156
    
    
    
    9.03
    
    
    
    3.39
    
    
    
    1,157,3694th Quarter
    
    
    7.29
    
    
    
    4.23
    
    
    
    1,295,675
    
    
    
    7.46
    
    
    
    4.23
    
    
    
    3,249,537
    
    
    
    7.45
    
    
    
    4.60
    
    
    
    1,002,54620101st Quarter
    
    
    14.93
    
    
    
    6.70
    
    
    
    1,446,308
    
    
    
    14.66
    
    
    
    7.41
    
    
    
    3,770,249
    
    
    
    14.64
    
    
    
    7.39
    
    
    
    909,5332nd Quarter
    
    
    16.22
    
    
    
    10.52
    
    
    
    2,755,950
    
    
    
    16.06
    
    
    
    11.27
    
    
    
    4,087,396
    
    
    
    16.07
    
    
    
    11.35
    
    
    
    924,4963rd Quarter
    
    
    19.52
    
    
    
    15.16
    
    
    
    2,004,464
    
    
    
    18.94
    
    
    
    15.43
    
    
    
    2,136,506
    
    
    
    18.91
    
    
    
    15.46
    
    
    
    436,6914th Quarter
    
    
    20.10
    
    
    
    15.13
    
    
    
    1,485,585
    
    
    
    19.58
    
    
    
    15.96
    
    
    
    1,878,120
    
    
    
    19.83
    
    
    
    15.92
    
    
    
    375,61720111st Quarter(3)
    
    
    19.92
    
    
    
    12.58
    
    
    
    1,664,289
    
    
    
    18.72
    
    
    
    3.72
    
    
    
    3,423,256
    
    
    
    18.78
    
    
    
    3.70
    
    
    
    828,882Last six months(3)April 2010
    
    
    19.92
    
    
    
    17.74
    
    
    
    1,310,652
    
    
    
    19.85
    
    
    
    17.80
    
    
    
    1,873,563
    
    
    
    19.92
    
    
    
    17.82
    
    
    
    351,084May 2010
    
    
    18.21
    
    
    
    12.58
    
    
    
    2,015,400
    
    
    
    17.39
    
    
    
    13.52
    
    
    
    3,265,799
    
    
    
    17.37
    
    
    
    13.53
    
    
    
    794,993June 2010
    
    
    16.00
    
    
    
    12.78
    
    
    
    1,682,659
    
    
    
    14.89
    
    
    
    3.60
    
    
    
    4,982,369
    
    
    
    14.86
    
    
    
    3.58
    
    
    
    1,295,594July 2010
    
    
    15.60
    
    
    
    13.54
    
    
    
    1,219,490
    
    
    
    3.80
    
    
    
    3.44
    
    
    
    6,870,976
    
    
    
    3.80
    
    
    
    3.44
    
    
    
    1,653,637August 2010
    
    
    15.79
    
    
    
    12.60
    
    
    
    1,823,527
    
    
    
    3.86
    
    
    
    3.26
    
    
    
    7,952,162
    
    
    
    3.85
    
    
    
    3.26
    
    
    
    2,004,486September 10, 2010
    
    
    14.44
    
    
    
    13.31
    
    
    
    1,227,200
    
    
    
    3.60
    
    
    
    3.29
    
    
    
    7,303,293
    
    
    
    3.60
    
    
    
    3.29
    
    
    
    1,667,676
 
 Notes:(1)
    
    From June 20, 2007 for trading prices for our ADSs on the NYSE.(2)
    
    Through September 10, 2010.(3)
    
    Post split and bonus, with effect from June 25, 2010. 173




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B.
    
    Plan of Distribution
 Not
applicable
 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
     174




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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
   175




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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.
 Division of Shares
   Voting Rights
   176




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Quorum
  Shareholder Resolutions
    
    
    amendments of the memorandum of association to alter the objects of the
company and to change the registered office of the company under Section 146 of the
Indian Companies Act;
    
    alteration of the articles of association in relation to insertion of
provisions defining private company;
    
    the issue of shares with differential rights with respect to voting,
dividend or otherwise;
    
    the sale of the whole or substantially the whole of an undertaking of the
company;
    
    providing loans, extending guarantees or providing a security in excess of
the limits prescribed under Section 372A of the Indian Companies Act;
    
    varying the rights of the holders of any class of shares or debentures or
other securities;
    
    the election of a director by minority shareholders; and
    
    the buy-back of shares.
 177




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##### Table of Contents



Dividends
    
    
    the rate of dividend to be declared shall not exceed the
lesser of 10.0% 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 10.0%
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
15.0% of our paid-up capital.
 178




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##### Table of Contents



Distribution of Assets on a Winding-up
  Transfer of Shares
        179




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##### Table of Contents



Disclosure of Ownership Interest
   Alteration of Shareholder Rights
  Share Register and Record Dates
    180




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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.
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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;
    
    any reserves created by a revaluation of fixed assets shall not be
capitalized;
    
    the articles of association of the company must contain provisions for the
capitalization of reserves; and
    
    the bonus issue must be implemented within two 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;
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
    
    a special resolution authorizing the buy-back must be passed in a general meeting;
    
    the buy-back is limited to 25.0% of the companys total paid up capital and free
reserves in a fiscal year;
    
    the ratio of debt owed is not more than twice the capital and free reserves after
such buy-back;
    
    the shares or other specified securities for share buy-back are fully paid-up; and
    
    the buy-back is in accordance with the SEBI (Buy-Back of Securities) Regulations,
1998, as amended.
     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.
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Provisions on Squeeze Out of Minority Shareholders
    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.
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Delaware Law
    
    Indian LawQuorum 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.Removal 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.
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Delaware Law
    
    Indian LawInterested 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.Cumulative 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.
    
    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.
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Delaware Law
    
    Indian LawDelaware 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.
    
    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.
 Interested 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 15.0% 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 15.0% or more of the voting stock at any time within the
previous three years.
    
    Indian law does not
prohibit corporate
transactions but
does require
disclosure of
related party
transactions in the
financial
statements of the
company. Under
applicable
accounting
standards in India,
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.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.
    
    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 in India.
Under such
accounting
standards, a party
is considered to
have a substantial
interest in a
company if that
party owns,
directly or
indirectly, 20.0% 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.
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.
    
    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.
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Delaware Law
    
    Indian LawAppraisal 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.Shareholder 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 CLB, 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 not less
than 75.0% 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 10.0%
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 10.0% 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 15.0% 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.

A 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
shareholders
holding not less than 75.0% of the
outstanding shares
in the general
meeting of the
company authorizing
the buy-back; (c)
the buy-back is
limited to 25.0% 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 10.0% 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 of the
same kind for a
period of six
months.
A company is also
prohibited from
purchasing its own
shares or specified
securities directly
or indirectly.
 190




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Comparison of Corporate Governance Standards
     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
$120,000 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 50.0% 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 50.0% 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; (vi) is not a
shareholder, owning 2.0% or more of the voting shares
of the company; and (vii) is not less than 21 years
of age.
There is no comparable requirement under Indian law.
 191




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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 statement of uses
or application of funds raised through an issue of
securities, the statement of funds utilized for
purposes other than as stated in the offer document
and the report submitted by the monitoring
committee agency, and to make appropriate
recommendations.   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.   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.
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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSEThe 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 SEC) 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.

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.

The 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 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.

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.)
    
    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 listing agreements require an Indian listed
company to have an internal audit function.
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.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.
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 SEC 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.)
    
    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.
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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.

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.)
    
    There is no comparable provision under Indian law.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.)
    
    Under Section 79A of the Indian Companies Act, a
company may issue equity shares of an existing
class of shares to employees or directors at a
discount or for consideration other than cash 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.Code 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 CEO.
 194




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##### Table of Contents



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
  Outstanding loans
  Option Agreement dated February 18, 2005 between Sterlite, IFL and ICICI Bank, Novation Agreement
dated November 15, 2008 between IFL, ICICI Bank Limited and Sterlite in respect of the Rs. 772.5
million term loan facility and Novation Agreement dated November 15, 2008 between IFL, ICICI Bank
Limited and Sterlite in respect of the Rs. 250 million term loan facility
  Corporate Guarantee dated February 8, 2005 by Sterlite to ICICI Bank on behalf of IFL
  195




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##### Table of Contents



Loan Agreement dated February 4, 2008 between Sterlite and Vedanta Aluminium
  Memoranda of Understanding dated August 29, 2007 and December 23, 2007, as amended, between
Sterlite and Vedanta Aluminium
  Term Sheet dated May 22, 2009 between Sterlite Industries (India) Limited and Vedanta Aluminium
Limited relating to the subscription of 9.75% Non-Convertible Debentures.
  Sterlite Plan Agreement in Principle Term Sheet dated June 12, 2009 by and among Asarco, the
subsidiary debtors, Sterlite USA, Robert C. Pate, in his capacity as the Future Claims
Representative, and the Official Committee of Asbestos Claimants
  196




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Sponsor Support Agreement dated June 29, 2009 among Sterlite, Sterlite Energy and the State Bank of
India
  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 a multinational
financial institution, 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, or (d) for transfer of shares of an Indian company engaged in the
information technology sector or in the mining sector for the same area or mineral;
    
    foreign investment of more than 24% in the equity capital of units
manufacturing items reserved for small scale industries; and
    
    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.
  197




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Issue of ADSs
    Restrictions on Redemption of ADSs, Sale of the Equity Shares Underlying the ADSs and the
Repatriation of Sale Proceeds
   198




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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 custodian agreement is amended to enable the custodian to accept shares
from entities other than the company;
    
    the number of shares of the Indian company so purchased does not exceed the
head room which is equivalent to the difference between numbers of ADS originally
issued and number of ADS outstanding, as further adjusted for ADS redeemed into underlying
shares and registered in the name of the non-resident investor (and is further subject
to specified sectoral caps); 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.
 199




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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
the ADR Scheme would be subject to a ceiling of 7% of the issue size, in the case of
public issues, and 2.0% 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.
 Corporate Actions
  Buyback of ADS
  FCCBs
 Eligibility
  Automatic Route
  
    
    the issue of FCCBs are subject to the FDI sectoral caps prescribed by the
Ministry of Finance;
    
    a public issue of FCCBs is to be made through reputable lead managers;
    
    FCCBs cannot be issued with attached warrants;
    
    issue-related expenses shall not exceed 4.0% of the issue size; and
    
    FCCBs issued under the automatic approval route to meet Indian Rupee
expenditure are required to be hedged unless there is a natural hedge in the form
of uncovered foreign exchange receivables.
 200




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##### Table of Contents



Pricing of FCCB Issue
  Regulatory Filings
  
    
    filing Form No. 83 with RBI through an authorised dealer;
    
    filing of information with RBI subsequent to the issuance of FCCBs which would
include: the total amount of FCCBs issued, the names of the investors resident
outside India and the number of FCCBs issued to each of them, and the amount
repatriated to India through normal banking channels duly supported by Foreign
Inward Remittance Certificates;
    
    filing of the return of allotment with the Registrar of Companies, Goa, Daman
and Diu, at the time of conversion of the FCCBs into equity shares;
    
    on conversion of the FCCBs into equity shares, the filing of information with
the Regional Office of the RBI in the prescribed Form FC-GPR, and to the
Department of Statistics and Information Management, RBI within 7 days of the
month to which it relates, in Form No. ECB-2; and
    
    monthly filing of Form No. ECB-2 with RBI through an authorised dealer.
 Buy Back of FCCBs
  201




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Restrictions on equity shares underlying the ADSs issued arising on conversion of FCCBs and the
repatriation of Sale Proceeds
   Investment by Foreign Institutional Investors
     202




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Portfolio Investment by Non-Resident Indians
   Transfer of Shares
  
    
    investments to be made by venture capital funds registered with SEBI or a
multinational financial institution;
    
    where the existing joint venture investment by either of the parties is
less than 3.0%;
    
    where the existing venture/collaboration is defunct or sick; or
    
    for transfer of shares of an Indian company engaged in the information
technology sector or in the mining sector for the same area or mineral.
  203




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Exchange Rates
   Period End(1)
    
    Average(1)(2)
    
    High
    
    LowFiscal Year:2006
    
    
    44.48
    
    
    
    44.17
    
    
    
    46.26
    
    
    
    43.052007
    
    
    43.10
    
    
    
    44.93
    
    
    
    46.83
    
    
    
    42.782008
    
    
    40.02
    
    
    
    40.13
    
    
    
    43.05
    
    
    
    38.482009
    
    
    50.87
    
    
    
    45.84
    
    
    
    51.96
    
    
    
    39.732010
    
    
    44.95
    
    
    
    47.39
    
    
    
    50.48
    
    
    
    44.942011(through September 10, 2010)
    
    
    46.28
    
    
    
    46.02
    
    
    
    47.49
    
    
    
    44.10Month:November 2009
    
    
    46.44
    
    
    
    46.53
    
    
    
    47.37
    
    
    
    46.06December 2009
    
    
    46.40
    
    
    
    46.53
    
    
    
    46.85
    
    
    
    46.00January 2010
    
    
    46.08
    
    
    
    45.89
    
    
    
    46.35
    
    
    
    45.35February 2010
    
    
    46.05
    
    
    
    46.27
    
    
    
    46.79
    
    
    
    45.97March 2010
    
    
    44.95
    
    
    
    45.45
    
    
    
    46.01
    
    
    
    44.94April 2010
    
    
    44.20
    
    
    
    44.44
    
    
    
    44.79
    
    
    
    44.10May 2010
    
    
    46.31
    
    
    
    45.77
    
    
    
    47.49
    
    
    
    44.46June 2010
    
    
    46.41
    
    
    
    46.50
    
    
    
    47.08
    
    
    
    45.64July 2010
    
    
    46.35
    
    
    
    46.76
    
    
    
    47.23
    
    
    
    46.25August 2010
    
    
    47.02
    
    
    
    46.46
    
    
    
    47.02
    
    
    
    45.70September 2010 (through 10, 2010)
    
    
    46.28
    
    
    
    46.55
    
    
    
    46.82
    
    
    
    46.28
 
 Notes:(1)
    
    The exchange rates quoted by Federal Reserve Bank of New York 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 quoted on Federal Reserve Bank of New York on
the last day of each month during the period for all fiscal years presented and the average of
the exchange rates quoted on Federal Reserve Bank of New York for all days during the period
for all months presented. 204




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Period End(1)
    
    Average(1)(2)
    
    High
    
    LowFiscal Year:2006
    
    
    1.40
    
    
    
    1.33
    
    
    
    1.42
    
    
    
    1.282007
    
    
    1.23
    
    
    
    1.30
    
    
    
    1.39
    
    
    
    1.232008
    
    
    1.10
    
    
    
    1.15
    
    
    
    1.27
    
    
    
    1.062009
    
    
    1.44
    
    
    
    1.31
    
    
    
    1.65
    
    
    
    1.022010
    
    
    1.09
    
    
    
    1.18
    
    
    
    1.44
    
    
    
    1.072011(September 10, 2010)
    
    
    1.08
    
    
    
    1.13
    
    
    
    1.22
    
    
    
    1.07Month:November 2009
    
    
    1.09
    
    
    
    1.09
    
    
    
    1.11
    
    
    
    1.07December 2009
    
    
    1.11
    
    
    
    1.11
    
    
    
    1.14
    
    
    
    1.08January 2010
    
    
    1.13
    
    
    
    1.10
    
    
    
    1.13
    
    
    
    1.07February 2010
    
    
    1.12
    
    
    
    1.13
    
    
    
    1.16
    
    
    
    1.11March 2010
    
    
    1.09
    
    
    
    1.10
    
    
    
    1.11
    
    
    
    1.08April 2010
    
    
    1.07
    
    
    
    1.08
    
    
    
    1.09
    
    
    
    1.07May 2010
    
    
    1.18
    
    
    
    1.15
    
    
    
    1.22
    
    
    
    1.08June 2010
    
    
    1.18
    
    
    
    1.17
    
    
    
    1.22
    
    
    
    1.13July2010
    
    
    1.10
    
    
    
    1.14
    
    
    
    1.19
    
    
    
    1.10August 2010
    
    
    1.09
    
    
    
    1.09
    
    
    
    1.10
    
    
    
    1.09September 2010 (through 10, 2010)
    
    
    1.08
    
    
    
    1.09
    
    
    
    1.10
    
    
    
    1.08
 
 Notes:(1)
    
    The exchange rates quoted on Federal Reserve Bank of New York 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 quoted on Federal Reserve Bank of New York on
the last day of each month during the period for all fiscal years presented and the average of
the exchange rates quoted on Federal Reserve Bank of New York for all days during the period for all months
presented.  E.
    
    Taxation
 India Taxation
  205




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Residence
  Taxation of Sale of the ADSs
  Withdrawal of Equity Shares in Exchange for the ADSs
  Taxation of Dividends
  206




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Taxation of Sale of the Equity Shares
  Sale of the Equity Shares on a Recognized Stock Exchange
   .
   207




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Securities Transaction Tax
  Sale of the Equity Shares otherwise than on a Recognized Stock Exchange
  Capital Losses
  Tax Treaties
  Withholding Tax on Capital Gains
  Buy-Back of Securities
  Stamp Duty
  208




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Wealth Tax, Gift Tax and Inheritance Tax
  Service Tax
  Minimum Alternate Tax
   Fringe Benefit Tax
  Tax Credit
  United States Federal Income Taxation
  209




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##### Table of Contents




    
    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.
  
    
    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.
  210




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Taxation of Dividends and Other Distributions on the ADSs or Equity Shares
     211




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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 total value of its assets (based on an average of the
quarterly values of the assets during a taxable year) is attributable to assets,
including cash, that produce or are held for the production of passive income (the
asset test).
    212




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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
  213




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Information Reporting and Backup Withholding
   New Legislation
  F.
    
    Dividends and Paying Agents
  G.
    
    Statements by Experts
  H.
    
    Documents on Display
  www.sec.gov
 I.
    
    Subsidiary Information
  214




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##### Table of Contents



ITEM 11.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Qualitative Analysis
  Currency Risk
  10% movement in currency
    
    For Rs./ $
    
    
    For AUD/ $(in millions)Copper
    
    Rs.
    687.3
    
    
    $
    15.3
    
    
    Rs.
    864.0
    
    
    $
    19.2Zinc
    
    
    5,514.0
    
    
    
    122.7
    
    
    
    
    
    
    
    Aluminum
    
    
    2,197.8
    
    
    
    48.9
    
    
    
    
    
    
    
    Total
    
    Rs.
    8399.1
    
    
    $
    186.9
    
    
    Rs.
    864.0
    
    
    $
    19.2
    Interest Rate Risk
   215




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##### Table of Contents



US DollarMovement in interest rates
    
    Interest Rates(in millions)0.5%
    
    Rs.
    131.7
    
    
    $
    2.91.0%
    
    
    263.4
    
    
    
    5.92.0%
    
    
    526.8
    
    
    
    11.7
 Commodity Price Risk
     $100 movement in LME price
    
    Change in Operating Income(in millions)Copper
    
    Rs.
    130.3
    
    
    $
    2.9Zinc
    
    
    3,073.8
    
    
    
    68.4Aluminum
    
    
    1,329.3
    
    
    
    29.6Total
    
    Rs.
    4,533.4
    
    
    $
    100.9
 Quantitative Analysis
  March 31,2009
    
    
    2010
    
    
    2010Asset
    
    
    Liability
    
    
    Asset
    
    
    Liability
    
    
    Asset
    
    
    Liability(Rs in millions)
    (Rs in millions)
    (US dollar in millions)Cash flow hedges:Commodity contracts
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    0.1
    
    
    
    Forward foreign
currency contracts
    
    
    1,189
    
    
    
    501
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    1.4Fair value hedges:Commodity contracts
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    0.6Forward foreign
currency contracts
    
    
    323
    
    
    
    
    
    
    
    2
    
    
    
    369
    
    
    
    0.0
    
    
    
    8.2Non-qualifying hedges:Commodity contracts
    
    
    26
    
    
    
    2,128
    
    
    
    110
    
    
    
    49
    
    
    
    2.4
    
    
    
    1.1Forward foreign
currency contracts
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    160
    
    
    
    0.1
    
    
    
    3.6Fair value
    
    
    1,538
    
    
    
    2,639
    
    
    
    115
    
    
    
    669
    
    
    
    2.6
    
    
    
    14.9
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##### Table of Contents



ITEM 12.
    
    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 D.
    
    American Depositary Shares
   Type of Service
    
    Fees
    
    By whom paid1.
    
    Issuance of ADSs
upon the deposit of
ordinary shares
(excluding
issuances as a
result of
distributions
described in
paragraph 4 below)
    
    Up to $5.00 per 100
ADSs (or any
portion thereof)
issued
    
    Person depositing shares or person receiving ADSs2.
    
    Surrender of ADSs
for cancellation
and withdrawal of
ordinary shares
underlying such
ADSs
    
    Up to $5.00 per 100
ADSs (or any
portion thereof)
surrendered
    
    Person surrendering
ADSs for purpose of
withdrawal of
deposited
securities or
person to whom
deposited
securities are
delivered3.
    
    Distribution of
cash dividends or
other cash
distributions (i.e.
sale of rights and
other entitlements)
    
    Up to $2.00 per 100
ADSs (or any
portion thereof)
held
    
    Person to whom
distribution is
made4.
    
    Distribution of
ADSs pursuant to
(i) stock dividends
or other free stock
distributions, or
(ii) exercise of
rights to purchase
additional ADSs
    
    Up to $5.00 per 100
ADSs (or any
portion thereof)
issued
    
    Person to whom
distribution is
made5.
    
    Distribution of
securities other
than ADSs or rights
to purchase
additional ADSs
(i.e. spin-off
shares)
    
    Up to $5.00 per 100
ADSs (or any
portion thereof)
issued
    
    Person to whom
distribution is
made6.
    
    Depositary services
    
    Up to $2.00 per 100
ADSs (or any
portion thereof)
held
    
    Person holding ADSs on applicable record date(s) established by the Depositary7.
    
    Transfer of ADRs
    
    $1.50 per
certificate
presented for
transfer
    
    Person presenting certificate for transfer
  
    
    taxes (including applicable interest and penalties) and other governmental
charges;
    
    registration fees for the registration of ordinary shares or other deposited
securities on the share register and applicable to transfers of ordinary shares or
other deposited securities to or from the name of the custodian, the Depositary or any
nominees upon the making of deposits and withdrawals;
 217




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
    
    certain cable, telex, facsimile and electronic transmission and delivery
expenses;
    
    expenses and charges incurred by the Depositary in the conversion of foreign
currency;
    
    fees and expenses incurred by the Depositary in connection with compliance
with exchange control regulations and other regulatory requirements applicable to
ordinary shares, deposited securities, ADSs and ADRs;
    
    fees and expenses incurred by the Depositary in connection with the delivery
of deposited securities; and
    
    the fees and expenses incurred by the Depositary, the custodian, or any
nominee in connection with the servicing or delivery of deposited securities.
     
 PART II
 
 ITEM 13.
    
    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14.
    
    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
 ADS offering in 2007
    218




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##### Table of Contents



ADS offering in 2009
    Convertible Notes offering in 2009
    
 ITEM 15.
    
    CONTROLS AND PROCEDURES
 (a)
    
    Disclosure Controls and Procedures
   219




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##### Table of Contents



(b)
    
    Managements Annual Report on Internal Control over Financial Reporting
       (c)
    
    Attestation Report of the Registered Public Accounting Firm
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
  220




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##### Table of Contents



(d)
    
    Changes in Internal Control over Financial Reporting
  ITEM 16.
 
 ITEM 16A.
    
    AUDIT COMMITTEE FINANCIAL EXPERT
  221




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ITEM 16B.
    
    CODE OF ETHICS
 www.sterlite-industries.com
  
 ITEM 16C.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    Fiscal2009
    
    
    2010(in thousands)Audit fees (audit and review of financial statements)
    
    $
    696.7
    
    
    $
    778.6Audit-related fees (including fees related to the ADS offering and other
miscellaneous audit related certifications)
    
    
    310.1
    
    
    
    743.5Tax fees (tax audit, other certifications and tax advisory services)
    
    
    29.1
    
    
    
    46.6All other fees (certification on corporate governance and advisory services)
    
    
    113.6
    
    
    
    374.6Total
    
    $
    1,149.5
    
    
    $
    1,943.3
 Audit Committee Pre-approval Process
 de minimus
 
 ITEM 16D.
    
    EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  222




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ITEM 16E.
    
    PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  Maximum Number(orTotal Number of
    
    Approximate DollarShares Purchased as
    
    Value) of SharesTotal Number of
    
    Average Price Paid per
    
    Part of Publicly
    
    that May Yet BeShares
    
    Share
    
    Announced Plans or
    
    Purchased Under thePurchased
    
    Rs.
    
    $
    
    Programs High
    
    Plans or ProgramsPeriod:April 23, 2009
    
    
    127,034
    
    
    Rs.
    352.65
    
    
    $
    7.85
    
    
    
    
    
    
    Not applicableApril 23, 2009
    
    
    37,127
    
    
    
    353.10
    
    
    
    7.86
    
    
    
    
    
    
    Not applicableApril 23, 2009
    
    
    69,438
    
    
    
    371.96
    
    
    
    8.28
    
    
    
    
    
    
    Not applicableApril 23, 2009
    
    
    252,945
    
    
    
    372.00
    
    
    
    8.28
    
    
    
    
    
    
    Not applicableApril 23, 2009
    
    
    350,000
    
    
    
    349.67
    
    
    
    7.78
    
    
    
    
    
    
    Not applicableApril 23, 2009
    
    
    2,070,000
    
    
    
    348.80
    
    
    
    7.76
    
    
    
    
    
    
    Not applicableJune 30, 2009
    
    
    713,915
    
    
    
    579.21
    
    
    
    12.89
    
    
    
    
    
    
    Not applicableJune 30, 2009
    
    
    19,731
    
    
    
    601.95
    
    
    
    13.39
    
    
    
    
    
    
    Not applicableJuly 21, 2009
    
    
    41,152,263
    
    
    
    546.14
    
    
    
    12.15
    
    
    
    41,152,263
    
    
    
    500,000,000March 25, 2010
    
    
    121,356
    
    
    
    821.20
    
    
    
    18.27
    
    
    
    
    
    
    Not applicableMarch 26, 2010
    
    
    323,790
    
    
    
    823.55
    
    
    
    18.32
    
    
    
    
    
    
    Not applicableMarch 30, 2010
    
    
    550,000
    
    
    
    851.49
    
    
    
    18.94
    
    
    
    
    
    
    Not applicableMarch 31, 2010
    
    
    140,000
    
    
    
    853.02
    
    
    
    18.98
    
    
    
    
    
    
    Not applicableTotal
    
    
    45,927,599
    
    
    Rs.
    527.86
    
    
    $
    11.7
    
    
    
    41,152,263
    
    
    Not applicable
 
 Notes:
 (1)
    
    During the year 2010, Twinstar Holdings Ltd acquired 46,631,918 equity shares of SIIL
including ADS and shareholding changed from 57.4% to 54.0%.
 (2)
    
    During the year 2010, MALCO sold 704,319 equity shares of
SIIL to Twinstar and its shareholding has been
changed from 3.7% to 3.0%.
 
 ITEM 16F.
    
    CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
  
 ITEM 16G.
    
    CORPORATE GOVERNANCE
   223




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224




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PART
III
 
 ITEM 17.
    
    FINANCIAL STATEMENTS
  
 ITEM 18.
    
    FINANCIAL STATEMENTS
  
    
    Report of Independent Registered Public Accounting Firm.
    
    Consolidated Statements of Income for the year ended March 31, 2009 and 2010.
    
    Consolidated Statements of Comprehensive Income for the year ended March 31,
2009 and 2010.
    
    Consolidated Statements of Financial Position as of April 1, 2008, March 31,
2009 and 2010.
    
    Consolidated Statement of Changes in Equity for the year ended March 31, 2009
and 2010.
    
    Notes to the Consolidated Financial Statements.
 
 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 SEC on June 4, 2007.1.2
    
    Memorandum of Association of Sterlite Industries (India) Limited, as amended  incorporated
by reference to Exhibit 1.2 of the annual report on Form-20F for fiscal 2008 (File No.
001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.1.3
    
    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 SEC 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 SEC on June 15, 2007 as amended by Form of
ADR incorporated by reference to Form 424B3 (File No. 333-139102), as filed with the SEC on
June 28, 2010.2.2
    
    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
SEC 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 SEC on
November 15, 2006.
 225




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##### Table of Contents



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 SEC on November 15, 2006.4.3
    
    Deed of Adherence dated December 11, 2007 among Vedanta Resources plc, Volcan Investments
Limited, Onclave PTC Limited and Anil Agarwal  incorporated by reference to Exhibit 4.3 of
the annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries
(India) Limited, as filed with the SEC on June 30, 2008.4.4
    
    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 SEC 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC
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 SEC 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 SEC on November 15, 2006.
 226




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##### Table of Contents



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 SEC 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 SEC 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 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 SEC
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 SEC 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC 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 SEC
on November 15, 2006.
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##### Table of Contents



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 SEC
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 SEC 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 SEC 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 SEC on November 15, 2006.4.28
    
    Letter issued by Sterlite Industries (India) Limited to Kuldip Kumar Kaura dated March 27,
2008  incorporated by reference to Exhibit 4.28 of the annual report on Form-20F for fiscal
2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on
June 30, 2008.4.29
    
    Share Purchase Agreement between Sterlite Industries (India) Limited and Anil Agarwal dated
October 3, 2006 relating to 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 SEC on November 22, 2006.4.30
    
    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 SEC on November 22, 2006.4.31
    
    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 SEC on November 22, 2006.4.32
    
    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 SEC on February 8, 2007.4.33
    
    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 SEC on
February 8, 2007.4.34
    
    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 SEC on
February 8, 2007.4.35
    
    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 SEC
on February 8, 2007.4.36
    
    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
 228




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##### Table of Contents



Convertible Debentures  incorporated by reference to Exhibit 4.38 of the annual report on
Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as
filed with the SEC on June 30, 2008.
 4.37
    
    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  incorporated by
reference to Exhibit 4.39 of the annual report on Form-20F for fiscal 2008 (File No.
001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.4.38
    
    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  incorporated by reference to Exhibit 4.40 of the annual report
on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as
filed with the SEC on June 30, 2008.4.39
    
    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  incorporated by
reference to Exhibit 4.41 of the annual report on Form-20F for fiscal 2008 (File No.
001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on June 30, 2008.4.40
    
    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  incorporated by reference to Exhibit 4.42 of the annual report on Form-20F
for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the
SEC on June 30, 2008.4.41
    
    Rs. 10,000 million Loan Agreement between Sterlite Industries (India) Limited and Vedanta
Aluminium Limited dated February 4, 2008  incorporated by reference to Exhibit 4.43 of the
annual report on Form-20F for fiscal 2008 (File No. 001-33175) of Sterlite Industries (India)
Limited, as filed with the SEC on June 30, 2008.4.42
    
    Amendment No. 1 dated April 15, 2009 to the Settlement and Sale and Purchase Agreement dated
March 6, 2009 among Asarco LLC, AR Silver Bell, Inc., Copper Basin Railway, Inc., Asarco Santa
Cruz, Inc., Sterlite (USA), Inc., and Sterlite Industries (India) Limited  incorporated by
reference to Exhibit 4.43 of the annual report on Form-20F for fiscal 2009 (File No.
001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on July 10, 2009.4.43
    
    Amendment No. 2 effective as of April 22, 2009 to the Settlement and Sale and Purchase
Agreement dated March 6, 2009, as amended on April 15, 2009, among Asarco LLC, AR Silver Bell,
Inc., Copper Basin Railway, Inc., Asarco Santa Cruz, Inc., Sterlite (USA), Inc., and Sterlite
Industries (India) Limited  incorporated by reference to Exhibit 4.44 of the annual report on
Form-20F for fiscal 2009 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed
with the SEC on July 10, 2009.4.44
    
    Amendment No. 3 effective as of June 12, 2009 to the Settlement and Sale and Purchase
Agreement dated March 6, 2009, as amended on April 15, 2009 and April 22, 2009, among Asarco
LLC, AR Silver Bell, Inc., Copper Basin Railway, Inc., Asarco Santa Cruz, Inc., Sterlite
(USA), Inc., and Sterlite Industries (India) Limited  incorporated by reference to Exhibit
4.45 of the annual report on Form-20F for fiscal 2009 (File No. 001-33175) of Sterlite
Industries (India) Limited, as filed with the SEC on July 10, 2009.
 229




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##### Table of Contents



4.45
    
    Sterlite Plan Agreement in Principle Term Sheet dated June 12, 2009 among Asarco LLC, the
subsidiary debtors, Sterlite (USA), Inc., Robert C. Pate, in his capacity as the Future Claims
Representative, and the Official Committee of Asbestos Claimants  incorporated by reference
to Exhibit 4.46 of the annual report on Form-20F for fiscal 2009 (File No. 001-33175) of
Sterlite Industries (India) Limited, as filed with the SEC on July 10, 2009.4.46
    
    Credit Agreement Letter dated February 7, 2005 between India Foils Limited and ICICI Bank
Limited  incorporated by reference to Exhibit 4.47 of the annual report on Form-20F for
fiscal 2009 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC
on July 10, 2009.4.47
    
    Novation Agreement dated November 15, 2008 among Sterlite Industries (India) Limited, India
Foils Limited and ICICI Bank Limited in respect of Rs. 772.5 million term loan facility 
incorporated by reference to Exhibit 4.48 of the annual report on Form-20F for fiscal 2009
(File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on July 10,
2009.4.48
    
    Credit Agreement Letter dated August 4, 2005 between India Foils Limited and ICICI Bank
Limited  incorporated by reference to Exhibit 4.49 of the annual report on Form-20F for
fiscal 2009 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC
on July 10, 2009.4.49
    
    Novation Agreement dated November 15, 2008 among Sterlite Industries (India) Limited, India
Foils Limited and ICICI Bank Limited in respect of the Rs. 250 million term loan facility 
incorporated by reference to Exhibit 4.50 of the annual report on Form-20F for fiscal 2009
(File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on July 10,
2009.4.50
    
    Rs. 55,690 million Common Rupee Loan Agreement dated June 29, 2009 among Sterlite Energy
Limited, the State Bank of India as facility agent and issuing bank, IDBI Trusteeship Services
Limited as security trustee and the lenders named therein  incorporated by reference to
Exhibit 4.51 of the annual report on Form-20F for fiscal 2009 (File No. 001-33175) of Sterlite
Industries (India) Limited, as filed with the SEC on July 10, 2009 .4.51
    
    $140 million Term Loan Facility Agreement dated June 29, 2009 among Sterlite Energy Limited,
India Infrastructure Finance (UK) Company Limited as lender, and the State Bank of India as
facility agent  incorporated by reference to Exhibit 4.52 of the annual report on Form-20F
for fiscal 2009 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the
SEC on July 10, 2009.4.52
    
    Sponsor Support Agreement dated June 29, 2009 among Sterlite Industries (India) Limited,
Sterlite Energy Limited, and the State Bank of India as facility agent  incorporated by
reference to Exhibit 4.53 of the annual report on Form-20F for fiscal 2009 (File No.
001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on July 10, 2009.4.53
    
    Term Sheet dated May 22, 2009 between Sterlite Industries (India) Limited and Vedanta
Aluminium Limited relating to the subscription of 9.75% Non-Convertible Debentures 
incorporated by reference to Exhibit 4.54 of the annual report on Form-20F for fiscal 2009
(File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on July 10,
2009 .4.54
    
    Agreement dated February 18, 2009 between the Orissa Mining Corporation Limited and Sterlite
Industries (India) Limited  incorporated by reference to Exhibit 4.55 of the annual report on
Form-20F for fiscal 2009 (File No. 001-33175) of Sterlite Industries (India) Limited, as filed
with the SEC on July 10, 2009.4.55
    
    Indenture and Supplemental Indenture, both dated October 29, 2009, between Sterlite
Industries (India) Limited and Wilmington Trust Company as trustee and Citibank, N.A., as
securities administrator  incorporated by reference to Exhibits 4.1 and 4.2 to the Form-6K
(File No. 001-33175) of Sterlite Industries (India) Limited, as filed with the SEC on November
3, 2009.8.1**
    
    List of subsidiaries of Sterlite Industries (India) Limited.
 230




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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 2002.15.1**
    
    Consent of Independent Registered Public Accounting Firm
 
 231




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##### Table of Contents



SIGNATURES
   STERLITE INDUSTRIES (INDIA) LIMITEDBy:
    /s/ Vinod BhandawatName:
    Vinod BhandawatTitle:
    Chief Financial Officer 232




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##### 



Index to Consolidated Financial Statements
 Page(s)Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Statements of Income for the year ended March 31, 2009 and 2010.
    
    
    F-3Consolidated Statements of Comprehensive Income for the year ended March 31, 2009 and 2010.
    
    
    F-4Consolidated Statements of Financial Position as at April 1, 2008, March 31, 2009 and 2010.
    
    
    F-5Consolidated Statements of Cash Flows for the year ended March 31, 2009 and 2010.
    
    
    F-6Consolidated Statements of Changes in Equity for the year ended March 31, 2009 and 2010.
    
    
    F-7Notes to the Consolidated Financial Statements
    
    
    F-8
  F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      
 F-2




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STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME  (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 For the year ended March 31,Notes
    
    2009
    
    2010
    
    2010(Rs. in millions)
    
    (Rs. in millions)
    
    (US dollarsin millions)(Note 2)Revenue
    
    
    5
    
    
    
    212,192
    
    
    
    244,903
    
    
    
    5,448.3Cost of sales
    
    
    
    
    
    
    (165,097
    )
    
    
    (181,928
    )
    
    
    (4,047.3
    )Gross profit
    
    
    
    
    
    
    47,095
    
    
    
    62,975
    
    
    
    1,401.0Other operating income
    
    
    
    
    
    
    3,750
    
    
    
    1,907
    
    
    
    42.4Distribution expenses
    
    
    
    
    
    
    (3,388
    )
    
    
    (3,022
    )
    
    
    (67.2
    )Administration expenses
    
    
    
    
    
    
    (4,367
    )
    
    
    (8,026
    )
    
    
    (178.6
    )Operating profit
    
    
    
    
    
    
    43,090
    
    
    
    53,834
    
    
    
    1,197.6Investment and other income
    
    
    6
    
    
    
    18,772
    
    
    
    13,811
    
    
    
    307.3Finance and other costs
    
    
    7
    
    
    
    (6,244
    )
    
    
    214
    
    
    
    4.8Share in Consolidated (loss)/profit of associate
    
    
    10
    
    
    
    (3,160
    )
    
    
    2,051
    
    
    
    45.6Profit before tax
    
    
    
    
    
    
    52,458
    
    
    
    69,910
    
    
    
    1,555.3Income tax expense
    
    
    8
    
    
    
    (7,782
    )
    
    
    (13,247
    )
    
    
    (294.7
    )Profit for the year
    
    
    
    
    
    
    44,676
    
    
    
    56,663
    
    
    
    1,260.6Profit attributable to:Equity holders of the parent
    
    
    
    
    
    
    32,228
    
    
    
    39,263
    
    
    
    873.5Minority interest
    
    
    
    
    
    
    12,448
    
    
    
    17,400
    
    
    
    387.1Earnings per share
    
    
    29Basic
    
    
    
    
    
    
    11.37
    
    
    
    12.27
    
    
    
    0.3Diluted
    
    
    
    
    
    
    11.37
    
    
    
    12.03
    
    
    
    0.3Weighted average number of equity shares used in
computing earnings per shareBasic
    
    
    
    
    
    
    2,833,583,490
    
    
    
    3,199,826,061
    
    
    
    3,199,826,061Diluted
    
    
    
    
    
    
    2,833,583,490
    
    
    
    3,236,000,281
    
    
    
    3,236,000,281
   F-3




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 For the year ended March 31,2009
    
    2010
    
    2010(Rs. in millions)
    
    (Rs. in millions)
    
    (US dollarsin millions)(Note 2)Profit for the year
    
    
    44,676
    
    
    
    56,663
    
    
    
    1,260.6Other comprehensive (loss)/ income, net of tax:Exchange differences on translation of foreign operations
    
    
    (327
    )
    
    
    1,295
    
    
    
    28.8(Loss)/gain on available-for-sale financial investments
    
    
    (79
    )
    
    
    318
    
    
    
    7.1Cash flow hedges*
    
    
    398
    
    
    
    121
    
    
    
    2.7Share in consolidated other comprehensive (loss)/income of associate *
    
    
    (582
    )
    
    
    799
    
    
    
    17.7Total other comprehensive (loss)/income for the year, net of tax
    
    
    (590
    )
    
    
    2,533
    
    
    
    56.3Total comprehensive income
    
    
    44,086
    
    
    
    59,196
    
    
    
    1,316.9Total comprehensive income attributable to:Equity holders of the parent
    
    
    31,708
    
    
    
    41,724
    
    
    
    928.2Minority interest
    
    
    12,378
    
    
    
    17,472
    
    
    
    388.744,086
    
    
    
    59,196
    
    
    
    1,316.9
 
 *
    
    Refer to Note 8 for tax related to each component of other comprehensive (loss)/ incomeRefer to Note 34(a) for amounts reclassified into profit for the year out of other
comprehensive (loss)/ income  F-4




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STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION  (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 As at April 1,
    
    As at March 31,Notes
    
    2008
    
    2009
    
    2010
    
    2010(US dollars inmillions)(Rs. in millions)
    
    (Rs. in millions)
    
    (Rs. in millions)
    
    (Note 2)ASSETSNon-current assetsProperty, plant and equipment
    
    
    9
    
    
    
    121,699
    
    
    
    166,528
    
    
    
    226,629
    
    
    
    5,041.8Leasehold land prepayments
    
    
    
    
    
    
    483
    
    
    
    967
    
    
    
    1,220
    
    
    
    27.1Investment in associate
    
    
    10
    
    
    
    19,085
    
    
    
    15,043
    
    
    
    4,621
    
    
    
    102.8Financial assets investments
    
    
    11
    
    
    
    1,123
    
    
    
    1,044
    
    
    
    1,362
    
    
    
    30.3Other non-current assets
    
    
    12
    
    
    
    1,274
    
    
    
    9,651
    
    
    
    10,227
    
    
    
    227.5Total non-current assets
    
    
    
    
    
    
    143,664
    
    
    
    193,233
    
    
    
    244,059
    
    
    
    5,429.5Current assetsInventories
    
    
    13
    
    
    
    33,373
    
    
    
    24,608
    
    
    
    29,822
    
    
    
    663.4Current tax asset
    
    
    
    
    
    
    20
    
    
    
    109
    
    
    
    660
    
    
    
    14.7Trade and other receivables
    
    
    14
    
    
    
    27,780
    
    
    
    32,311
    
    
    
    118,907
    
    
    
    2,645.3Short term investments
    
    
    15
    
    
    
    155,964
    
    
    
    188,067
    
    
    
    211,022
    
    
    
    4,694.6Derivative financial assets
    
    
    25
    
    
    
    1,627
    
    
    
    1,538
    
    
    
    115
    
    
    
    2.6Restricted cash and cash equivalents
    
    
    16
    
    
    
    59
    
    
    
    2,011
    
    
    
    60
    
    
    
    1.3Cash and cash equivalents
    
    
    17
    
    
    
    12,363
    
    
    
    2,701
    
    
    
    2,021
    
    
    
    45.0Total current assets
    
    
    
    
    
    
    231,186
    
    
    
    251,345
    
    
    
    362,607
    
    
    
    8,066.9Assets held for sale
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    188
    
    
    
    4.2Total assets
    
    
    
    
    
    
    374,850
    
    
    
    444,578
    
    
    
    606,854
    
    
    
    13,500.6LIABILITIESCurrent liabilitiesShort-term borrowings
    
    
    19
    
    
    
    10,190
    
    
    
    20,202
    
    
    
    19,121
    
    
    
    425.4Acceptances
    
    
    20
    
    
    
    27,033
    
    
    
    35,829
    
    
    
    29,901
    
    
    
    665.2Trade and other payables
    
    
    21
    
    
    
    22,831
    
    
    
    27,243
    
    
    
    35,095
    
    
    
    780.8Derivative financial liabilities
    
    
    25
    
    
    
    638
    
    
    
    2,639
    
    
    
    669
    
    
    
    14.9Provisions
    
    
    22
    
    
    
    687
    
    
    
    737
    
    
    
    748
    
    
    
    16.7Current tax liabilities
    
    
    
    
    
    
    1,087
    
    
    
    676
    
    
    
    863
    
    
    
    19.1Total current liabilities
    
    
    
    
    
    
    62,466
    
    
    
    87,326
    
    
    
    86,397
    
    
    
    1,922.1Net current assets
    
    
    
    
    
    
    168,720
    
    
    
    164,019
    
    
    
    276,210
    
    
    
    6,144.8Non-current liabilitiesLong-term borrowings
    
    
    19
    
    
    
    9,949
    
    
    
    14,384
    
    
    
    43,578
    
    
    
    969.4Deferred tax liabilities
    
    
    8
    
    
    
    16,141
    
    
    
    15,172
    
    
    
    17,955
    
    
    
    399.5Retirement benefits
    
    
    24
    
    
    
    647
    
    
    
    711
    
    
    
    865
    
    
    
    19.2Provisions
    
    
    22
    
    
    
    322
    
    
    
    348
    
    
    
    382
    
    
    
    8.5Other non-current liabilities
    
    
    23
    
    
    
    6,332
    
    
    
    6,034
    
    
    
    5,689
    
    
    
    126.6Total non-current liabilities
    
    
    
    
    
    
    33,391
    
    
    
    36,649
    
    
    
    68,469
    
    
    
    1,523.2Total liabilities
    
    
    
    
    
    
    95,857
    
    
    
    123,975
    
    
    
    154,866
    
    
    
    3,445.3Net assets
    
    
    
    
    
    
    278,993
    
    
    
    320,603
    
    
    
    451,988
    
    
    
    10,055.3EQUITYShare capital
    
    
    27
    
    
    
    1,417
    
    
    
    1,417
    
    
    
    1,681
    
    
    
    37.4Securities premium
    
    
    
    
    
    
    106,532
    
    
    
    106,532
    
    
    
    182,797
    
    
    
    4,066.7Other components of equity
    
    
    
    
    
    
    (377
    )
    
    
    439
    
    
    
    2,723
    
    
    
    60.6Retained earnings
    
    
    
    
    
    
    113,232
    
    
    
    142,145
    
    
    
    177,971
    
    
    
    3,959.2Equity attributable to equity holders
of the parent
    
    
    
    
    
    
    220,804
    
    
    
    250,533
    
    
    
    365,172
    
    
    
    8,123.9Minority interest
    
    
    
    
    
    
    58,189
    
    
    
    70,070
    
    
    
    86,816
    
    
    
    1,931.4Total Equity
    
    
    
    
    
    
    278,993
    
    
    
    320,603
    
    
    
    451,988
    
    
    
    10,055.3
  F-5




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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 31,2009
    
    2010
    
    2010(Rs. in
    
    (Rs. In
    
    (US dollars inmillions)
    
    millions)
    
    millions) (Note 2)Cash flows from operating activitiesProfit before taxes
    
    
    52,458
    
    
    
    69,910
    
    
    
    1,555.3Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    8,024
    
    
    
    8,061
    
    
    
    179.3Provision for doubtful debts/advances
    
    
    12
    
    
    
    46
    
    
    
    1.0Fair value
gain on financial assets held for trading
    
    
    (2,254
    )
    
    
    (2,741
    )
    
    
    (61.0
    )Profit on sale of fixed asset, net
    
    
    (10
    )
    
    
    (104
    )
    
    
    (2.3
    )Share in consolidated (profit) / loss of associate
    
    
    3,160
    
    
    
    (2,051
    )
    
    
    (45.6
    )Impairment of guarantees
    
    
    137
    
    
    
    
    
    
    
    Exchange (gains)/loss, net
    
    
    2,159
    
    
    
    (6,074
    )
    
    
    (135.1
    )Gain on fair
valuation of conversion option
    
    
    
    
    
    
    (587
    )
    
    
    (13.0
    )Interest and dividend income
    
    
    (13,779
    )
    
    
    (13,076
    )
    
    
    (290.9
    )Interest expenses
    
    
    4,688
    
    
    
    3,910
    
    
    
    87.0Changes in assets and liabilities:Decrease in trade and other receivables
    
    
    12,843
    
    
    
    3,008
    
    
    
    66.9Decrease /(Increase) in inventories
    
    
    8,767
    
    
    
    (5,167
    )
    
    
    (115.0
    )(Increase)/decrease in other current and non-current assets
    
    
    (6,629
    )
    
    
    1,313
    
    
    
    29.2(Decrease)/increase in trade and other payable
    
    
    (8,520
    )
    
    
    3,410
    
    
    
    75.9Increase/(Decrease) in other current and non-current liabilities
    
    
    1,759
    
    
    
    (1,482
    )
    
    
    (33.0
    )Proceeds from short term investments
    
    
    984,841
    
    
    
    1,231,265
    
    
    
    27,391.9Purchases of short term investments
    
    
    (976,457
    )
    
    
    (1,270,518
    )
    
    
    (28,265.1
    )Cash generation from operation
    
    
    71,199
    
    
    
    19,123
    
    
    
    425.5Interest paid
    
    
    (3,897
    )
    
    
    (5,597
    )
    
    
    (124.5
    )Interest received
    
    
    4,420
    
    
    
    6,460
    
    
    
    143.7Dividend received
    
    
    9,030
    
    
    
    5,966
    
    
    
    132.7Income tax paid
    
    
    (8,649
    )
    
    
    (11,703
    )
    
    
    (260.3
    )Net cash from operating activities
    
    
    72,103
    
    
    
    14,249
    
    
    
    317.1Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (40,623
    )
    
    
    (61,875
    )
    
    
    (1,376.5
    )Proceeds from sale of property, plant and equipment
    
    
    66
    
    
    
    323
    
    
    
    7.1Redemption of investments in associate
    
    
    
    
    
    
    13,342
    
    
    
    296.8Loans repaid by related parties
    
    
    
    
    
    
    6,850
    
    
    
    152.4Loans to related parties
    
    
    (15,381
    )
    
    
    (96,848
    )
    
    
    (2,154.5
    )Proceeds from short term deposits
    
    
    13,354
    
    
    
    55,811
    
    
    
    1,241.6Purchases of short term deposits
    
    
    (50,277
    )
    
    
    (37,136
    )
    
    
    (826.2
    )Net changes in restricted cash and cash equivalents
    
    
    (1,952
    )
    
    
    1,951
    
    
    
    43.4Net cash used in investing activities
    
    
    (94,813
    )
    
    
    (117,582
    )
    
    
    (2,615.9
    )Cash flows from financing activitiesProceeds from issuance of equity shares ,net
    
    
    
    
    
    
    76,529
    
    
    
    1,702.5Proceeds from Convertible notes
    
    
    
    
    
    
    23,133
    
    
    
    514.6Proceeds from/(repayment of) working capital loan, net
    
    
    (3,588
    )
    
    
    (1,194
    )
    
    
    (26.6
    )Proceeds from/(repayment of) acceptances, net
    
    
    5,454
    
    
    
    (1,386
    )
    
    
    (30.9
    )Repayment of other short term borrowings
    
    
    
    
    
    
    (4,500
    )
    
    
    (100.1
    )Proceeds from other short-term borrowings
    
    
    4,500
    
    
    
    5,626
    
    
    
    125.2Proceeds from long-term borrowings
    
    
    14,790
    
    
    
    13,380
    
    
    
    297.7Repayment of long-term borrowings
    
    
    (3,902
    )
    
    
    (5,103
    )
    
    
    (113.5
    )Payment of dividends to equity holders of the parent, including dividend tax
    
    
    (3,315
    )
    
    
    (3,437
    )
    
    
    (76.5
    )Payment of dividends to minority, including dividend tax
    
    
    (497
    )
    
    
    (726
    )
    
    
    (16.1
    )Net cash provided by financing activities
    
    
    13,442
    
    
    
    102,322
    
    
    
    2,276.3Effect of exchange rate changes on cash and cash equivalents
    
    
    (394
    )
    
    
    331
    
    
    
    7.4Net (decrease) in cash and cash equivalents
    
    
    (9,662
    )
    
    
    (680
    )
    
    
    (15.1
    )Cash and cash equivalents at the beginning of the year
    
    
    12,363
    
    
    
    2,701
    
    
    
    60.1Cash and cash equivalents at the end of the year
    
    
    2,701
    
    
    
    2,021
    
    
    
    45.0Supplementary disclosure of non-cash investing activities:Payables for purchase of property, plant and equipment
    
    
    14,383
    
    
    
    18,363
    
    
    
    408.5
  F-6




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STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY  (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 Attributable to equity holders of the parentTranslation
    
    Available forShare
    
    Securities
    
    of foreign
    
    sale financial
    
    Cash flow
    
    Retained
    
    
    
    
    
    Minority
    
    Totalcapital
    
    premium
    
    operations
    
    investments
    
    hedges
    
    earning
    
    Total
    
    Interest
    
    equityBalance as at April 1, 2008
    
    
    1,417
    
    
    
    106,532
    
    
    
    (72
    )
    
    
    87
    
    
    
    (392
    )
    
    
    113,232
    
    
    
    220,804
    
    
    
    58,189
    
    
    
    278,993Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,228
    
    
    
    32,228
    
    
    
    12,448
    
    
    
    44,676Exchange differences on
translation of foreign
operations
    
    
    
    
    
    
    
    
    
    
    (327
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (327
    )
    
    
    
    
    
    
    (327
    )Movement in available for
sale financial investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79
    )
    
    
    
    
    
    
    
    
    
    
    (79
    )
    
    
    
    
    
    
    (79
    )Net movement in fair value
of cash flow hedges, net of
tax *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    468
    
    
    
    
    
    
    
    468
    
    
    
    (70
    )
    
    
    398Share in consolidated other
comprehensive income of
associate, net of tax*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (582
    )
    
    
    
    
    
    
    (582
    )
    
    
    
    
    
    
    (582
    )Total comprehensive income
during the year
    
    
    
    
    
    
    
    
    
    
    (327
    )
    
    
    (79
    )
    
    
    (114
    )
    
    
    32,228
    
    
    
    31,708
    
    
    
    12378
    
    
    
    44,086Adjustment for amount
transferred to initial
carrying amount of
property, plant and
equipments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,336
    
    
    
    
    
    
    
    1,336
    
    
    
    
    
    
    
    1,336Dividend paid including tax
on dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,315
    )
    
    
    (3,315
    )
    
    
    (497
    )
    
    
    (3,812
    )Balance as at March 31, 2009
    
    
    1,417
    
    
    
    106,532
    
    
    
    (399
    )
    
    
    8
    
    
    
    830
    
    
    
    142,145
    
    
    
    250,533
    
    
    
    70,070
    
    
    
    320,603Balance as at April 1, 2009
    
    
    1,417
    
    
    
    106,532
    
    
    
    (399
    )
    
    
    8
    
    
    
    830
    
    
    
    142,145
    
    
    
    250,533
    
    
    
    70,070
    
    
    
    320,603Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,263
    
    
    
    39,263
    
    
    
    17,400
    
    
    
    56,663Exchange differences on
translation of foreign
operations
    
    
    
    
    
    
    
    
    
    
    1,295
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,295
    
    
    
    
    
    
    
    1,295Movement in available for
sale financial investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    318
    
    
    
    
    
    
    
    
    
    
    
    318
    
    
    
    
    
    
    
    318Net movement in fair value
of cash flow hedges, net of
tax *
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    49
    
    
    
    72
    
    
    
    121Share of other
comprehensive income of
associate, net of tax*
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    799
    
    
    
    
    
    
    
    799
    
    
    
    
    
    
    
    799Total comprehensive income
for the year
    
    
    
    
    
    
    
    
    
    
    1,295
    
    
    
    318
    
    
    
    848
    
    
    
    39,263
    
    
    
    41,724
    
    
    
    17,472
    
    
    
    59,196Shares issued
    
    
    264
    
    
    
    76,265
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,529
    
    
    
    
    
    
    
    76,529Share in associate towards
adjustment for amount
transferred to initial
carrying amount of
property, plant and
equipments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    (177
    )Dividend paid including tax
on dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,437
    )
    
    
    (3,437
    )
    
    
    (726
    )
    
    
    (4,163
    )Balance as at March 31, 2010
    
    
    1,681
    
    
    
    182,797
    
    
    
    896
    
    
    
    326
    
    
    
    1,501
    
    
    
    177,971
    
    
    
    365,172
    
    
    
    86,816
    
    
    
    451,988Balance as at March 31,
2010 (in US dollars in
millions)
    
    
    37.4
    
    
    
    4,066.7
    
    
    
    19.9
    
    
    
    7.3
    
    
    
    33.4
    
    
    
    3,959.2
    
    
    
    8,123.9
    
    
    
    1,931.4
    
    
    
    10,055.3
 
 *
    
    Refer to Note 8 for taxes related to each component of the other comprehensive incomeRefer to Note 34(a) for amount reclassified to the statement of income from other
comprehensive income  F-7




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STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1. Company overview
          2. Basis of preparation of financial statements
 Basis of preparation
    F-8




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Basis of measurement
  Recently issued accounting pronouncements
   Improvements to IFRSs issued in April 2009 approved amendments to:
 IFRS 5, Non-current Assets Held for Sale and Discontinued Operations
 IFRS 8, Operating Segments
 IAS 1 (Revised 2007), Presentation of Financial Statements
 IAS 7, Statement of Cash Flows
 IAS 17, Leases
 IAS 18, Revenue
 IAS 36, Impairment of Assets
 IAS 38, Intangible Assets
 IAS 39, Financial Instruments: Recognition and Measurement
 IFRIC Interpretation 9, Reassessment of Embedded Derivatives
 Improvements to IFRSs issued in May 2010 approved amendments to:
 IFRS 3 (Revised 2008) Business Combinations
 IFRS 7 Financial Instruments: Disclosures
 IAS 1(Revised 2007) Presentation of Financial Statements
 IAS 27 (Revised 2008) Consolidated and Separate Financial Statements
 IAS 34 Interim Financial Reporting
 IFRS 3(Revised 2008), Business Combinations
  F-9




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##### Table of Contents




    
    Establishes the principle that a change in control is a significant economic event.
Accordingly, acquisition accounting is applied only at the date that control is achieved.
Consequently, goodwill is identified and net assets remeasured to fair value only in
respect of the transaction that achieves control, and not in respect of any earlier or
subsequent acquisitions of equity interests.
    
    Requires the measurement of contingent consideration at fair value on the acquisition
date. Subsequent changes in the fair value, except in certain situations, are recorded
through the statement of income.
    
    Provides an explicit option on an acquisition by acquisition basis, to measure any
minority interest in an entity acquired at fair value of their proportion of identifiable
assets and liabilities or at full fair value.
    
    Requires transactions in subsidiary equity interests between the parent and
non-controlling interests (both acquisitions and disposals that do not result in a loss of
control) to be accounted for as equity transactions.
  IFRS 9, Financial Instruments
   IAS 27 (Revised 2008), Consolidated and Separate Financial Statements
   Amendment to standards early adopted
 IFRS 7, Financial Instruments-disclosures
  Going concern
  Convenience translation
  F-10




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##### Table of Contents



3. Significant accounting policies
 A. Basis of consolidation
    B. Investments in associates
    C. Revenue recognition
    D. Business combinations
   F-11




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##### Table of Contents



E. Property, plant and equipment
 (i). Mining properties
       (ii). Other property, plant and equipment
  (iii). Assets in the course of construction
  (iv). Depreciation
   Buildings: Operations
    
    30 years Administration
    
    50 yearsPlant and equipment
    
    10 - 20 yearsOffice equipment and fixtures
    
    3 - 20 yearsMotor vehicles
    
    9 - 11 years
 F-12




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##### Table of Contents



F. Non-current assets held for sale
   G. Financial Instruments
 (i). Non-derivative financial assets
     (a). Financial asset investments
   (b). Short term investments
   (c). Cash and cash equivalents
  F-13




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##### Table of Contents



(d). Loans and receivables
   (ii). Non-derivative financial liabilities
     (a). Borrowings
   (b). Foreign currency convertible notes
   (c). Trade and other payables
  (iii). Derivative financial instruments
   F-14




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##### Table of Contents



H. Equity instruments
  I. Borrowing costs
   J. Impairment
 Financial assets
     F-15




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##### Table of Contents



Non-financial assets
     K. Government grants
  L. Inventories
  
    
    purchased copper concentrate is recorded at cost on a first-in, first-out (FIFO)
basis; all other materials including stores and spares are valued 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 based on normal
levels of activity and are moved out of inventory on a FIFO basis; and
    
    by-products and scrap are valued at net realisable value.
  M. Taxation
    
    
    tax payable on the future remittance of the past earnings of subsidiaries where the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not reverse in the foreseeable
future;
    
    deferred income tax is not recognised on goodwill which is not deductible for tax
purposes or on the initial recognition of an asset or liability in a transaction that is
not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
    
    deferred tax assets are recognised only to the extent that it is more likely than not
that they will be recovered.
 F-16




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##### Table of Contents



N. Retirement benefit schemes
   O. Share based payments
  P. Provisions for liabilities and charges
  Q. Restoration, rehabilitation and environmental costs
   F-17




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##### Table of Contents



R. Foreign currency translation
    S. Earnings per share
  T. Critical accounting judgments and estimation uncertainty
    i.
    
    Note 9 and the accounting policy on property, plant and equipments- Mining reserve
estimates and useful life of property, plant and equipment.ii.
    
    Note 18 and the accounting policy on impairment of assets:In assessing the property, plant and equipment for impairment, factors leading to
significant reduction in profits such as changes in commodity prices, the Companys business
plans and significant downward revision in the estimated mining reserves are taken into
consideration. The carrying value of the assets of a cash generating unit (CGU) and
associated mining reserves is compared with the recoverable amount of those assets, that is,
the higher of fair value less costs to sell and value in use. Value in use is usually
determined on the basis of discounted estimated future cash flows. This involves management
estimates on commodity prices, market demand and supply, economic and regulatory climates,
long term mine plan and other factors. Any subsequent changes to cash flow due to changes in
the abovementioned factors could impact on the carrying value of the assets.iii.
    
    Note 22 and the accounting policy on restoration, rehabilitation and environmental
costs:Provision is made for costs associated with restoration and rehabilitation of mining sites
as soon as the obligation to incur such costs arises. Such restoration and closure costs are
typical of extractive industries and they are normally incurred at the end of the life of
the mine. The costs are estimated on the basis of mine closure plans and the estimated
discounted costs of dismantling and removing these facilities and the costs of restoration
are capitalized when incurred reflecting our
 F-18




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##### Table of Contents



obligations at that time. A corresponding provision is created on the liability side. The
capitalized asset is charged to the income statement over the life of the asset through
depreciation over the life of the operation and the provision is increased each period via
unwinding the discount on the provision. Management estimates are based on local legislation
and/or other agreements. The actual costs and cash outflows may differ from estimates
because of changes in laws and regulations, changes in prices, analysis of site conditions
and changes in restoration technology.
 iv.
    
    Note 24 and the accounting policy on retirement benefit schemesv.
    
    Note 31 and 35 Contingencies:The Company also has significant capital commitments in relation to various capital projects
which are not recognized on the statement of financial positions. In the normal course of
business, contingent liabilities may arise from litigation and other claims against the
Company. Guarantees are also provided in the normal course of business. There are certain
obligations which management has concluded, based on all available facts and circumstances,
are not probable of payment or are very difficult to quantify reliably, and such obligations
are treated as contingent liabilities and disclosed in the notes but are not reflected as
liabilities in the consolidated financial statements. Although there can be no assurance
regarding the final outcome of the legal proceedings in which Company involved, it is not
expected that such contingencies will have a materially adverse effect on its financial
position or profitability.vi.
    
    Note 8 and accounting policy on taxation:In preparing consolidated financial statements, the Company recognises income taxes in each
of the jurisdictions in which it operate. There are many transactions and calculations for
which the ultimate tax determination is uncertain. The Company recognises liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will be due.
Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such differences will impact the current and deferred income tax assets
and liabilities in the period in which such determination is made.vii.
    
    Note 10 and Note 35 (2) on investments in associate:Consequent to ongoing delay in approval for the Niyamgiri mines, the Company has reviewed the
carrying value of its investments in Vedanta Aluminium for impairment, and has concluded that no
impairment is necessary based on the possible alternate sources of obtaining bauxite.
 4. Explanation of transition to IFRS
   Exemptions from retrospective application
  i.
    
    Business combinations exemption The Company has applied the exemption as provided in
IFRS 1 on non-application of IFRS 3, to business combinations consummated prior to April 1,
2008.ii.
    
    Fair value hierarchy disclosure exemption In January 2010, the IASB issued Limited
Exemption from Comparative IFRS 7 Disclosures for First-time Adopters (Amendment to IFRS 1).
This amendment relieves first-time adopters of IFRSs from providing the additional
disclosures introduced in March 2009 by Improving Disclosures about Financial Instruments
(Amendments to IFRS 7). The effective date of the amendment is July 1, 2010 with earlier
application permitted. The Company decided to early adopt this amendment and accordingly,
the fair value hierarchy disclosures required by IFRS 7 have not been disclosed as on April
1, 2008.
 Exceptions from full retrospective application
 i.
    
    Derecognition of financial assets and liabilities exception As per IAS 39, if a
first time adopter derecognized non-derivative financial assets or non-derivative financial
liabilities under its Previous GAAP as a result of a transaction that occurred before
January 1, 2004, it shall not recognize those assets and liabilities under IFRS unless they
qualify for recognition as a result of a later transaction or event. The Company did not
re-recognize any such financial assets or liabilities which were derecognized before
January 1, 2004 and hence, this exception is not applicable.ii.
    
    Hedge accounting exception The Company did not have on the date of transition a
hedging relationship of a type that does not qualify for hedge accounting under IAS 39.
Hence, this exception is not applicable.
 F-19




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##### Table of Contents



iii.
    
    Estimates exception Upon an assessment of the estimates made under Previous GAAP,
the Company has concluded that there was no necessity to revise the estimates under IFRS
except where estimates were required by IFRS and not required by Previous GAAP or estimates
were required by Previous GAAP and not required by IFRS.iv.
    
    Assets classified as held for sale and discontinued operations The Company has not
classified any non-current asset as held for sale on or prior to the transition date and
hence this exception is not applicable.
 Reconciliations
   a. Reconciliation of equity
 As atParticulars
    
    Notes
    
    April 1, 2008
    
    March 31, 2009(Rs. in millions)
    
    (Rs. in millions)Equity attributable to equity holders of the parent as per Previous GAAP
    
    
    
    
    
    
    221,123
    
    
    
    246,865Minority interest
    
    
    
    
    
    
    58,098
    
    
    
    69,877Adjusted equity as per Previous GAAP
    
    
    
    
    
    
    279,221
    
    
    
    316,742Cash flow hedge  basis adjustment
    
    
    1
    
    
    
    
    
    
    
    1,336Capitalization of major overhaul costs
    
    
    2
    
    
    
    15
    
    
    
    276Capitalization of exchange differences as an adjustment to interest costs
    
    
    3
    
    
    
    221
    
    
    
    815Capitalization of interest income /expense, net
    
    
    4
    
    
    
    (70
    )
    
    
    (127
    )Share in associate
    
    
    5
    
    
    
    (440
    )
    
    
    2,351Others
    
    
    
    
    
    
    147
    
    
    
    164Tax adjustment
    
    
    6
    
    
    
    (101
    )
    
    
    (954
    )Equity as per IFRS
    
    
    
    
    
    
    278,993
    
    
    
    320,603Equity attributable to equity holders of the parent
    
    
    
    
    
    
    220,804
    
    
    
    250,533Minority interest
    
    
    
    
    
    
    58,189
    
    
    
    70,070
 b. Reconciliation of total comprehensive income
 For the year endedParticulars
    
    Notes
    
    March 31, 2009(Rs. in millions)Comprehensive income attributable to:Equity holders of the parent
    
    
    
    
    
    
    29,057Minority interest
    
    
    
    
    
    
    12,277Comprehensive income as per Previous GAAP
    
    
    
    
    
    
    41,334Capitalization of major overhaul costs
    
    
    2
    
    
    
    261Capitalization of exchange differences as an adjustment to interest costs
    
    
    3
    
    
    
    594Capitalization of interest income /expense (net)
    
    
    4
    
    
    
    (57
    )Share in associate
    
    
    5
    
    
    
    2,791Others
    
    
    
    
    
    
    17Tax adjustment
    
    
    6
    
    
    
    (854
    )Total Comprehensive income as per IFRS
    
    
    
    
    
    
    44,086Attributable to:Equity holders of the parent
    
    
    
    
    
    
    31,708Minority interest
    
    
    
    
    
    
    12,378
 F-20




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##### Table of Contents



c. Notes to reconciliations
  1.
    
    Under Previous GAAP as well as under IFRS, the effective portion of changes in fair values of
derivatives that are designated and qualify as cash flow hedges are recorded in the other
comprehensive income. However, under IFRS, when a hedge of a forecast transaction subsequently
results in recognition of a non financial asset, the associated cumulative gains and losses
that were previously recognized in other comprehensive income can be removed from equity and
included in the initial cost or other carrying amount of that asset, although such
removal/adjustment of gains and losses are not included in other comprehensive income in the
period of removal. The Company elected to follow this treatment under IFRS. Previous GAAP
does not permit cumulative gains or losses of a cash flow hedge to be included in the initial
cost or other carrying amount of the acquired asset. As a result of this difference, there is
an increase in equity under IFRS by Rs. 1,336 million as at March 31, 2009.2.
    
    Under Previous GAAP, major overhaul costs incurred were fully expensed in the period in which
they were incurred. Under IFRS, major overhaul costs incurred are capitalized as plant,
property and equipment and are depreciated over the period of benefit expected and
consequently affected the valuation of inventories.This difference has resulted in an increase in the equity under IFRS by Rs. 15 million and
Rs. 276 million as at April 1, 2008 and March 31, 2009, respectively and an increase in the
comprehensive income under IFRS by Rs. 261 million for the year ended March 31, 2009.3.
    
    Under Previous GAAP, the capitalization of foreign exchange differences was not permitted and
the same was recorded in the statement of income in the period in which they were incurred.
Under IFRS, foreign exchange differences can be capitalized to the extent that they are
regarded as an adjustment to interest costs.The aforementioned difference has resulted in an increase in the equity under IFRS by Rs. 221
million and Rs. 815 million as at April 1, 2008 and March 31, 2009, respectively and an
increase in comprehensive income under IFRS by Rs. 594 million for the year ended March 31,
2009.4.
    
    Under Previous GAAP, interest expenses were capitalized only to the extent directly
attributable to expenditure incurred during the construction period of the qualifying project.
When interest income was earned on any surplus funds it was recorded within the statement of
income in the period earned, along with any interest expense incurred not capitalized as part
of the qualifying asset. Under IFRS, interest income on surplus funds borrowed in respect of
qualifying assets, and interest expense incurred in relation to borrowings incurred for
qualifying assets are capitalized to the qualifying asset..The aforesaid differences have resulted in a decrease in the equity under IFRS by Rs. 70
million and Rs. 127 million as at April 1, 2008 and March 31, 2009 respectively and a
decrease in comprehensive income under IFRS by Rs. 57 million for the year ended March 31,
2009.5.
    
    The difference in the share of profit of the associate between the Previous GAAP and IFRS
arises mainly on account of the treatment of exchange differences to the extent regarded as an
adjustment to interest cost. This difference in treatment resulted in a decrease in the equity
under IFRS by Rs. 440 million and an increase by Rs. 2,351 million as at April 1, 2008 and
March 31, 2009, respectively and an increase in the comprehensive income under IFRS by Rs.
2,791 million for the year ended March 31, 2009.6.
    
    Tax adjustments arises on account of deferred tax impact on the adjustments discussed in 1 to
5 above and on unrealised profits arising from inter-company transactions due to different
approach on jurisdictional tax rate between IFRS and Previous GAAP. This has resulted in a
decrease in the equity under IFRS by Rs. 101 million and Rs. 954 million as at April 1, 2008
and March 31, 2009, respectively and a decrease in the comprehensive income under IFRS by Rs.
854 million for the year ended March 31, 2009.
 F-21




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##### Table of Contents



5. Revenue
 For the year ended March 31,2009
    
    2010
    
    2010(US dollars in(Rs. in millions)
    
    (Rs. in millions)
    
    millions)Gross revenue
    
    
    228,487
    
    
    
    256,943
    
    
    
    5,716.2Less: excise duty
    
    
    (16,295
    )
    
    
    (12,040
    )
    
    
    (267.9
    )Revenue, net of excise duty
    
    
    212,192
    
    
    
    244,903
    
    
    
    5,448.3
 6. Investment and other income
 For the year ended March 31,2009
    
    2010
    
    2010(US dollars in(Rs. in millions)
    
    (Rs. in millions)
    
    millions)Dividend income on financial assets held for trading
    
    
    9,030
    
    
    
    5,966
    
    
    
    132.7Fair value gain on financial assets held for trading
    
    
    2,254
    
    
    
    2,741
    
    
    
    61.0Interest income on bank deposits
    
    
    2,518
    
    
    
    2,389
    
    
    
    53.1Interest income on loans and receivables
    
    
    2,179
    
    
    
    4,925
    
    
    
    109.6Foreign exchange gain /(loss)
    
    
    2,881
    
    
    
    (1,997
    )
    
    
    (44.4
    )Capitalisation of interest income(1)
    
    
    (90
    )
    
    
    (213
    )
    
    
    (4.7
    )18,772
    
    
    
    13,811
    
    
    
    307.3
 Notes:
 
 (1)
    
    Capitalisation of interest income relates to the income from temporary surplus funds,
specifically borrowed to acquire/ construct qualifying assets. 7. Finance and other costs
 For the year ended March 31,2009
    
    2010
    
    2010(US dollars in(Rs. in millions)
    
    (Rs. in millions)
    
    millions)Interest on borrowings other than convertible notes
    
    
    3,703
    
    
    
    4,037
    
    
    
    89.8Interest on convertible notes
    
    
    
    
    
    
    890
    
    
    
    19.8Bank charges
    
    
    778
    
    
    
    620
    
    
    
    13.8Unwinding of discount on provisions
    
    
    17
    
    
    
    11
    
    
    
    0.2Gain on fair valuation of conversion option
    
    
    
    
    
    
    (587
    )
    
    
    (13.0
    )Foreign exchange loss/(gain) on foreign currency borrowings
    
    
    2,785
    
    
    
    (3,395
    )
    
    
    (75.5
    )Other
    
    
    249
    
    
    
    52
    
    
    
    1.1Capitalisation of finance costs(1)
    
    
    (1,288
    )
    
    
    (1,842
    )
    
    
    (41.0
    )6,244
    
    
    
    (214
    )
    
    
    (4.8
    )
 Notes:
 
 (1)
    
    Capitalisation of finance costs relates to funds borrowed both specifically and generally to
acquire/ construct qualifying assets.The rate for capitalisation of interest relating to general borrowings was approximately NIL and
12.68% for the year ended March 31, 2009 and 2010 respectively.(2)
    
    Finance costs include Rs.3,703 million and Rs. 4,927 million ($109.6 million) in respect of
financial liabilities which are carried at amortised cost using the effective interest rate method
for the year ended March 31, 2009 and 2010 respectively. 8.
Income Tax expenses
 Overview of the Indian direct tax regime
   F-22




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
    
    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 Export Oriented
Unit, from where goods are exported out of India, are exempt from tax upto March 2011.
    (a) Consolidated statement of income
 For the year ended March 31,2009
    
    2010
    
    2010(Rs. in
    
    (Rs. in
    
    (US dollars inmillions)
    
    millions)
    
    millions)Current tax:Current tax on profit for the year
    
    
    8,954
    
    
    
    11,492
    
    
    
    255.7Credits in respect of current tax for earlier years
    
    
    (913
    )
    
    
    (129
    )
    
    
    (2.9
    )Total current tax
    
    
    8,041
    
    
    
    11,363
    
    
    
    252.8Deferred tax:Origination and reversal of temporary differences
    
    
    (259
    )
    
    
    2,287
    
    
    
    50.9Reduction in tax rate
    
    
    
    
    
    
    (403
    )
    
    
    (9.0
    )Total deferred tax
    
    
    (259
    )
    
    
    1,884
    
    
    
    41.9Tax expense for the year
    
    
    7,782
    
    
    
    13,247
    
    
    
    294.7Effective income tax rate (%)
    
    
    14.8
    %
    
    
    18.9
    %
    
    
    18.9
    %
 F-23




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##### Table of Contents



(b) Consolidated statement of other comprehensive (loss)/ income
 2009
    
    2010
    
    2010(Rs. in
    
    (Rs. in
    
    (US dollars inmillions)
    
    millions)
    
    millions)Deferred tax (credit)/charge on: cash flow hedges
    
    
    (381
    )
    
    
    174
    
    
    
    3.8 reclassification adjustments on cash flow hedges
    
    
    2
    
    
    
    381
    
    
    
    8.5 share in consolidated other comprehensive (loss)/income of associate
    
    
    (300
    )
    
    
    246
    
    
    
    5.5(679
    )
    
    
    801
    
    
    
    17.8
  For the year ended March 31,2009
    
    2010
    
    2010(US dollars in(Rs. in millions)
    
    (Rs. in millions)
    
    millions)Accounting profit before tax
    
    
    52,458
    
    
    
    69,910
    
    
    
    1,555.3Tax at Indian statutory income tax rate of 33.99%
    
    
    17,831
    
    
    
    23,762
    
    
    
    528.6Disallowable expenses
    
    
    13
    
    
    
    323
    
    
    
    7.2Non-taxable income
    
    
    (3,344
    )
    
    
    (2,932
    )
    
    
    (65.2
    )Tax holidays and similar exemptions
    
    
    (5,942
    )
    
    
    (7,943
    )
    
    
    (176.7
    )Change in deferred tax balances due to the change in
income tax rates from 33.99% to 33.2175%
    
    
    
    
    
    
    (403
    )
    
    
    (9.0
    )Effect of tax rates differences of subsidiaries
operating in other jurisdictions
    
    
    (176
    )
    
    
    (48
    )
    
    
    (1.1
    )Dividend distribution tax
    
    
    126
    
    
    
    191
    
    
    
    4.3Unrecognised MAT credit
    
    
    520
    
    
    
    404
    
    
    
    9.0Credit in respect of previous years
    
    
    (913
    )
    
    
    (129
    )
    
    
    (2.9
    )Utilisation of tax losses
    
    
    (333
    )
    
    
    (355
    )
    
    
    (7.9
    )Deferred tax assets write down as no longer recoverable
    
    
    
    
    
    
    377
    
    
    
    8.47,782
    
    
    
    13,247
    
    
    
    294.7
  Deferred tax assets/liabilities
   Rs. In millionsExchangedifferenceOpening
    
    Charged/
    
    
    
    
    
    transferred tobalance as
    
    (credited) to
    
    Charged/
    
    translation of
    
    Total as atSignificant components of deferred tax
    
    at April 1,
    
    Statement of
    
    (credited)
    
    foreign
    
    March 31,liabilities/(assets)
    
    2008
    
    income
    
    to equity
    
    operation
    
    2009Share in profit or loss of associate
    
    
    39
    
    
    
    (1,074
    )
    
    
    (300
    )
    
    
    
    
    
    
    (1,335
    )Property, plant and equipment
    
    
    16,207
    
    
    
    243
    
    
    
    
    
    
    
    (3
    )
    
    
    16,447Voluntary retirement scheme
    
    
    (32
    )
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    (13
    )Employee benefits
    
    
    (220
    )
    
    
    (22
    )
    
    
    2
    
    
    
    
    
    
    
    (240
    )Fair value of Derivative assets/ liabilities
    
    
    (76
    )
    
    
    76
    
    
    
    (381
    )
    
    
    
    
    
    
    (381
    )Fair valuation of other assets/liabilities
    
    
    427
    
    
    
    (85
    )
    
    
    
    
    
    
    (2
    )
    
    
    340Other temporary differences
    
    
    (204
    )
    
    
    584
    
    
    
    
    
    
    
    (26
    )
    
    
    35416,141
    
    
    
    (259
    )
    
    
    (679
    )
    
    
    (31
    )
    
    
    15,172
 F-24




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##### Table of Contents



US dollar inRs. In millions
    
    millionsExchangedifferenceOpening
    
    Charged/
    
    
    
    
    
    transferred tobalance as
    
    (credited) to
    
    Charged/
    
    translation of
    
    Total as at
    
    Total as atSignificant components of deferred tax
    
    at April 1,
    
    Statement of
    
    (credited)
    
    foreign
    
    March 31,
    
    March 31,liabilities/(assets)
    
    2009
    
    income
    
    to equity
    
    operation
    
    2010
    
    2010Share in profit or loss of associate
    
    
    (1,335
    )
    
    
    1,089
    
    
    
    246
    
    
    
    
    
    
    
    
    
    
    
    Property, plant and equipment
    
    
    16,447
    
    
    
    1,498
    
    
    
    
    
    
    
    3
    
    
    
    17,948
    
    
    
    399.3Voluntary retirement scheme
    
    
    (13
    )
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    (0.1
    )Employee benefits
    
    
    (240
    )
    
    
    (67
    )
    
    
    
    
    
    
    (1
    )
    
    
    (308
    )
    
    
    (6.8
    )Fair value of Derivative assets/ liabilities
    
    
    (381
    )
    
    
    (1
    )
    
    
    555
    
    
    
    
    
    
    
    173
    
    
    
    3.8Fair valuation of other assets/liabilities
    
    
    340
    
    
    
    (44
    )
    
    
    
    
    
    
    (2
    )
    
    
    294
    
    
    
    6.5MAT credits entitlement
    
    
    
    
    
    
    (93
    )
    
    
    
    
    
    
    
    
    
    
    (93
    )
    
    
    (2.1
    )Other temporary differences
    
    
    354
    
    
    
    (504
    )
    
    
    
    
    
    
    98
    
    
    
    (52
    )
    
    
    (1.1
    )Total
    
    
    15,172
    
    
    
    1,884
    
    
    
    801
    
    
    
    98
    
    
    
    17,955
    
    
    
    399.5
     F-25




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##### Table of Contents



9. Property, plant and equipments
 Rs. In millions
    
    US dollar inmillionsOfficeMining
    
    Land
    
    Plant and
    
    Motor
    
    equipmentsproperty
    
    and building
    
    equipments
    
    vehicles
    
    and fixtures
    
    Total
    
    TotalCostApril 1, 2008
    
    
    16,728
    
    
    
    11,480
    
    
    
    115,360
    
    
    
    224
    
    
    
    2,007
    
    
    
    145,799
    
    
    
    3243.6Additions
    
    
    64
    
    
    
    635
    
    
    
    8,121
    
    
    
    75
    
    
    
    139
    
    
    
    9,034
    
    
    
    201.0Disposals/adjustments
    
    
    
    
    
    
    (119
    )
    
    
    (349
    )
    
    
    (28
    )
    
    
    (19
    )
    
    
    (515
    )
    
    
    (11.5
    )Foreign exchange
    
    
    (165
    )
    
    
    1
    
    
    
    (66
    )
    
    
    
    
    
    
    (9
    )
    
    
    (239
    )
    
    
    (5.3
    )April 1, 2009
    
    
    16,627
    
    
    
    11,997
    
    
    
    123,066
    
    
    
    271
    
    
    
    2,118
    
    
    
    154,079
    
    
    
    3427.8Additions
    
    
    170
    
    
    
    2,677
    
    
    
    21,874
    
    
    
    123
    
    
    
    554
    
    
    
    25,398
    
    
    
    565.0Disposals/adjustments*
    
    
    
    
    
    
    (326
    )
    
    
    (2,127
    )
    
    
    (24
    )
    
    
    (25
    )
    
    
    (2,502
    )
    
    
    (55.7
    )Foreign exchange
    
    
    638
    
    
    
    2
    
    
    
    314
    
    
    
    2
    
    
    
    37
    
    
    
    993
    
    
    
    22.1March 31, 2010
    
    
    17,435
    
    
    
    14,350
    
    
    
    143,127
    
    
    
    372
    
    
    
    2,684
    
    
    
    177,968
    
    
    
    3959.2Accumulated depreciation and impairmentApril 1, 2008
    
    
    7,729
    
    
    
    3,033
    
    
    
    36,572
    
    
    
    106
    
    
    
    1,068
    
    
    
    48,508
    
    
    
    1,079.2Charge for the year
    
    
    1,190
    
    
    
    323
    
    
    
    6,364
    
    
    
    18
    
    
    
    119
    
    
    
    8,014
    
    
    
    178.3Disposals/adjustments
    
    
    
    
    
    
    (48
    )
    
    
    (126
    )
    
    
    (10
    )
    
    
    (16
    )
    
    
    (200
    )
    
    
    (4.4
    )Foreign exchange
    
    
    (162
    )
    
    
    
    
    
    
    (73
    )
    
    
    
    
    
    
    (6
    )
    
    
    (241
    )
    
    
    (5.4
    )April 1, 2009
    
    
    8,757
    
    
    
    3,308
    
    
    
    42,737
    
    
    
    114
    
    
    
    1,165
    
    
    
    56,081
    
    
    
    1,247.7Charge for the year
    
    
    793
    
    
    
    344
    
    
    
    6,697
    
    
    
    28
    
    
    
    188
    
    
    
    8,050
    
    
    
    179.1Disposals/adjustments*
    
    
    
    
    
    
    (292
    )
    
    
    (1,550
    )
    
    
    (9
    )
    
    
    (23
    )
    
    
    (1,874
    )
    
    
    (41.7
    )Foreign exchange
    
    
    636
    
    
    
    1
    
    
    
    291
    
    
    
    
    
    
    
    26
    
    
    
    954
    
    
    
    21.2March 31, 2010
    
    
    10,186
    
    
    
    3,361
    
    
    
    48,175
    
    
    
    133
    
    
    
    1,356
    
    
    
    63,211
    
    
    
    1,406.3
 F-26




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##### Table of Contents



OfficeMining
    
    
    Land
    
    
    Plant and
    
    
    Motor
    
    
    equipmentsproperty
    
    
    and building
    
    
    equipments
    
    
    vehicles
    
    
    and fixtures
    
    
    Total
    
    
    TotalProperty,
plants and equipment as at:April 1, 2008
    
    
    8,999
    
    
    
    8,447
    
    
    
    78,788
    
    
    
    118
    
    
    
    939
    
    
    
    97,291
    
    
    
    2,164.4Assets under construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,408
    
    
    
    543.0Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    121,699
    
    
    
    2,707.4March 31, 2009
    
    
    7,870
    
    
    
    8,689
    
    
    
    80,329
    
    
    
    157
    
    
    
    953
    
    
    
    97,998
    
    
    
    2,180.2Assets under construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,530
    
    
    
    1524.6Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166,528
    
    
    
    3,704.8March 31, 2010
    
    
    7,249
    
    
    
    10,989
    
    
    
    94,952
    
    
    
    239
    
    
    
    1,328
    
    
    
    114,757
    
    
    
    2,553.0Assets under construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,872
    
    
    
    2,488.8Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226,629
    
    
    
    5,041.8March 31, 2010 (US dollar in millions)
    
    
    161
    
    
    
    244.4
    
    
    
    2,112.4
    
    
    
    5.3
    
    
    
    29.6
 
 *
    
    Adjustments refer to classification of certain property, plant and equipments as assets
held for sale, refer Note 18   F-27




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##### Table of Contents



10. Investment in associate
   As at April 1
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Equity investment
    
    
    3,085
    
    
    
    1,701
    
    
    
    4,621
    
    
    
    102.8Optionally fully convertible debenture (OFCD)(1)
    
    
    16,000
    
    
    
    13,342
    
    
    
    
    
    
    
    Total
    
    
    19,085
    
    
    
    15,043
    
    
    
    4,621
    
    
    
    102.8
 
 (1)
    
    Secured by way of first charge on immovable properties of Vedanta Aluminium and was
convertible at the option of the Company based on the fair value of the shares. In September
2008, out of Rs. 16,000 million of investments in OFCD, Rs. 2,658 million had been converted
into 1,772,268 equity shares of Rs. 10 each at a premium of Rs. 1,490 per share. During the
year 2009-10, the balance proceeds due against the OFCD were received by the Company.  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Current assets
    
    
    7,277
    
    
    
    15,843
    
    
    
    22,681
    
    
    
    504.6Non-current assets
    
    
    80,879
    
    
    
    147,440
    
    
    
    244,867
    
    
    
    5,447.5Total assets
    
    
    88,156
    
    
    
    163,283
    
    
    
    267,548
    
    
    
    5,952.1Current liabilities
    
    
    14,321
    
    
    
    79,107
    
    
    
    149,486
    
    
    
    3,325.6Non-current liabilities
    
    
    63,376
    
    
    
    78,408
    
    
    
    102,398
    
    
    
    2,278.0Total liabilities
    
    
    77,697
    
    
    
    157,515
    
    
    
    251,884
    
    
    
    5,603.6
 For the year  ended March 31,2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)Total revenue
    
    
    2,069
    
    
    
    14,852
    
    
    
    330.4Operating (loss)/profit
    
    
    (1,011
    )
    
    
    738
    
    
    
    16.4(Loss)/profit for the year
    
    
    (10,712
    )
    
    
    6,952
    
    
    
    154.7Share in consolidated (loss)/profit of associate
    
    
    (3,160
    )
    
    
    2,051
    
    
    
    45.6Share in consolidated other comprehensive (loss)/income of associate, net of tax
    
    
    (582
    )
    
    
    799
    
    
    
    17.7Share in associate towards adjustment in amount transferred to initial
carrying amount of property, plant and equipments
    
    
    
    
    
    
    (177
    )
    
    
    (3.9
    )
 F-28




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11. Financial assets investments
  Movements:
 2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)Beginning of the year,
    
    
    1,123
    
    
    
    1,044
    
    
    
    23.2Changes in fair value
    
    
    (79
    )
    
    
    318
    
    
    
    7.1As at March 31,
    
    
    1,044
    
    
    
    1,362
    
    
    
    30.3
 Available for sale financial assets consists of the following:
 As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Quoted
    
    
    139
    
    
    
    60
    
    
    
    378
    
    
    
    8.4Unquoted
    
    
    984
    
    
    
    984
    
    
    
    984
    
    
    
    21.91,123
    
    
    
    1,044
    
    
    
    1,362
    
    
    
    30.3
   12. Other non-current assets
 As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Loans to associate
    
    
    
    
    
    
    8,490
    
    
    
    8,890
    
    
    
    197.8Other non-current assets
    
    
    1,274
    
    
    
    1,161
    
    
    
    1,337
    
    
    
    29.71,274
    
    
    
    9,651
    
    
    
    10,227
    
    
    
    227.5
 13. Inventories
  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Raw materials and consumables
    
    
    18,470
    
    
    
    12,688
    
    
    
    15,908
    
    
    
    353.9Work-in-progress
    
    
    13,578
    
    
    
    10,845
    
    
    
    12,847
    
    
    
    285.8Finished goods
    
    
    1,325
    
    
    
    1,075
    
    
    
    1,067
    
    
    
    23.733,373
    
    
    
    24,608
    
    
    
    29,822
    
    
    
    663.4
  F-29




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##### Table of Contents



14. Trade and other receivables
  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Trade receivables
    
    
    13,551
    
    
    
    7,771
    
    
    
    4,963
    
    
    
    110.4Trade receivables from associate
    
    
    907
    
    
    
    1,035
    
    
    
    634
    
    
    
    14.1Trade receivables from other related parties
    
    
    1,330
    
    
    
    599
    
    
    
    423
    
    
    
    9.4Loans to associate
    
    
    3,965
    
    
    
    6,850
    
    
    
    95,709
    
    
    
    2,129.2Loans to other related parties
    
    
    
    
    
    
    5,364
    
    
    
    6,805
    
    
    
    151.4Balance with Government authorities
    
    
    1,039
    
    
    
    1,215
    
    
    
    2,589
    
    
    
    57.6Prepayments
    
    
    142
    
    
    
    157
    
    
    
    624
    
    
    
    13.9Claims/refunds receivable
    
    
    2,351
    
    
    
    3,416
    
    
    
    3,365
    
    
    
    74.9Advances for supplies
    
    
    2,830
    
    
    
    2,315
    
    
    
    1,525
    
    
    
    33.9Other receivables
    
    
    1,665
    
    
    
    3,589
    
    
    
    2,270
    
    
    
    50.527,780
    
    
    
    32,311
    
    
    
    118,907
    
    
    
    2,645.3
   Allowances for impairment of trade and other receivables
  2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)Balance at the beginning of the year
    
    
    172
    
    
    
    184
    
    
    
    4.1Allowance made during the year
    
    
    14
    
    
    
    57
    
    
    
    1.3Written off
    
    
    (2
    )
    
    
    (11
    )
    
    
    (0.3
    )Closing balance asat March 31,
    
    
    184
    
    
    
    230
    
    
    
    5.1
 15. Short term investments
  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Bank deposits
    
    
    801
    
    
    
    50,326
    
    
    
    31,296
    
    
    
    696.2Other investments
    
    
    155,163
    
    
    
    137,741
    
    
    
    179,726
    
    
    
    3,998.4155,964
    
    
    
    188,067
    
    
    
    211,022
    
    
    
    4,694.6
   F-30




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16. Restricted cash and cash equivalents
  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Cash at banks
    
    
    59
    
    
    
    61
    
    
    
    60
    
    
    
    1.3Short-term deposits
    
    
    
    
    
    
    1,950
    
    
    
    
    
    
    
    59
    
    
    
    2,011
    
    
    
    60
    
    
    
    1.3
   17. Cash and cash equivalents
  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Cash at banks and in hand
    
    
    2,349
    
    
    
    1,222
    
    
    
    1,789
    
    
    
    39.8Short-term deposits
    
    
    10,014
    
    
    
    1,479
    
    
    
    232
    
    
    
    5.212,363
    
    
    
    2,701
    
    
    
    2,021
    
    
    
    45.0
  18. Assets held for sale
   As at March 31, 2010Accumulated depreciationGross value
    
    and impairment
    
    Carrying value(Rs. in millions)Building
    
    
    192
    
    
    
    179
    
    
    
    13Plant and machinery
    
    
    1,254
    
    
    
    1,079
    
    
    
    175Total
    
    
    1,446
    
    
    
    1,258
    
    
    
    188
    F-31




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##### Table of Contents



19. Borrowings
   As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    (US dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Banks and financial institutions
    
    
    6,119
    
    
    
    7,031
    
    
    
    6,942
    
    
    
    154.4Current portion of long-term borrowings(1)
    
    
    4,071
    
    
    
    13,171
    
    
    
    12,179
    
    
    
    271.0Short-term and current portion of long term borrowings
    
    
    10,190
    
    
    
    20,202
    
    
    
    19,121
    
    
    
    425.4Weighted average interest rate on short-term borrowings
    
    
    4.6
    %
    
    
    6.8
    %
    
    
    4.1
    %
    
    
    4.1
    %Unused line of credit on short-term borrowings
    
    
    46,393
    
    
    
    65,095
    
    
    
    121,507
    
    
    
    2,703.2
  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    (US dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Banks and financial institutions
    
    
    12,293
    
    
    
    20,128
    
    
    
    26,840
    
    
    
    597.1Non-convertible debentures
    
    
    1,000
    
    
    
    5,996
    
    
    
    6,000
    
    
    
    133.5Convertible notes
    
    
    
    
    
    
    
    
    
    
    22,226
    
    
    
    494.4Others(1)
    
    
    727
    
    
    
    1,431
    
    
    
    691
    
    
    
    15.4Long-term borrowings
    
    
    14,020
    
    
    
    27,555
    
    
    
    55,757
    
    
    
    1,240.4Less: Current portion of long-term borrowings(1)
    
    
    (4,071
    )
    
    
    (13,171
    )
    
    
    (12,179
    )
    
    
    (271.0
    )Long-term borrowings, net of current portion
    
    
    9,949
    
    
    
    14,384
    
    
    
    43,578
    
    
    
    969.4
 Note:
 
 (1)
    
    Include debts outstanding to related parties of Rs. 281 million, Rs. 851 million and Rs. Nil
as at April 1, 2008, March 31, 2009 and March 31, 2010, respectively.  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    (US dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Borrowings repayableWithin one year (included in short-term borrowing)
    
    
    4,071
    
    
    
    13,171
    
    
    
    12,179
    
    
    
    271.0In the second year
    
    
    3,527
    
    
    
    2,557
    
    
    
    5,956
    
    
    
    132.5In two to five years
    
    
    5,414
    
    
    
    7,131
    
    
    
    32,522
    
    
    
    723.5After five years
    
    
    1,008
    
    
    
    4,696
    
    
    
    5,100
    
    
    
    113.414,020
    
    
    
    27,555
    
    
    
    55,757
    
    
    
    1,240.4
 Major borrowings are as follows:
 Working capital loans
  Foreign currency loans
  F-32




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##### Table of Contents



Term loans
       F-33




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##### Table of Contents



Buyers credit
       Non-convertible debentures
   F-34




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##### Table of Contents



Commercial papers
    Convertible notes
 Convertible Senior Notes (Convertible Notes) due 2014
    
 *
    
    Prior to the bonus issue and share split of the equity share of the Company on June 25, 2010,
each ADS represented one equity share. 20. Acceptances
  As at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(Rs. in millions)
    
    (Rs. in millions)
    
    (Rs. in millions)
    
    (US dollars inmillions)Payable under trade
financing
arrangements
    
    
    27,033
    
    
    
    35,829
    
    
    
    29,901
    
    
    
    665.227,033
    
    
    
    35,829
    
    
    
    29,901
    
    
    
    665.2
  F-35




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##### Table of Contents



21. Trade and other payables
  As  at April 1,
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(Rs. in millions)
    
    (Rs. in millions)
    
    (Rs. in millions)
    
    (US dollars inmillions)Trade payables
    
    
    16,183
    
    
    
    16,773
    
    
    
    19,736
    
    
    
    439.1Advances from customers
    
    
    617
    
    
    
    1,335
    
    
    
    1,838
    
    
    
    40.9Amount due to related party
    
    
    946
    
    
    
    1,982
    
    
    
    1,216
    
    
    
    27.1Security deposit and retentions
    
    
    611
    
    
    
    4,095
    
    
    
    9,971
    
    
    
    221.8Other payables
    
    
    4,474
    
    
    
    3,058
    
    
    
    2,334
    
    
    
    51.922,831
    
    
    
    27,243
    
    
    
    35,095
    
    
    
    780.8
  22. Provisions
 Restoration,rehabilitationand environmental
    
    Others(a)
    
    (b)
    
    Total
    
    Total(Rs. in millions)
    
    (US dollarsin millionsAsat April 1, 2008
    
    
    322
    
    
    
    687
    
    
    
    1009
    
    
    
    22.4Adjustments on account of change in discount rate
    
    
    24
    
    
    
    
    
    
    
    24
    
    
    
    0.5Charged to statement of income
    
    
    
    
    
    
    50
    
    
    
    50
    
    
    
    1.1Unwinding of discounts
    
    
    17
    
    
    
    
    
    
    
    17
    
    
    
    0.4Exchange differences
    
    
    (15
    )
    
    
    
    
    
    
    (15
    )
    
    
    (0.3
    )Asat April 1, 2009
    
    
    348
    
    
    
    737
    
    
    
    1,085
    
    
    
    24.1Additions
    
    
    20
    
    
    
    
    
    
    
    20
    
    
    
    0.5Disposal
    
    
    (26
    )
    
    
    
    
    
    
    (26
    )
    
    
    (0.5
    )Adjustments on account of change in discount rate
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )
    
    
    (0.1
    )Credited to statement of income
    
    
    
    
    
    
    (15
    )
    
    
    (15
    )
    
    
    (0.3
    )Unwinding of discounts
    
    
    11
    
    
    
    
    
    
    
    11
    
    
    
    0.2Exchange differences
    
    
    59
    
    
    
    
    
    
    
    59
    
    
    
    1.3Asat March 31, 2010
    
    
    408
    
    
    
    722
    
    
    
    1,130
    
    
    
    25.2Classification asat April 1, 2008Current
    
    
    
    
    
    
    687
    
    
    
    687
    
    
    
    15.3Non-current
    
    
    322
    
    
    
    
    
    
    
    322
    
    
    
    7.1322
    
    
    
    687
    
    
    
    1,009
    
    
    
    22.4Classification asat March 31, 2009Current
    
    
    
    
    
    
    737
    
    
    
    737
    
    
    
    16.4Non-current
    
    
    348
    
    
    
    
    
    
    
    348
    
    
    
    7.7348
    
    
    
    737
    
    
    
    1,085
    
    
    
    24.1Classification asat March 31, 2010Current
    
    
    26
    
    
    
    722
    
    
    
    748
    
    
    
    16.7Non-current
    
    
    382
    
    
    
    
    
    
    
    382
    
    
    
    8.5408
    
    
    
    722
    
    
    
    1,130
    
    
    
    25.2
 
 (a)
    
    Restoration, rehabilitation and environmentalThe provisions for restoration, rehabilitation and environmental represents the Companys best
estimate of the costs which will be incurred in the future to meet the obligations under the laws
of the land, the terms referred to in the Companys mining and other licences and contractual
arrangements. These amounts become payable upon closure of the mines and are expected to be
incurred over a period of 3 to 20 years.(b)
    
    Others F-36




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23.
Other non-current liabilities
  As at April 1,
    
    
    
    
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(US dollars in(Rs. in millions)
    
    (Rs. in millions)
    
    (Rs. in millions)
    
    millions)Payable to related party
    
    
    3,607
    
    
    
    
    
    
    
    
    
    
    
    Security deposits and retentions
    
    
    2,725
    
    
    
    6,034
    
    
    
    5,689
    
    
    
    126.66,332
    
    
    
    6,034
    
    
    
    5,689
    
    
    
    126.6
 24. Employee benefits
    Defined contribution plans
  Central provident fund
  Superannuation
  Australian pension scheme
   Defined benefit plan
 Gratuity plan
  F-37




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##### Table of Contents



SIIL
    
    HZL
    
    BALCO2009
    
    2010
    
    2009
    
    2010
    
    2009
    
    2010Discount rate
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.5
    %Expected rate of increase in compensation level of covered employees
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %
    
    5.0% for Executives, 3.0% Non Executives
    
    5.0% for Executives, 3.0% Non ExecutivesExpected return on assets
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    9.5
    %
    
    
    9.0
    %
    
    NA
    
    NA
   Year ended March 312009
    
    2010
    
    2010Rs. in millions
    
    US dollar inmillionsCurrent service cost
    
    
    (82
    )
    
    
    (97
    )
    
    
    (2.2
    )Actuarial losses
    
    
    (62
    )
    
    
    (236
    )
    
    
    (5.2
    )Expected return on plan assets
    
    
    77
    
    
    
    87
    
    
    
    1.9Interest cost
    
    
    (114
    )
    
    
    (123
    )
    
    
    (2.7
    )Total charge
    
    
    (181
    )
    
    
    (369
    )
    
    
    (8.2
    )
  As at April 1,
    
    
    As at March, 31,2008
    
    2009
    
    2010
    
    2010Rs. in millions
    
    US dollar inmillionsFair value of plan assets (a)
    
    
    870
    
    
    
    981
    
    
    
    1,121
    
    
    
    25.0Present value of defined benefit obligation (b)
    
    
    (1,517
    )
    
    
    (1,692
    )
    
    
    (1,986
    )
    
    
    (44.2
    )Deficit in defined benefit obligations (a-b)
    
    
    (647
    )
    
    
    (711
    )
    
    
    (865
    )
    
    
    (19.2
    )Comprising of:Funded obligations
    
    
    (956
    )
    
    
    (1,084
    )
    
    
    (1,384
    )
    
    
    (30.8
    )Unfunded obligations
    
    
    (561
    )
    
    
    (608
    )
    
    
    (602
    )
    
    
    (13.4
    )
  As at March 312009
    
    2010
    
    2010Rs. In millions
    
    US dollar inmillionsBalance at the beginning of the year
    
    
    (1,517
    )
    
    
    (1,692
    )
    
    
    (37.6
    )Current service costs
    
    
    (82
    )
    
    
    (97
    )
    
    
    (2.2
    )Benefits paid
    
    
    89
    
    
    
    168
    
    
    
    3.7Interest cost
    
    
    (114
    )
    
    
    (123
    )
    
    
    (2.7
    )Actuarial losses
    
    
    (68
    )
    
    
    (242
    )
    
    
    (5.4
    )Asat March 31,
    
    
    (1,692
    )
    
    
    (1,986
    )
    
    
    (44.2
    )
 F-38




---



##### Table of Contents



As at March 312009
    
    2010
    
    2010US dollar inRs. In millions
    
    millionsBalance at the beginning of the year
    
    
    870
    
    
    
    981
    
    
    
    21.8Contributions received
    
    
    117
    
    
    
    215
    
    
    
    4.8Benefits paid
    
    
    (89
    )
    
    
    (168
    )
    
    
    (3.7
    )Actuarial gains
    
    
    6
    
    
    
    6
    
    
    
    0.2Expected return on plan assets
    
    
    77
    
    
    
    87
    
    
    
    1.9Asat March 31,
    
    
    981
    
    
    
    1,121
    
    
    
    25.0
  % allocation of plan assetsAs at March 31Assets by category
    
    2009
    
    2010Government securities
    
    
    56.3
    
    
    
    53.0Debentures/Bonds
    
    
    35.9
    
    
    
    42.8Equity instruments
    
    
    6.0
    
    
    
    4.0Money market instruments
    
    
    1.8
    
    
    
    0.2100.0
    
    
    
    100.0
  As at March 312009
    
    2010
    
    2010US dollar inRs. In millions
    
    millionsExperience losses arising on plan liabilities
    
    
    (68
    )
    
    
    (242
    )
    
    
    (5.4
    )Experience gains arising on plan assets
    
    
    6
    
    
    
    6
    
    
    
    0.1
  F-39




---



##### Table of Contents



25. Financial instruments
  Financial assets and liabilities:
  As at April 1, 2008Rs. In millionsAvailable for
    
    Derivatives
    
    TotalHeld for
    
    Loans and
    
    sale financial
    
    used for
    
    carrying
    
    Total fairFinancial assets
    
    Cash
    
    trading
    
    receivables
    
    assets
    
    hedging
    
    value
    
    valueFinancial assets investments at fair value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    139
    
    
    
    139 at cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    984
    
    
    
    
    
    
    
    984
    
    
    
    *Other non-current assets
    
    
    
    
    
    
    
    
    
    
    1,274
    
    
    
    
    
    
    
    
    
    
    
    1,274
    
    
    
    896Trade and other receivable
    
    
    
    
    
    
    
    
    
    
    23,769
    
    
    
    
    
    
    
    
    
    
    
    23,769
    
    
    
    23,769Short term investments Bank deposits
    
    
    
    
    
    
    
    
    
    
    801
    
    
    
    
    
    
    
    
    
    
    
    801
    
    
    
    801 Other investments
    
    
    
    
    
    
    155,163
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    155,163
    
    
    
    155,163Derivative financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,627
    
    
    
    1,627
    
    
    
    1,627Cash and cash equivalents including restricted cash
    
    
    12,422
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,422
    
    
    
    12,42212,422
    
    
    
    155,163
    
    
    
    25,844
    
    
    
    1,123
    
    
    
    1,627
    
    
    
    196,179
    
    
    
    194,817
  F-40




---



##### Table of Contents



As at April 1, 2008Rs. in millionsDerivatives
    
    
    
    
    
    Totalused for
    
    Amortised
    
    carrying
    
    Total fairFinancial liabilities
    
    hedging
    
    cost
    
    value
    
    valueBorrowings Short term
    
    
    
    
    
    
    10,190
    
    
    
    10,190
    
    
    
    10,190 Long term
    
    
    
    
    
    
    9,949
    
    
    
    9,949
    
    
    
    9,040Acceptances
    
    
    
    
    
    
    27,033
    
    
    
    27,033
    
    
    
    27,033Trade and other payables
    
    
    
    
    
    
    22,214
    
    
    
    22,214
    
    
    
    22,214Derivative financial liabilities
    
    
    638
    
    
    
    
    
    
    
    638
    
    
    
    638Payable to
related party (Note 23)
    
    
    
    
    
    
    3,607
    
    
    
    3,607
    
    
    
    3,607Total
    
    
    638
    
    
    
    72,993
    
    
    
    73,631
    
    
    
    72,722
  F-41




---



##### Table of Contents



As at March 31, 2009Rs. In millionsAvailable for
    
    Derivatives
    
    TotalHeld for
    
    Loans and
    
    sale financial
    
    used for
    
    carrying
    
    Total fairFinancial assets
    
    Cash
    
    trading
    
    receivables
    
    assets
    
    hedging
    
    value
    
    valueFinancial assets investments at fair value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    60
    
    
    
    60 at cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    984
    
    
    
    
    
    
    
    984
    
    
    
    *Other non-current assets
    
    
    
    
    
    
    
    
    
    
    9,651
    
    
    
    
    
    
    
    
    
    
    
    9,651
    
    
    
    9,304Trade and other receivable
    
    
    
    
    
    
    
    
    
    
    28,624
    
    
    
    
    
    
    
    
    
    
    
    28,624
    
    
    
    28,624Short term investments Bank deposits
    
    
    
    
    
    
    
    
    
    
    50,326
    
    
    
    
    
    
    
    
    
    
    
    50,326
    
    
    
    50,326 Other investments
    
    
    
    
    
    
    137,741
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,741
    
    
    
    137,741Derivative financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,538
    
    
    
    1,538
    
    
    
    1,538Cash and cash equivalents including restricted cash
    
    
    4,712
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,712
    
    
    
    4,7124,712
    
    
    
    137,741
    
    
    
    88,601
    
    
    
    1,044
    
    
    
    1,538
    
    
    
    233,636
    
    
    
    232,305
  F-42




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##### Table of Contents



As at March 31, 2009Rs. in millionsDerivatives
    
    
    
    
    
    Totalused for
    
    Amortised
    
    carrying
    
    Total fairFinancial liabilities
    
    hedging
    
    cost
    
    value
    
    valueBorrowingsShort term
    
    
    
    
    
    
    20,202
    
    
    
    20,202
    
    
    
    20,202Long term
    
    
    
    
    
    
    14,384
    
    
    
    14,384
    
    
    
    14,102Acceptances
    
    
    
    
    
    
    35,829
    
    
    
    35,829
    
    
    
    35,829Trade and other payables
    
    
    
    
    
    
    25,908
    
    
    
    25,908
    
    
    
    25,908Derivative financial liabilities
    
    
    2,639
    
    
    
    
    
    
    
    2,639
    
    
    
    2,639Total
    
    
    2,639
    
    
    
    96,323
    
    
    
    98,962
    
    
    
    98,680
  F-43




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##### Table of Contents



As at March 31, 2010Rs. In millions
    
    US dollar in millionsAvailable for
    
    Derivatives
    
    Total
    
    
    
    
    
    TotalHeld for
    
    Loans and
    
    sale financial
    
    used for
    
    carrying
    
    Total fair
    
    carrying
    
    Total fairFinancial assets
    
    Cash
    
    trading
    
    receivables
    
    assets
    
    hedging
    
    value
    
    value
    
    value
    
    valueFinancial assets investments at fair value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    378
    
    
    
    
    
    
    
    378
    
    
    
    378
    
    
    
    8.4
    
    
    
    8.4 at cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    984
    
    
    
    
    
    
    
    984
    
    
    
    *
    
    
    
    21.9
    
    
    
    *Other non-current assets
    
    
    
    
    
    
    
    
    
    
    10,227
    
    
    
    
    
    
    
    
    
    
    
    10,227
    
    
    
    9,913
    
    
    
    227.5
    
    
    
    220.5Trade and other receivable
    
    
    
    
    
    
    
    
    
    
    114,169
    
    
    
    
    
    
    
    
    
    
    
    114,169
    
    
    
    114,169
    
    
    
    2,539.9
    
    
    
    2,539.9Short term investmentsBank deposits
    
    
    
    
    
    
    
    
    
    
    31,296
    
    
    
    
    
    
    
    
    
    
    
    31,296
    
    
    
    31,296
    
    
    
    696.2
    
    
    
    696.2Other investments
    
    
    
    
    
    
    179,726
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    179,726
    
    
    
    179,726
    
    
    
    3,998.4
    
    
    
    3,998.4Derivative financial assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115
    
    
    
    115
    
    
    
    115
    
    
    
    2.6
    
    
    
    2.6Cash and cash equivalents including restricted cash
    
    
    2,081
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,081
    
    
    
    2,081
    
    
    
    46.3
    
    
    
    46.32,081
    
    
    
    179,726
    
    
    
    155,692
    
    
    
    1,362
    
    
    
    115
    
    
    
    338,976
    
    
    
    337,678
    
    
    
    7,541.2
    
    
    
    7,512.3
  F-44




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##### Table of Contents



As at March 31 2010Rs. in millions
    
    US dollar in millionsDerivatives
    
    
    
    
    
    Total
    
    
    
    
    
    Totalused for
    
    Amortised
    
    carrying
    
    Total fair
    
    carrying
    
    Total fairFinancial liabilities
    
    hedging
    
    cost
    
    value
    
    value
    
    value
    
    valueBorrowingsShort term
    
    
    
    
    
    
    19,121
    
    
    
    19,121
    
    
    
    19,121
    
    
    
    425.4
    
    
    
    425.4Long term (other than convertible notes)
    
    
    
    
    
    
    21,352
    
    
    
    21,352
    
    
    
    21,240
    
    
    
    475.0
    
    
    
    472.5Convertible notes
    
    
    5,963
    
    
    
    16,263
    
    
    
    22,226
    
    
    
    24,273
    
    
    
    494.4
    
    
    
    539.9Acceptances
    
    
    
    
    
    
    29,901
    
    
    
    29,901
    
    
    
    29,901
    
    
    
    665.2
    
    
    
    665.2Trade and other payables
    
    
    
    
    
    
    33,257
    
    
    
    33,257
    
    
    
    33,257
    
    
    
    739.9
    
    
    
    739.9Derivative financial liabilities
    
    
    669
    
    
    
    
    
    
    
    669
    
    
    
    669
    
    
    
    14.9
    
    
    
    14.9Total
    
    
    6,632
    
    
    
    119,894
    
    
    
    126,526
    
    
    
    128,461
    
    
    
    2,814.8
    
    
    
    2,857.8
  
 *
    
    The fair value of unquoted financial assets investments have
been considered to be cost. Refer assumptions below. Fair value hierarchy
      As at March 31, 2009
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Rs. In millionsFinancial assetsAt fair value through profit or loss Held for trading
    
    
    137,741
    
    
    
    
    
    
    
     Derivative financial assetsCommodity contracts
    
    
    26
    
    
    
    
    
    
    
     Forward foreign currency contracts
    
    
    
    
    
    
    1,512
    
    
    
    Available for sale investmentsFinancial asset investments held at fair value
    
    
    60
    
    
    
    
    
    
    
    137,827
    
    
    
    1,512
    
    
    
    Financial liabilitiesAt fair value through profit or lossDerivative financial liabilitiesCommodity contracts
    
    
    2,138
    
    
    
    
    
    
    
    Forward foreign currency contracts
    
    
    
    
    
    
    5012,138
    
    
    
    501
    
    
    
    
 F-45




---



##### Table of Contents



As at March 31, 2010
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Rs. In millions
    
    US$ in millionsFinancial assetsAt fair value through profit or loss Held for trading
    
    
    179,726
    
    
    
    
    
    
    
    
    
    
    
    3,998.4
    
    
    
    
    
    
    
     Derivative financial assetsCommodity contracts
    
    
    111
    
    
    
    
    
    
    
    
    
    
    
    2.5
    
    
    
     Forward foreign currency contracts
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    Available for sale investmentsFinancial asset investments held at fair value
    
    
    378
    
    
    
    
    
    
    
    
    
    
    
    8.4
    
    
    
    
    
    
    
    180,215
    
    
    
    4
    
    
    
    
    
    
    
    4,009.3
    
    
    
    0.1
    
    
    
    Financial liabilitiesAt fair value through profit or lossDerivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commodity contracts
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    Forward foreign currency contracts
    
    
    
    
    
    
    593
    
    
    
    
    
    
    
    
    
    
    
    13.2
    
    
    
     Embedded derivative on convertible notes
    
    
    
    
    
    
    
    
    
    
    5,963
    
    
    
    
    
    
    
    
    
    
    
    132.776
    
    
    
    593
    
    
    
    5,963
    
    
    
    1.7
    
    
    
    13.2
    
    
    
    132.7
   
    
    Short term marketable securities traded in active markets are determined with
reference to quotes from the financial institutions; for example: Net asset value (NAV) for
investments in mutual funds declared by mutual fund house.
    
    Trade and other receivables (excluding deposits with governments and other
prepayments) , trade and other payables and short term borrowings approximate their
carrying amounts largely due to the short-term maturities of these instruments
    
    For all non current financial assets and financial
liabilities, either the carrying value approximates the fair value or
fair value have been estimated by discounting the expected future
cash flows using a discount rate equivalent to the risk free rate of
return adjusted for the appropriate credit spread.
    
    Long-term fixed-rate and variable-rate borrowings are evaluated by the company
based on parameters such as interest rates, specific country risk factors, and the risk
characteristics of the financed project.
 
    
    Accordingly the fair value of convertible notes as at March
31, 2010 is Rs. 24,273 million. For all other long-term fixed-rate and variable-rate borrowings,
either the carrying amount approximates the fair value, or fair value have
been estimated by discounting the expected future cash flows using a discount rate equivalent to
the risk free rate of return adjusted for the appropriate credit spread.The fair value of the embedded derivative liability of convertible notes has been calculated
using Auxiliary Reversed Binomial Tree method and using the following significant assumptions as
at March 31, 2010:
 
    
    the implied volatility as 38.3% ; and
    
    the share price as US$ 18.6.
 
    
    The fair value of quoted available-for-sale financial assets investments are
derived from quoted market prices in active markets. Fair value in respect of unquoted
equity instruments cannot be reliably measured and are stated at cost.
    
    The Company enters into derivative contracts with various counterparties,
principally financial institutions with investment grade credit ratings. Forward foreign
currency contracts are valued using valuation techniques with market observable inputs. The
most frequently applied valuation techniques for such derivatives include forward pricing
using present value
 F-46




---



##### Table of Contents



calculations foreign exchange spot and forward premium rates. Commodity contracts are valued
using the forward LME rates of commodities actively traded on the listed metal exchange i.e.
London Metal Exchange, United Kingdom (U.K.).The changes in counterparty credit risk had no material effect on the hedge effectiveness
assessment for derivatives designated in hedge relationship and the value of other financial
instruments recognised at fair value.The estimated fair value amounts as at March 31, 2010 have been measured as at the
respective dates. As such, the fair values of these financial instruments subsequent to the
respective reporting dates may be different than the amounts reported at each year-end.
  Risk management
    
    
    improve financial risk awareness and risk transparency
    
    identify, control and monitor key risks
    
    identify risk accumulations
    
    provide management with reliable information on the Companys risk situation
    
    improve financial returns
 Treasury management
   Commodity price risk
   
    
    economic hedging of prices realised on commodity contracts
    
    purchases and sales of physical contracts
    
    cash flow hedging of revenues
 F-47




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##### Table of Contents



Aluminum
  Copper
   Zinc
   $100 movement in LME price
    
    Change in operating income(in millions)Copper
    
    Rs.
    130.3
    
    
    $
    2.9Zinc
    
    
    3,073.8
    
    
    
    68.4Aluminum
    
    
    1,329.3
    
    
    
    29.6Total
    
    Rs.
    4,533.4
    
    
    $
    100.9
  Financial risk
  (a) Liquidity
   F-48




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##### Table of Contents



As at April 1, 2008Payment due by year
    
    <1 year
    
    1-2 years
    
    2-5 years
    
    >5 years
    
    TotalRs. in millionsAcceptances
    
    
    27,033
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,033Trade and other payables
    
    
    22,214
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,214Payable to
related party (Note 23)
    
    
    
    
    
    
    3,607
    
    
    
    
    
    
    
    
    
    
    
    3,607Borrowings
    
    
    10,190
    
    
    
    3,527
    
    
    
    5,414
    
    
    
    1,008
    
    
    
    20,139Derivative liabilities
    
    
    638
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63860,075
    
    
    
    7,134
    
    
    
    5,414
    
    
    
    1,008
    
    
    
    73,631
 As at March 31, 2009Payment due by year
    
    <1 year
    
    1-2 years
    
    2-5 years
    
    >5 years
    
    TotalRs. in millionsAcceptances
    
    
    35,829
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,829Trade and other payables
    
    
    25,908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,908Borrowings
    
    
    20,202
    
    
    
    2,557
    
    
    
    7,131
    
    
    
    4,696
    
    
    
    34,586Derivative liabilities
    
    
    2,639
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,63984,578
    
    
    
    2,557
    
    
    
    7,131
    
    
    
    4,696
    
    
    
    98,962
 As at March 31, 2010Payment due by year
    
    <1 year
    
    1-2 years
    
    2-5 years
    
    >5 years
    
    TotalRs. in millionsAcceptances
    
    
    29,901
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,901Trade and other payables
    
    
    33,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,257Borrowings (other than
    
    
    19,121
    
    
    
    5,956
    
    
    
    10,296
    
    
    
    5,100
    
    
    
    40,473convertible notes)Convertible notes
    
    
    
    
    
    
    
    
    
    
    22,226
    
    
    
    
    
    
    
    22,226Derivative liabilities
    
    
    669
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66982,948
    
    
    
    5,956
    
    
    
    32,522
    
    
    
    5,100
    
    
    
    126,526
  Funding facility
    
    Total facility
    
    Drawn
    
    Un drawnRs. in millionsLess than 1 year
    
    
    52,467
    
    
    
    10,190
    
    
    
    42,2771-2 years
    
    
    7,643
    
    
    
    3,527
    
    
    
    4,1162-5 years and above
    
    
    6,422
    
    
    
    6,422
    
    
    
    Total
    
    
    66,532
    
    
    
    20,139
    
    
    
    46,393
  Funding facility
    
    Total facility
    
    Drawn
    
    Un drawnRs. in millionsLess than 1 year
    
    
    85,122
    
    
    
    20,202
    
    
    
    64,9201-2 years
    
    
    2,557
    
    
    
    2,557
    
    
    
    2-5 years and above
    
    
    12,002
    
    
    
    11,827
    
    
    
    175Total
    
    
    99,681
    
    
    
    34,586
    
    
    
    65,095
 F-49




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##### Table of Contents



Funding facility
    
    Total facility
    
    Drawn
    
    Un drawnRs. in millionsLess than 1 year
    
    
    82,989
    
    
    
    19,121
    
    
    
    63,8681-2 years
    
    
    5,956
    
    
    
    5,956
    
    
    
    2-5 years and above
    
    
    73,035
    
    
    
    15,396
    
    
    
    57,639Total
    
    
    161,980
    
    
    
    40,473
    
    
    
    121,507US dollars in millions
    
    
    3,603.6
    
    
    
    900.4
    
    
    
    2,703.2
 Collateral
   (b) Foreign exchange risk
     As at March 31, 2009
    
    As at March 31, 2010Financial
    
    Financial
    
    Financial
    
    FinancialAssets
    
    liabilities
    
    Assets
    
    liabilitiesRs. in millionsUS dollar
    
    
    12,010
    
    
    
    58,698
    
    
    
    9,223
    
    
    
    91,113Indian rupee
    
    
    220,735
    
    
    
    37,961
    
    
    
    328,970
    
    
    
    34,501Japanese yen
    
    
    
    
    
    
    1,083
    
    
    
    
    
    
    
    Australian dollar
    
    
    872
    
    
    
    1,118
    
    
    
    745
    
    
    
    585Euro
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    273Others
    
    
    19
    
    
    
    48
    
    
    
    38
    
    
    
    54233,636
    
    
    
    98,962
    
    
    
    338,976
    
    
    
    126,526
  F-50




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##### Table of Contents



(c) Interest rate risk
      Floating rate
    
    Fixed rate financial
    
    Non-interest bearing
    
    Total financialfinancial assets
    
    assets
    
    financial assets
    
    assetsRs. In millionsFinancial assets
    
    
    142,246
    
    
    
    72,498
    
    
    
    17,354
    
    
    
    232,098Derivative assets
    
    
    
    
    
    
    
    
    
    
    1,538
    
    
    
    1,538142,246
    
    
    
    72,498
    
    
    
    18,892
    
    
    
    233,636
   Floating rate
    
    Fixed rate financial
    
    Non-interest bearing
    
    Total financialfinancial liabilities
    
    liabilities
    
    financial liabilities
    
    liabilitiesRs. in millionsFinancial liabilities
    
    
    47,429
    
    
    
    22,188
    
    
    
    26,706
    
    
    
    96,323Derivative liabilities
    
    
    
    
    
    
    
    
    
    
    2,639
    
    
    
    2,63947,429
    
    
    
    22,188
    
    
    
    29,345
    
    
    
    98,962
   Floating rate
    
    Fixed rate financial
    
    Non-interest bearing
    
    Total financialfinancial assets
    
    Assets
    
    financial assets
    
    assetsRs. in millionsFinancial assets
    
    
    176,333
    
    
    
    148,189
    
    
    
    14,339
    
    
    
    338,861Derivative financial assets
    
    
    
    
    
    
    
    
    
    
    115
    
    
    
    115176,333
    
    
    
    148,189
    
    
    
    14,454
    
    
    
    338,976
 F-51




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##### Table of Contents



Floating rate
    
    Fixed rate financial
    
    Non-interest bearing
    
    Total financialfinancial liabilities
    
    liabilities
    
    financial liabilities
    
    liabilitiesRs. in millionsFinancial liabilities
    
    
    60,665
    
    
    
    30,888
    
    
    
    34,304
    
    
    
    125,857Derivative financial liabilities
    
    
    
    
    
    
    
    
    
    
    669
    
    
    
    66960,665
    
    
    
    30,888
    
    
    
    34,973
    
    
    
    126,526
   US dollarMovement in interest rates
    
    Interest rates(in millions)0.5%
    
    
    Rs.
    131.7
    
    
    $
    2.91.0%
    
    
    
    263.4
    
    
    
    5.92.0%
    
    
    
    526.8
    
    
    
    11.7
 (d) Counterparty and concentration of credit risk
      
  F-52




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##### Table of Contents



As at March 312009
    
    2010
    
    2010Rs. in millions
    
    Rs. in millions
    
    US dollars in millionsLess than 1 month
    
    
    4,542
    
    
    
    8,812
    
    
    
    196.1Between 1 - 3 months
    
    
    1,921
    
    
    
    3,075
    
    
    
    68.4Between 3 - 12 months
    
    
    1,140
    
    
    
    1,268
    
    
    
    28.2Greater than 12 months
    
    
    49
    
    
    
    24
    
    
    
    0.57,652
    
    
    
    13,179
    
    
    
    293.2
   Derivative financial instruments
     Embedded derivatives
    Cash flow hedges
  F-53




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##### Table of Contents



Fair value hedge
    Non-qualifying/economic hedge
   As at March 31, 2009
    
    As at March 31, 2010Assets
    
    Liabilities
    
    Assets
    
    Liabilities
    
    Assets
    
    LiabilitiesRs. in millions
    
    US dollars in millionsCurrentCash flow hedges* Commodity contracts
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    0.1
    
    
    
     Forward foreign currency contracts
    
    
    1189
    
    
    
    501
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    1.4Fair value hedges** Commodity contracts
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    0.6 Forward foreign currency contracts
    
    
    323
    
    
    
    
    
    
    
    2
    
    
    
    369
    
    
    
    0.0
    
    
    
    8.2Non-qualifying hedges Commodity contracts
    
    
    26
    
    
    
    2,128
    
    
    
    110
    
    
    
    49
    
    
    
    2.4
    
    
    
    1.1 Forward foreign currency contracts
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    160
    
    
    
    0.1
    
    
    
    3.6Total
    
    
    1,538
    
    
    
    2,639
    
    
    
    115
    
    
    
    669
    
    
    
    2.6
    
    
    
    14.9
 
 *
    
    Refer statement of income and statement of change in equity for the change in the fair value of
cash flow hedges.**
    
    The change in fair value hedge of Rs. 17 million ($0.4 million) in commodity contracts and Rs.690
million on forward foreign currency contracts ($15.4 million) has been recognised in the statement
of income and offset with the similar gains on the underlying sales 26. Capital management
   F-54




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##### Table of Contents



As at April 1
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(Rs. in
    
    (Rs. in
    
    (Rs. in
    
    (US dollars inmillions)
    
    millions)
    
    millions)
    
    millions)Equity
    
    
    279,370
    
    
    
    320,164
    
    
    
    449,265
    
    
    
    9,994.7Cash and cash equivalents (Note 16 and 17)
    
    
    12,422
    
    
    
    4,712
    
    
    
    2,081
    
    
    
    46.3Short term investments (Note 15)
    
    
    155,964
    
    
    
    188,067
    
    
    
    211,022
    
    
    
    4,694.6Total cash (a)
    
    
    168,386
    
    
    
    192,779
    
    
    
    213,103
    
    
    
    4,740.9Short-term borrowings
    
    
    10,190
    
    
    
    20,202
    
    
    
    19,121
    
    
    
    425.4Long-term borrowings
    
    
    9,949
    
    
    
    14,384
    
    
    
    43,578
    
    
    
    969.4Total debt (b) (Note 19)
    
    
    20,139
    
    
    
    34,586
    
    
    
    62,699
    
    
    
    1,394.8Net cash (a-b)
    
    
    148,247
    
    
    
    158,193
    
    
    
    150,404
    
    
    
    3,346.1Total capital (equity  net cash)
    
    
    131,123
    
    
    
    161,971
    
    
    
    298,861
    
    
    
    6,648.6Cash to equity ratio
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.3
    
    
    
    0.3
 27. Shareholders equity
      General reserves
  Debenture redemption reserve
  F-55




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Preference share redemption reserve
   Dividends
        
    
    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 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.
 F-56




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##### Table of Contents



28. Share-Based Compensation Plans
  The Vedanta Resources Long-Term Incentive Plan (the LTIP)
   29. Earnings per share (EPS)
   Computation of weighted average number of shares
 For the year ended March 31,2009
    
    2010Weighted average number of ordinary shares for basic earnings per share
    
    
    2,833,583,490
    
    
    
    3,199,826,061Effect of dilution:Convertible notes
    
    
    
    
    
    
    36,174,220Adjusted weighted average number of ordinary shares for diluted earnings per share
    
    
    2,833,583,490
    
    
    
    3,236,000,281
 Computation of basic and diluted earnings per share
 Basic earnings per share:
 For the year ended March 31,2009
    
    2010
    
    2010(US dollars in(Rs. in millions
    
    millionsexcept EPS data)
    
    except EPS data)Profit for the year attributable to equity holders of the parent
    
    
    32,228
    
    
    
    39,263
    
    
    
    873.5Weighted average number of ordinary shares for basic earnings
per share
    
    
    2,833,583,490
    
    
    
    3,199,826,061
    
    
    
    3,199,826,061Earnings per share
    
    
    11.37
    
    
    
    12.27
    
    
    
    0.3
 F-57




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##### Table of Contents



Diluted earnings per share:
 For the year ended March 31,2009
    
    2010
    
    2010(US dollars in(Rs. in millions
    
    millionsexcept EPS data)
    
    except EPS data)Profit for the year attributable to equity holders of the parent
    
    
    32,228
    
    
    
    39,263
    
    
    
    873.5Adjustment in respect of convertible notes
    
    
    
    
    
    
    (345
    )
    
    
    (7.7
    )Profit for the year after dilutive adjustment
    
    
    32,228
    
    
    
    38,918
    
    
    
    865.8Adjusted weighted average number of ordinary shares for diluted
earnings per share
    
    
    2,833,583,490
    
    
    
    3,236,000,281
    
    
    
    3,236,000,281Earnings per share
    
    
    11.37
    
    
    
    12.03
    
    
    
    0.3
  30. Options to acquire subsidiarys shares
 a. Call option  HZL
  b. Call option  BALCO
  31. Commitments, contingencies, and guarantees
  F-58




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##### Table of Contents



a. Commitments and contingencies
 i. Commitments
 Capital commitments
  Export obligations
  ii. Contingencies
     b. Guarantees
  
    
    Guarantees on the issuance of customs and excise duty bonds amounting to Rs.
879 million and Rs. 757 million ($16.8 million) for import of goods, including capital
equipment at concessional rates of duty as at March 31, 2009 and 2010 respectively. The
Company does not anticipate any liability on these guarantees.
    
    Corporate guarantee of Rs. 21,000 million and Rs. 34,000 million ($756.4 million)
on behalf of Vedanta Aluminium for obtaining credit facilities as at March 31, 2009 and
2010 respectively. The Company also issued corporate guarantees of Rs. 14,704 million and
Rs. 14,386 million ($320.0 million) for importing capital equipment at concessional rates
of duty under the Export Promotion Capital Goods Scheme enacted by the Government of India
for the referred periods. 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 the Company will be liable to pay the dues to the Government of India. As at
March 31, 2009 and 2010, the Company determined that it has no liability on these corporate
guarantees.
    
    Bank guarantee amounting to AUD 5.0 million (Rs. 207 million or $4.6 million)
as at March 31, 2010 (Previous year AUD 5.0 million or Rs. 175 million), in favour of the
Ministry for Economic Development, Energy and Resources, as a
 F-59




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##### Table of Contents



security against rehabilitation liabilities on behalf of CMT. The same guarantee is backed
up by the issuance of a corporate guarantee of Rs. 320 million ($7.1 million). These
liabilities have been fully recognized in the Companys consolidated financial statements.
The Company does not anticipate any additional liability on these guarantees.
 
    
    Bank indemnity guarantees amounting to AUD 2.9 million (Rs. 119 million or $2.6
million) as at March 31, 2010 (Previous year AUD 2.9 million or Rs. 100 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 the Companys consolidated financial statements. The
Company does not anticipate any additional liability on these guarantees.
    
    Performance bank guarantees amounting to Rs. 2,809 million and Rs. 2,201
million ($49.0 million) as at March 31, 2009 and 2010 respectively. 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. The Company does 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 at March 31, 2009 and 2010 was Rs.
2,047 million and Rs. 1,203 million ($26.8 million) respectively. The Company has also
issued bank guarantees in the normal course of business for an aggregate value of Rs. 493
million and Rs. 515 million ($11.4 million) for litigation, against provisional valuation
and for other liabilities as at March 31, 2009 and 2010 respectively. The Company does not
anticipate any liability on these guarantees.
  32. Segment information
  Copper
  Zinc
  Aluminum
  Power
  F-60




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##### Table of Contents



Others
    a. For the year ended March 31, 2009
 Copper
    
    Zinc
    
    Aluminum
    
    Power
    
    Others
    
    Elimination
    
    Total(Rs. in millions)RevenueSales to external customers
    
    
    116,525
    
    
    
    55,724
    
    
    
    39,170
    
    
    
    773
    
    
    
    
    
    
    
    
    
    
    
    212,192Inter-segment sales
    
    
    145
    
    
    
    
    
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    (311
    )
    
    
    Segment revenue
    
    
    116,670
    
    
    
    55,724
    
    
    
    39,336
    
    
    
    773
    
    
    
    
    
    
    
    (311
    )
    
    
    212,192Results:Segment profit
    
    
    13,312
    
    
    
    27,773
    
    
    
    9,103
    
    
    
    931
    
    
    
    (5
    )
    
    
    
    
    
    
    51,114Depreciation and amortisation
    
    
    (2,191
    )
    
    
    (2,615
    )
    
    
    (2,609
    )
    
    
    (608
    )
    
    
    (1
    )
    
    
    
    
    
    
    (8,024
    )Operating profit
    
    
    11,121
    
    
    
    25,158
    
    
    
    6,494
    
    
    
    323
    
    
    
    (6
    )
    
    
    
    
    
    
    43,090Finance and other costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,244
    )Investment and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,772Share in consolidated loss of associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,160
    )Profit before tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,458Income Tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,782
    )Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,676Assets and liabilitiesAssetsSegment assets
    
    
    43,417
    
    
    
    61,991
    
    
    
    60,185
    
    
    
    48,968
    
    
    
    338
    
    
    
    
    
    
    
    214,899Investment in associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,043
    
    
    
    
    
    
    
    15,04343,417
    
    
    
    61,991
    
    
    
    60,185
    
    
    
    48,968
    
    
    
    15,381
    
    
    
    
    
    
    
    229,942Financial assets investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,044Short-term investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188,067Cash and cash equivalent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,712Loan to related parties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,704Current tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109Total assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    444,578LiabilitiesSegment liabilities
    
    
    47,451
    
    
    
    8,072
    
    
    
    11,709
    
    
    
    6,308
    
    
    
    1
    
    
    
    
    
    
    
    73,541Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,202Current tax liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    676Long term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,384Deferred tax liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,172Total liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,975Additions to property, plant and
equipments
    
    
    1,946
    
    
    
    12,945
    
    
    
    10,696
    
    
    
    27,550
    
    
    
    
    
    
    
    
    
    
    
    53,137
 F-61




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##### Table of Contents



b. For the year ended March 31, 2010
 Copper
    
    Zinc
    
    Aluminum
    
    Power
    
    Others
    
    Elimination
    
    Total
    
    Total(US dollars in(Rs. in millions)
    
    millions)RevenueSales to external customers
    
    
    130,608
    
    
    
    79,434
    
    
    
    28,289
    
    
    
    6,572
    
    
    
    
    
    
    
    
    
    
    
    244,903
    
    
    
    5,448.3Inter-segment sales
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    1,472
    
    
    
    
    
    
    
    (1,550
    )
    
    
    
    
    
    
    Segment revenue
    
    
    130,608
    
    
    
    79,434
    
    
    
    28,367
    
    
    
    8,044
    
    
    
    
    
    
    
    (1,550
    )
    
    
    244,903
    
    
    
    5,448.3ResultsSegment profit
    
    
    5,120
    
    
    
    47,124
    
    
    
    5,499
    
    
    
    4,160
    
    
    
    (8
    )
    
    
    
    
    
    
    61,895
    
    
    
    1,376.9Depreciation and amortization
    
    
    (1,982
    )
    
    
    (3,053
    )
    
    
    (2,310
    )
    
    
    (715
    )
    
    
    (1
    )
    
    
    
    
    
    
    (8,061
    )
    
    
    (179.3
    )Operating profit
    
    
    3,138
    
    
    
    44,071
    
    
    
    3,189
    
    
    
    3,445
    
    
    
    (9
    )
    
    
    
    
    
    
    53,834
    
    
    
    1,197.6Finance and other costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214
    
    
    
    4.8Investment and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,811
    
    
    
    307.3Share in consolidated
profit of associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,051
    
    
    
    45.6Profit before tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,910
    
    
    
    1,555.3Income Tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,247
    )
    
    
    (294.7
    )Profit for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,663
    
    
    
    1,260.6Assets and liabilitiesAssetsSegment assets
    
    
    47,256
    
    
    
    82,859
    
    
    
    68,119
    
    
    
    77,134
    
    
    
    335
    
    
    
    
    
    
    
    275,703
    
    
    
    6,133.5Investment in associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,621
    
    
    
    
    
    
    
    4,621
    
    
    
    102.847,256
    
    
    
    82,859
    
    
    
    68,119
    
    
    
    77,134
    
    
    
    4,956
    
    
    
    
    
    
    
    280,324
    
    
    
    6,236.3Financial assets investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,362
    
    
    
    30.3Short-term investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211,022
    
    
    
    4,694.6Cash and cash equivalent
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,082
    
    
    
    46.3Loan to related parties
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111,404
    
    
    
    2,478.4Current tax asset
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    660
    
    
    
    14.7Total assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    606,854
    
    
    
    13,500.6LiabilitiesSegment liability
    
    
    41,526
    
    
    
    10,324
    
    
    
    9,485
    
    
    
    12,013
    
    
    
    1
    
    
    
    
    
    
    
    73,349
    
    
    
    1,631.9Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,121
    
    
    
    425.4Current tax liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    863
    
    
    
    19.1Long term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,352
    
    
    
    475.0Convertible notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,226
    
    
    
    494.4Deferred tax liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,955
    
    
    
    399.5Total liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,866
    
    
    
    3,445.3Additions to property,
plant and equipments
    
    
    3,759
    
    
    
    23,949
    
    
    
    15,969
    
    
    
    25,074
    
    
    
    
    
    
    
    
    
    
    
    68,751
    
    
    
    1,529.5
 Geographical Segment Analysis
  For the year ended March 31,2009
    
    2010
    
    2010(US dollars in(Rs. in millions)
    
    (Rs. in millions)
    
    millions)India
    
    
    140,330
    
    
    
    155,218
    
    
    
    3,453.1Others
    
    
    71,862
    
    
    
    89,685
    
    
    
    1,995.2212,192
    
    
    
    244,903
    
    
    
    5,448.3
 F-62




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##### Table of Contents



As at April 1
    
    As at Mar 312008
    
    2009
    
    2010Carrying
    
    Carrying
    
    Carrying
    
    Carryingamount
    
    amount
    
    amount
    
    amount(US dollars in(Rs. in millions)
    
    (Rs. in millions)
    
    millions)India
    
    
    121,354
    
    
    
    166,554
    
    
    
    226,435
    
    
    
    5,037.5Australia
    
    
    789
    
    
    
    580
    
    
    
    660
    
    
    
    14.7UAE
    
    
    39
    
    
    
    361
    
    
    
    754
    
    
    
    16.7122,182
    
    
    
    167,495
    
    
    
    227,849
    
    
    
    5,068.9
 33. Related party transactions
  The Companys
    
    
    
    Immediatepercentage holding
    
    
    
    percentage holding(in % as at March 31,
    
    Immediate
    
    (in % as at March 31,Subsidiaries
    
    Principal activities
    
    2010)
    
    holding company
    
    2010)BALCO
    
    Aluminium mining and smelting
    
    
    51
    
    
    Sterlite
    
    
    51CMT
    
    Copper mining
    
    
    100
    
    
    MCBV
    
    
    100Fujairah Gold FZE
    
    Precious metal processing
    
    
    100
    
    
    CMT
    
    
    100HZL
    
    Zinc mining and smelting
    
    
    64.9
    
    
    SOVL
    
    
    64.9Monte cello BV
    
    Holding company
    
    
    100
    
    
    Sterlite
    
    
    100Sterlite Energy
    
    Energy generation
    
    
    100
    
    
    Sterlite
    
    
    100SOVL
    
    Special purpose vehicle for acquiring HZL
    
    
    100
    
    
    Sterlite
    
    
    100Sterlite Infra
Limited(1)
    
    Infrastructure projects
    
    
    100
    
    
    Sterlite
    
    
    100Thalanga Copper Mines
(TCM)
    
    Copper mining
    
    
    100
    
    
    MCBV
    
    
    100Sterlite (USA) Inc.
    
    Financing company
    
    
    100
    
    
    Sterlite
    
    
    100TSPL
    
    Energy generation
    
    
    100
    
    
    SEL
    
    
    100
 
 Notes:
 (1)
    
    With effect from February 8, 2010, Sterlite Paper Limiteds name was changed to Sterlite
Infra Limited.
  Ultimate controlling party
  Enterprises where the 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)
    
    Konkola Copper Mines plc (KCM)
    
    Monte Cello Corporation NV (MCNV)
 F-63




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##### Table of Contents




    
    Sterlite Foundation
    
    Anil Agarwal Foundation
    
    Vedanta Medical Research Foundation (VMRF)
    
    Political and Public Awareness Trust
    
    Volcan Investments Limited (Volcan)
    
    Vedanta Resources Holding Limited
    
    Vedanta Resource Cyprus Limited
    
    Sesa Goa Limited (Sesa Goa)
    
    Sesa Industries Limited (Sesa Industries)
    
    Twinstar Infrastructure Limited
    
    V S Dempo and Company Private Limited (V S Dempo)
    
    Dempo Mining Corporation Private Limited (DMCPL)
 Fellow subsidiary cum associate
  Associate of Vedanta Resources Plc
  
 *
    
    Following the hive-off of IFL in November 2008, IFL is no longer a related party of the Company.  
    
    Mr. Anil Agarwal, Non executive chairman
    
    Mr. Navin Agarwal, Executive vice-chairman
    
    Mr. Tarun Jain, Director of finance
    
    Mr. D. D. Jalan, Whole time director
    
    Mr. K.K. Kaura (Till September 30, 2008), Managing Director & CEO
 F-64




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##### Table of Contents



For the year ended March 31,2009
    
    2010
    
    2010(Rs. in millions)
    
    (Rs. in millions)
    
    (US dollars in millions)SalesSTL
    
    
    4,467
    
    
    
    1,579
    
    
    
    35.1MALCO
    
    
    3
    
    
    
    1
    
    
    
    0.0IFL
    
    
    549
    
    
    
    
    
    
    
    Vedanta Aluminium
    
    
    1,613
    
    
    
    1,249
    
    
    
    27.8Total
    
    
    6,632
    
    
    
    2,829
    
    
    
    62.9Purchases of goods/servicesSTL
    
    
    4
    
    
    
    1
    
    
    
    0.0Sesa Industries
    
    
    30
    
    
    
    39
    
    
    
    0.9Sesa Goa
    
    
    2
    
    
    
    11
    
    
    
    0.2Vedanta Aluminium
    
    
    4,354
    
    
    
    3,029
    
    
    
    67.4KCM
    
    
    111
    
    
    
    710
    
    
    
    15.8MALCO
    
    
    31
    
    
    
    184
    
    
    
    4.1Total
    
    
    4,532
    
    
    
    3,974
    
    
    
    88.4Rent incomeVedanta Aluminium
    
    
    12
    
    
    
    21
    
    
    
    0.5Total
    
    
    12
    
    
    
    21
    
    
    
    0.5Interest and dividend income / (Finance costs)Vedanta
    
    
    (10
    )
    
    
    (21
    )
    
    
    (0.5
    )Vedanta Aluminium
    
    
    528
    
    
    
    3,676
    
    
    
    81.8KCM
    
    
    156
    
    
    
    211
    
    
    
    4.7MCNV
    
    
    (653
    )
    
    
    
    
    
    
    Total
    
    
    21
    
    
    
    3,866
    
    
    
    86.0Dividend paidMALCO
    
    
    (102
    )
    
    
    (90
    )
    
    
    (2.0
    )Twin star
    
    
    (1,615
    )
    
    
    (1,440
    )
    
    
    (32.0
    )Total
    
    
    (1,717
    )
    
    
    (1,530
    )
    
    
    (34.0
    )Management fees expensesVedanta
    
    
    (230
    )
    
    
    (237
    )
    
    
    (5.3
    )Total
    
    
    (230
    )
    
    
    (237
    )
    
    
    (5.3
    )Loans given/(repaid) during the yearVedanta Aluminium
    
    
    11,450
    
    
    
    94,550
    
    
    
    2,103.4Vedanta Aluminium
    
    
    
    
    
    
    (6,850
    )
    
    
    (152.4
    )KCM
    
    
    3,931
    
    
    
    2,298
    
    
    
    51.1Total
    
    
    15,381
    
    
    
    89,998
    
    
    
    2,002.1Loan repaid during the yearMCNV
    
    
    (3,037
    )
    
    
    (570
    )
    
    
    (12.7
    )Total
    
    
    (3,037
    )
    
    
    (570
    )
    
    
    (12.7
    )Guarantees outstanding given / (taken)**Vedanta Aluminium
    
    
    35,838
    
    
    
    48,386
    
    
    
    1,076.4Vedanta
    
    
    (8,662
    )
    
    
    (7,674
    )
    
    
    (170.7
    )Total
    
    
    27,176
    
    
    
    40,712
    
    
    
    905.7DonationsSterlite Foundation
    
    
    
    
    
    
    33
    
    
    
    0.7Total
    
    
    
    
    
    
    33
    
    
    
    0.7Purchase of property, plant and equipmentsVedanta Aluminium
    
    
    (81
    )
    
    
    (78
    )
    
    
    (1.7
    )Total
    
    
    (81
    )
    
    
    (78
    )
    
    
    (1.7
    )Investment (purchased)/redeemed
during the yearVedanta Aluminium***
    
    
    (2,658
    )
    
    
    13,342
    
    
    
    296.8
 
 **
    
    Maximum guarantee amount and does not represent actual liability.***
    
    Also refer Note 10 F-65




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##### Table of Contents



As at April 1
    
    As at March 31,2008
    
    2009
    
    2010
    
    2010(Rs. in millions)

    

    (Rs. in millions)

    

    (Rs. in millions)

    

    (US dollars inmillions)Receivable from:IFL
    
    
    369
    
    
    
    
    
    
    
    
    
    
    
    STL
    
    
    827
    
    
    
    274
    
    
    
    196
    
    
    
    4.4Vedanta Aluminium
    
    
    907
    
    
    
    1,035
    
    
    
    634
    
    
    
    14.1MALCO
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    0.2KCM
    
    
    131
    
    
    
    261
    
    
    
    
    
    
    
    Sesa Goa
    
    
    3
    
    
    
    16
    
    
    
    10
    
    
    
    0.2Twin Star
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    Anil Agarwal Foundation
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    0.0V S Dempo
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    0.0DMCPL
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    0.0VMRF
    
    
    
    
    
    
    47
    
    
    
    205
    
    
    
    4.6Total
    
    
    2,237
    
    
    
    1,634
    
    
    
    1,057
    
    
    
    23.5Loans to:Vedanta Aluminium
    
    
    3,965
    
    
    
    15,340
    
    
    
    104,599
    
    
    
    2,327.0KCM
    
    
    
    
    
    
    5,364
    
    
    
    6,805
    
    
    
    151.4Total
    
    
    3,965
    
    
    
    20,704
    
    
    
    111,404
    
    
    
    2,478.4Payable to:MCNV
    
    
    3,607
    *
    
    
    
    
    
    
    
    
    
    
    STL
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    0.2Vedanta Aluminium
    
    
    
    
    
    
    297
    
    
    
    263
    
    
    
    5.8Vedanta
    
    
    946
    
    
    
    1,685
    
    
    
    875
    
    
    
    19.5MALCO
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    0.5KCM
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    1.1Total
    
    
    4,553
    
    
    
    1,982
    
    
    
    1,216
    
    
    
    27.1Borrowings from:MCNV
    
    
    
    
    
    
    570
    
    
    
    
    
    
    
    Twin Star Infrastructure Limited
    
    
    281
    
    
    
    281
    
    
    
    
    
    
    
    Total
    
    
    281
    
    
    
    851
    
    
    
    
    
    
    
    
 
 *
    
    included under the head non-current liabilities Terms and conditions of transactions with related parties
  F-66




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##### Table of Contents



Loan to associates
   Loan to fellow subsidiary
  Remuneration of key management personnel
  As at March 31,2009
    
    2010
    
    2010(Rs. in millions)
    
    (Rs. in millions)
    
    (US dollars in millions)Short-term employee benefits
    
    
    140
    
    
    
    111
    
    
    
    2.5Post employment benefits
    
    
    11
    
    
    
    11
    
    
    
    0.3Share based payments
    
    
    19
    
    
    
    30
    
    
    
    0.7170
    
    
    
    152
    
    
    
    3.5
 34. Other notes
 (a) Components of other comprehensive income
 For the year ended March 312009
    
    2010
    
    2010US dollars inRs. in millions
    
    millionsCash flow hedges:Net gain/(loss) arising during the year
    
    
    220
    
    
    
    (619
    )
    
    
    (13.8
    )Reclassification adjustments for net loss included in the statement of income
    
    
    178
    
    
    
    740
    
    
    
    16.5Net gain on cash flow hedges recognised in other comprehensive income, net of tax
    
    
    398
    
    
    
    121
    
    
    
    2.7
  For the year ended March 31,2009
    
    2010
    
    2010(US dollars(Rs. in millions)
    
    (Rs. in millions)
    
    in millions)Other operating income
    
    
    141
    
    
    
    51
    
    
    
    1.1Cost of sales
    
    
    (783
    )
    
    
    (368
    )
    
    
    (8.2
    )Investment and other income
    
    
    2,881
    
    
    
    (1,997
    )
    
    
    (44.4
    )Finance and other costs
    
    
    (2,785
    )
    
    
    3,395
    
    
    
    75.5Total
    
    
    (546
    )
    
    
    1,081
    
    
    
    24.0
 F-67




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##### Table of Contents



CONSOLIDATED STATEMENTS OF INCOME  (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 For the year ended March 31,Notes
    
    2009
    
    2010
    
    2010(US dollars(Rs. in millions)
    
    (Rs. in millions)
    
    in millions)Revenue
    
    
    5
    
    
    
    212,192
    
    
    
    244,903
    
    
    
    5,448.3Other operating income
    
    
    
    
    
    
    3,750
    
    
    
    1,907
    
    
    
    42.4Investment and other income
    
    
    6
    
    
    
    18,772
    
    
    
    13,811
    
    
    
    307.3Total Income
    
    
    
    
    
    
    234,714
    
    
    
    260,621
    
    
    
    5,798.0(Decrease)/increase in inventories of finished goods and work-in-progress
    
    
    
    
    
    
    (2,983
    )
    
    
    1,994
    
    
    
    44.4Raw materials and other consumables used
    
    
    
    
    
    
    (147,876
    )
    
    
    (168,635
    )
    
    
    (3,751.6
    )Employee costs
    
    
    
    
    
    
    (7,706
    )
    
    
    (8,903
    )
    
    
    (198.1
    )Costs
associated with ASARCO [refer Note 35 (4)]
    
    
    
    
    
    
    
    
    
    
    (2,735
    )
    
    
    (60.9
    )Other costs
    
    
    
    
    
    
    (6,263
    )
    
    
    (6,636
    )
    
    
    (147.6
    )Depreciation and amortisation
    
    
    
    
    
    
    (8,024
    )
    
    
    (8,061
    )
    
    
    (179.3
    )Finance and other costs
    
    
    7
    
    
    
    (6,244
    )
    
    
    214
    
    
    
    4.8Share in consolidated (loss)/profit of associate
    
    
    10
    
    
    
    (3,160
    )
    
    
    2,051
    
    
    
    45.6Profit before tax
    
    
    
    
    
    
    52,458
    
    
    
    69,910
    
    
    
    1,555.3Income tax expense
    
    
    8
    
    
    
    (7,782
    )
    
    
    (13,247
    )
    
    
    (294.7
    )Profit for the year
    
    
    
    
    
    
    44,676
    
    
    
    56,663
    
    
    
    1,260.6
 (d). Employee costs
 For the year ended March 31,2009
    
    2010
    
    2010(US dollars in(Rs. in millions)
    
    (Rs. in millions)
    
    millions)Salaries, wages and bonus
    
    
    7,206
    
    
    
    7,935
    
    
    
    176.6Defined contribution pension scheme costs
    
    
    334
    
    
    
    395
    
    
    
    8.8Defined benefit pension scheme costs
    
    
    166
    
    
    
    339
    
    
    
    7.5Voluntary retirement expenses
    
    
    
    
    
    
    234
    
    
    
    5.27,706
    
    
    
    8,903
    
    
    
    198.1
 35. Subsequent Events
 1.
    
    Board of directors of SIIL, in its meeting held on April 26, 2010, proposed the stock split
of its equity share from the face value of Rs. 2 per share to Re 1 per share each fully paid
up, and bonus issue in the ratio of 1:1 post stock split. The shareholders of SIIL, in the
annual general meeting held on June 11, 2010, approved the referred proposals of the board.2.
    
    Ministry of Environment and Forests (MOEF) clearance for mining at Niyamgiri hillsMOEF, in a statement issued on August 24, 2010, refused the final approval to the Orissa Mining
Corporation (OMC) proposal for the bauxite mining at Niyamgiri hills, in the State of Orissa,
following the report of Dr. N.C. Saxena committee and recommendation of Forest Advisory
Committee, MOEF. Since all the issues raised in Dr. Saxena Committee report were already looked
into by Honble Supreme Court, hence the same cannot be raised again as per principle of res
judicata. After the grant of environment clearance, certain groups of persons and individuals
have filed appeal challenging the grant of environment clearance before National Environment
Appellate Authority (NEAA) on the same issues which were raised during hearing in Supreme Court.
NEAA ,disposing all the appeals vide its order dated September 15, 2010, has refused to relook
into the issues already discussed in the Supreme Court under the principle of res judicata, but
advised MOEF to look into the two environment impact assessment s (EIAs) prepared for the mining
project. As per NEAA order, additional conditions, if any required can be incorporated by MOEF in
the Environment Clearance, which remains inoperable for the time being, till MOEF revisits the
matter. In view of the ongoing delay in approval of the Niyamgiri mining, the Government of
Orissa is actively considering allocation of alternative sources of bauxite to Vedanta
Aluminiums alumina refinery, from the State of Orissa.3.
    
    The Central Excise Department has issued an exparte notice for reversal of Cenvat credit of
Rs 3,150 million along with interest of Rs 88 million for non compliance of Rules 4(5a) and
4(6) of the Cenvat Credit Rules, in respect of non-return of job work
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challans for the period March to September 2009 within stipulated time. In addition, the
Department has also alleged violation of Advance license conditions for the period 2005-2009. No
show cause notice in this regard has been served on SIIL. SIIL filed two writ petitions in
Madurai Bench of Madras High Court. By an order dated July 22, 2010, the Honble Madurai Bench of
Madras High Court has granted interim stay till the disposal of the writ petitions against the
ex-parte proceedings initiated by the department vide notices dated June 8, 2010 and June 9,
2010. SIIL has also been legally advised that the alleged charges are not legally sustainable and
there is no financial liability on SIIL.4.
    
    During the year the plan proposed by ASARCO and sponsored by SIILs wholly owned subsidiary,
Sterlite (USA) Inc was rejected by the US District Court. SIIL preferred to file an appeal
against the order of US District Court. Subsequently, the Bankruptcy Court also approved the
motion of ASARCO to terminate the settlement and Purchase and Sale Agreement (PSA) and allowed
it to draw on the USD 50 million Letter of Credit. SIIL has contested the same and has filed
an application before the Bankruptcy Court for refund of USD 50 million drawn down by ASARCO
and payment of compensation for legal expenses. SIIL has provided Rs. 2,735 million (being the
USD 50 million referred to above and other expenses related thereto) during the year ended
March 31,2010. On March 17, 2010, ASARCO has filed a complaint in US Bankruptcy court for
breaching the May 2008 agreement and has claimed damages suffered as a result of the alleged
breach, which is being contested by SIIL. SIIL believes that no significant additional loss
will arise from these claims.5.
    
    In response to the various writ petitions filed in the year 1996-1998 challenging the
environment clearances for setting up of the copper smelter at Tuticorin, the Madras High
Court concluded its hearings in February 2010 and by its order of September 28, 2010 ordered
the closure of the smelter at Tuticorin. SIIL has filed a special leave petition before the
Supreme Court of India against the order of the Madras High Court on September 29, 2010 for
interim suspension of the said order and also expects to file an appeal against the said
order. SIIL believes that it will successfully defend its position.
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