##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 FORM 20-F
 (Mark One)
 o
    
    Registration statement pursuant to section 12(b) or 12(g) of the Securities Exchange Act
of 1934
 or
 þ
    
    Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended March 31, 2009
 or
 o
    
    Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from

to
 or
 o
    
    Shell company report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
 Date of event requiring this shell company report
 Commission file number 001-33175
 Sterlite Industries (India) Limited
 (Exact Name of Registrant as specified in its charter)
 Republic of India(Jurisdiction of Incorporation or Organization)
    
    Vedanta, 75 Nehru Road
Vile Parle (East)
Mumbai, Maharashtra 400-099
India(Address of Principal Executive Offices)
 (Name, Telephone, E-mail and/or facsimile number and Address of
Company Contact Person)
  American Depositary Shares, each representing one equity share, 
par value Rs. 2 per equity share(Title of Class)
    
    New York Stock Exchange(Name of Exchange On Which Registered)
  None  (Title of Class)
 None  (Title of Class)
  As of March 31, 2009, 708,494,411 equity shares, par value Rs. 2 per equity share, were issued
and outstanding, of which 75,678,479 equity shares were held in the form of 75,678,479 American
Depositary Shares, or ADSs. Each ADS represents one equity share.
  þ o
  o þ
  þ o
  o o
  Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o  U.S. GAAP þ
    
    International Financial Reporting Standards as issued
by the International Accounting Standards Board o
    
    Other o
  o o
  o þ




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##### 



TABLE OF CONTENTS
 PAGEPART I
    
    
    2ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
    
    
    2ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
    
    
    3ITEM 3. KEY INFORMATION
    
    
    3ITEM 4. INFORMATION ON THE COMPANY
    
    
    25ITEM 4A. UNRESOLVED STAFF COMMENTS
    
    
    92ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    
    
    92ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
    
    
    123ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
    
    
    130ITEM 8. FINANCIAL INFORMATION
    
    
    136ITEM 9. THE OFFER AND LISTING
    
    
    140ITEM 10. ADDITIONAL INFORMATION
    
    
    141ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    175ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
    
    
    176PART II
    
    
    176ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
    
    
    176ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
    
    
    177ITEM 15. CONTROLS AND PROCEDURES
    
    
    177ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
    
    
    179ITEM 16B. CODE OF ETHICS
    
    
    179ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    179ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
    
    
    179ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
    
    
    179ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
    
    
    179ITEM 16G. CORPORATE GOVERNANCE
    
    
    180PART III
    
    
    180ITEM 17. FINANCIAL STATEMENTS
    
    
    180ITEM 18. FINANCIAL STATEMENTS
    
    
    180ITEM 19. EXHIBITS
    
    
    180SIGNATURES
    
    
    185INDEX TO FINANCIAL STATEMENTS
    
    
    F-1EX-4.42 Settlement and Purchase and Sale Agreement dated March 6, 2009.EX-4.43 Amendment No.1 dated April 15, 2009 to the Settlement and Sales and Purchase Agreement dated March 6, 2009.EX-4.44 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.EX-4.45 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.EX-4.46 Sterlite Plan Agreement in Principle Term Sheet dated June 12, 2009.EX-4.47 Credit Agreement Letter dated February 7, 2005 between India Foils Limited and ICICI Bank Limited.EX-4.48 Novation Agreement dated November 15, 2008 among Sterlite Industries (India) Limited, India Foils Limited and ICICI Bank Limited in respect of the Rs.772.5 million term loan facility.EX-4.49 Credit Agreement Letter dated August 4, 2005 between India Foils Limited and ICICI Bank Limited.EX-4.50 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.EX-4.51 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.EX-4.52 $140 million Term Loan Facility Agreement dated June 29, 2009 among Sterlite Energy Limited, India Infrastructure Finance (UK) Company Limited.EX-4.53 Sponsor Support Agreement dated June 29, 2009 among Sterlite Industries (India) Limited, Sterlite Energy Limited, and the State Bank of India as facility agent.EX-4.54 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.EX-4.55 Agreement dated February 18, 2009 between the Orissa Mining Corporation Limited and Sterlite Industries (India) Limited.EX-8.1 List of subsidiaries of Sterlite Industries (India) Limited.EX-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.EX-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.EX-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.EX-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.
  i




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##### Table of Contents



CONVENTIONS USED IN THIS ANNUAL REPORT
      SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  1




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##### Table of Contents




    
    a decline or volatility in the prices of or demand for copper, zinc or aluminum;
    
    events that could cause a decrease in our production of copper, zinc or aluminum;
    
    unavailability or increased costs of raw materials for our products;
    
    our actual economically recoverable copper ore, lead-zinc ore or bauxite reserves being
lower than we have estimated;
    
    our ability to expand our business, effectively manage our growth or implement our
strategy, including our planned entry into the commercial power business;
    
    our ability to retain our senior management team and hire and retain sufficiently skilled
labor to support our operations;
    
    regulatory, legislative and judicial developments and future regulatory actions and
conditions in our operating areas;
    
    increasing competition in the copper, zinc or aluminum industry;
    
    political or economic instability in India or around the region;
    
    worldwide economic and business conditions, including the unprecedented and challenging
conditions recently;
    
    our ability to successfully consummate strategic acquisitions, including our proposed acquisition of substantially all of the operating assets of ASARCO LLC, or
Asarco, a copper mining, smelting and refining company based in Tucson, Arizona, United
States;
    
    the outcome of outstanding litigation in which we are involved;
    
    our ability to maintain good relations with our trade unions and avoid strikes and
lock-outs;
    
    any actions of our controlling shareholder, Vedanta;
    
    our business future capital requirements and the availability of financing on favorable
terms;
    
    the continuation of tax holidays, exemptions and deferred tax schemes we enjoy;
    
    changes in tariffs, royalties, customs duties and government assistance; and
    
    terrorist attacks and other acts of violence, natural disasters and other environmental
conditions and outbreaks of infectious diseases and other public health concerns in India,
Asia and elsewhere.
  
 PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  2




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##### Table of Contents



ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 A. Selected Consolidated Financial Data
    Year Ended March 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009(in millions, except share and per share data)Consolidated Statement of Operations Data:Net sales
    
    Rs.
    66,643
    
    
    Rs.
    122,791
    
    
    Rs.
    241,246
    
    
    Rs.
    246,414
    
    
    Rs.
    212,192
    
    
    $
    4,171.3Other operating revenues
    
    
    628
    
    
    
    1,334
    
    
    
    2,251
    
    
    
    2,616
    
    
    
    3,683
    
    
    
    72.4Total revenue
    
    
    67,271
    
    
    
    124,125
    
    
    
    243,497
    
    
    
    249,030
    
    
    
    215,875
    
    
    
    4,243.7Cost of sales
    
    
    (50,615
    )
    
    
    (86,981
    )
    
    
    (144,798
    )
    
    
    (164,869
    )
    
    
    (164,566
    )
    
    
    (3,235.1
    )Selling and distribution expenses
    
    
    (1,428
    )
    
    
    (2,117
    )
    
    
    (3,444
    )
    
    
    (3,808
    )
    
    
    (3,847
    )
    
    
    (75.6
    )General and administration expenses
    
    
    (2,370
    )
    
    
    (2,596
    )
    
    
    (2,633
    )
    
    
    (4,572
    )
    
    
    (5,078
    )
    
    
    (99.8
    )Other income/(expenses):Gain on sale of real estate
    
    
    
    
    
    
    
    
    
    
    986
    
    
    
    
    
    
    
    
    
    
    
    Impairment of assets
    
    
    (1,276
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Voluntary retirement scheme expenses
    
    
    (186
    )
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    Guarantees, impairment of investments and
loans
    
    
    
    
    
    
    (1,300
    )
    
    
    
    
    
    
    (628
    )
    
    
    (137
    )
    
    
    (2.7
    )Operating income
    
    
    11,396
    
    
    
    31,131
    
    
    
    93,511
    
    
    
    75,153
    
    
    
    42,247
    
    
    
    830.5Interest and dividend income
    
    
    1,780
    
    
    
    1,873
    
    
    
    2,072
    
    
    
    6,548
    
    
    
    16,728
    
    
    
    328.8Interest expense
    
    
    (1,962
    )
    
    
    (3,238
    )
    
    
    (4,329
    )
    
    
    (3,386
    )
    
    
    (6,874
    )
    
    
    (135.1
    )Net realized and unrealized investment gains
    
    
    399
    
    
    
    541
    
    
    
    2,280
    
    
    
    4,511
    
    
    
    2,254
    
    
    
    44.3Income before income taxes, minority
interests and equity in net (loss)/income
of associate
    
    
    11,613
    
    
    
    30,307
    
    
    
    93,534
    
    
    
    82,826
    
    
    
    54,355
    
    
    
    1,068.5Income taxes:Current
    
    
    (2,674
    )
    
    
    (7,894
    )
    
    
    (23,192
    )
    
    
    (18,410
    )
    
    
    (8,041
    )
    
    
    (158.1
    )Deferred
    
    
    (831
    )
    
    
    (1,111
    )
    
    
    (1,967
    )
    
    
    (3,214
    )
    
    
    1,595
    
    
    
    31.4Income after income taxes, before minority
interests and equity in net (loss)/income
of associate
    
    
    8,108
    
    
    
    21,302
    
    
    
    68,375
    
    
    
    61,202
    
    
    
    47,909
    
    
    
    941.8Minority interests
    
    
    (2,764
    )
    
    
    (6,073
    )
    
    
    (21,053
    )
    
    
    (19,093
    )
    
    
    (12,346
    )
    
    
    (242.7
    )Equity in net (loss)/income of associate,
net of taxes
    
    
    
    
    
    
    (99
    )
    
    
    24
    
    
    
    491
    
    
    
    (6,001
    )
    
    
    (118.0
    )Net income from continuing operations
    
    
    5,344
    
    
    
    15,130
    
    
    
    47,346
    
    
    
    42,600
    
    
    
    29,562
    
    
    
    581.1Discontinued operations:Income from divested business, net of tax
    
    
    222
    
    
    
    369
    
    
    
    86
    
    
    
    
    
    
    
    
    
    
    
    Net Income
    
    Rs.
    5,566
    
    
    Rs.
    15,499
    
    
    Rs.
    47,432
    
    
    Rs.
    42,600
    
    
    Rs.
    29,562
    
    
    $
    581.1
 3




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Year Ended March 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009(in millions, except share and per share data)Basic earnings per share:(1)Income from continuing operations
    
    Rs.
    11.74
    
    
    Rs.
    27.35
    
    
    Rs.
    84.78
    
    
    Rs.
    63.16
    
    
    Rs.
    41.7
    
    
    $
    0.82Income from discontinued operations
    
    
    0.48
    
    
    
    0.67
    
    
    
    0.15
    
    
    
    
    
    
    
    
    
    
    
    Basic earnings per share
    
    Rs.
    12.22
    
    
    Rs.
    28.02
    
    
    Rs.
    84.93
    
    
    Rs.
    63.16
    
    
    Rs.
    41.7
    
    
    $
    0.82Diluted earnings per share:(1)Income from continuing operations
    
    Rs.
    11.57
    
    
    Rs.
    27.35
    
    
    Rs.
    84.78
    
    
    Rs.
    63.16
    
    
    Rs.
    41.7
    
    
    $
    0.82Income from discontinued operations
    
    
    0.48
    
    
    
    0.67
    
    
    
    0.15
    
    
    
    
    
    
    
    
    
    
    
    Diluted earnings per share
    
    Rs.
    12.05
    
    
    Rs.
    28.02
    
    
    Rs.
    84.93
    
    
    Rs.
    63.16
    
    
    Rs.
    41.7
    
    
    $
    0.82Weighted average number of equity shares
used in computing earnings per share:(1)Basic
    
    
    455,343,743
    
    
    
    553,216,634
    
    
    
    558,494,411
    
    
    
    674,478,018
    
    
    
    708,494,411
    
    
    
    708,494,411Diluted
    
    
    465,108,143
    
    
    
    553,216,634
    
    
    
    558,494,411
    
    
    
    674,478,018
    
    
    
    708,494,411
    
    
    
    708,494,411Dividend declared per share(2)
    
    Rs.
    3.00
    
    
    Rs.
    1.25
    
    
    Rs.
    4.00
    
    
    Rs.
    4.00
    
    
    Rs.
    3.50
    
    
    $
    0.07
 
 Notes:(1)
    
    Earnings per share and weighted average number of equity shares used in computing earnings
per share have been adjusted for the five-for-two stock split and one-for-one bonus issue
effective May 12, 2006.(2)
    
    The dividend for fiscal 2006 was recommended by our board of directors on May 30, 2006 and
approved by our shareholders at the general meeting held on September 20, 2006. The dividend
paid for fiscal 2006 was paid after the five-for-two stock split and one-for-one bonus issue
effective May 12, 2006. The interim dividend for fiscal 2007 was declared by our board of
directors on November 15, 2006 and paid on December 11, 2006 to holders of record of our
equity shares on December 7, 2006. On May 3, 2007, our board of directors recommended that the
interim dividend should be considered as the final dividend for fiscal 2007. The dividend for
fiscal 2008 was recommended by our board of directors on April 26, 2008 and approved by our
shareholders at the general meeting held on August 22, 2008. On April 28, 2009, our board of
directors recommended a final dividend of Rs. 3.50 ($0.07) per equity share for fiscal 2009,
subject to shareholders approval at the next general meeting to be held before September 2009. As of March 31,2006
    
    2007
    
    2008
    
    2009
    
    2009(in millions)Consolidated Balance Sheet Data:Cash and cash equivalents
    
    Rs.
    9,258
    
    
    Rs.
    9,436
    
    
    Rs.
    12,363
    
    
    Rs.
    2,701
    
    
    $
    53.1Total assets
    
    
    167,539
    
    
    
    225,881
    
    
    
    376,179
    
    
    
    443,086
    
    
    
    8,710.2Long-term debt, net of current portion
    
    
    30,237
    
    
    
    13,128
    
    
    
    9,949
    
    
    
    14,384
    
    
    
    282.8Short-term and current portion of long-term debt
    
    
    4,390
    
    
    
    8,353
    
    
    
    10,190
    
    
    
    20,202
    
    
    
    397.1Total shareholders equity
    
    
    53,498
    
    
    
    96,960
    
    
    
    221,123
    
    
    
    246,865
    
    
    
    4,852.9
 Year Ended March 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009(in millions)Cash Flow Data:Net cash provided by (used in):Operating activities
    
    Rs.
    6,075
    
    
    Rs.
    19,595
    
    
    Rs.
    40,418
    
    
    Rs.
    (17,594
    )
    
    Rs.
    78,204
    
    
    $
    1,537.3Investing activities
    
    
    (21,391
    )
    
    
    (16,676
    )
    
    
    (24,006
    )
    
    
    (56,404
    )
    
    
    (95,458
    )
    
    
    (1,876.5
    )Financing activities
    
    
    17,321
    
    
    
    375
    
    
    
    (15,910
    )
    
    
    76,582
    
    
    
    7,986
    
    
    
    157.0Other Consolidated Financial Data:Net sales:Copper
    
    Rs.
    34,508
    
    
    Rs.
    67,921
    
    
    Rs.
    115,192
    
    
    Rs.
    126,276
    
    
    Rs.
    116,525
    
    
    $
    2,290.7Zinc
    
    
    21,967
    
    
    
    38,573
    
    
    
    85,963
    
    
    
    78,222
    
    
    
    55,724
    
    
    
    1,095.4Aluminum
    
    
    10,168
    
    
    
    16,297
    
    
    
    40,091
    
    
    
    41,596
    
    
    
    39,170
    
    
    
    770.0Power(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    773
    
    
    
    15.2Corporate and others(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    320
    
    
    
    
    
    
    
    Total
    
    Rs.
    66,643
    
    
    Rs.
    122,791
    
    
    Rs.
    241,246
    
    
    Rs.
    246,414
    
    
    Rs.
    212,192
    
    
    $
    4,171.3Operating income:Copper
    
    Rs.
    2,440
    
    
    Rs.
    7,659
    
    
    Rs.
    17,235
    
    
    Rs.
    11,037
    
    
    Rs.
    10,557
    
    
    $
    207.5Zinc
    
    
    8,309
    
    
    
    21,287
    
    
    
    62,908
    
    
    
    53,192
    
    
    
    25,148
    
    
    
    494.4Aluminum
    
    
    1,824
    
    
    
    3,496
    
    
    
    13,371
    
    
    
    11,581
    
    
    
    6,364
    
    
    
    125.1Power(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    184
    
    
    
    3.6Corporate and others(1)
    
    
    (1,177
    )
    
    
    (1,311
    )
    
    
    (3
    )
    
    
    (657
    )
    
    
    (6
    )
    
    
    (0.1
    )Total
    
    Rs.
    11,396
    
    
    Rs.
    31,131
    
    
    Rs.
    93,511
    
    
    Rs.
    75,153
    
    
    Rs.
    42,247
    
    
    $
    830.5Segment
profit:(2)Copper
    
    Rs.
    3,899
    
    
    Rs.
    8,982
    
    
    Rs.
    17,689
    
    
    Rs.
    12,650
    
    
    Rs.
    12,574
    
    
    $
    247.2Zinc
    
    
    9,785
    
    
    
    23,216
    
    
    
    65,129
    
    
    
    55,563
    
    
    
    27,777
    
    
    
    546.0Aluminum
    
    
    2,504
    
    
    
    4,752
    
    
    
    15,765
    
    
    
    14,244
    
    
    
    8,954
    
    
    
    176.0Power(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    792
    
    
    
    15.6Corporate and others(1)
    
    
    (100
    )
    
    
    (8
    )
    
    
    (2
    )
    
    
    384
    
    
    
    132
    
    
    
    2.6Total
    
    Rs.
    16,088
    
    
    Rs.
    36,942
    
    
    Rs.
    98,581
    
    
    Rs.
    82,841
    
    
    Rs.
    50,229
    
    
    $
    987.4
 4




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##### Table of Contents



Notes:
 (1)
    
    The corporate and other segment includes the
results from the power segment for the periods prior to the year ended March 31, 2009.(2)
    
    Segment profit is calculated by adjusting operating income for depreciation, depletion and
amortization, voluntary retirement scheme expenses, impairment of assets and guarantees,
impairment of investments and loans and gain on sale of real estate,
as applicable. Segment profit is not a recognized measurement under
US GAAP. Our segment profit may not be comparable
to similarly titled measures reported by other companies due to potential inconsistencies in
the method of calculation. We have included our segment profit because we believe it is an
indicative measure of our operating performance and is used by investors and analysts to
evaluate companies in our industry. Our segment profit should be considered in addition to,
and not as a substitute for, other measures of financial performance and liquidity reported in
accordance with US GAAP. We believe that the inclusion of supplementary adjustments applied in
our presentation of segment profit are appropriate because we believe it is a more indicative
measure of our baseline performance as it excludes certain charges that our management
considers to be outside of our core operating results. In addition, our segment profit is
among the primary indicators that our management uses as a basis for planning and forecasting
of future periods. The following table reconciles operating income to segment profit for the
periods presented: Year Ended March 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2009(in millions)Copper:Operating income
    
    Rs.
    2,440
    
    
    Rs.
    7,659
    
    
    Rs.
    17,235
    
    
    Rs.
    11,037
    
    
    Rs.
    10,557
    
    
    $
    207.5Plus:Depreciation, depletion and amortization
    
    
    1,239
    
    
    
    1,323
    
    
    
    1,440
    
    
    
    1,613
    
    
    
    2,017
    
    
    
    39.7Gain on sale of real estate
    
    
    
    
    
    
    
    
    
    
    (986
    )
    
    
    
    
    
    
    
    
    
    
    Impairment of assets
    
    
    220
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Segment profit
    
    Rs.
    3,899
    
    
    Rs.
    8,982
    
    
    Rs.
    17,689
    
    
    Rs.
    12,650
    
    
    Rs.
    12,574
    
    
    $
    247.2Zinc:Operating income
    
    Rs.
    8,309
    
    
    Rs.
    21,287
    
    
    Rs.
    62,908
    
    
    Rs.
    53,192
    
    
    Rs.
    25,148
    
    
    $
    494.4Plus:Depreciation, depletion and amortization
    
    
    1,290
    
    
    
    1,929
    
    
    
    2,124
    
    
    
    2,371
    
    
    
    2,629
    
    
    
    51.6Voluntary retirement scheme expenses
    
    
    186
    
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    Segment profit
    
    Rs.
    9,785
    
    
    Rs.
    23,216
    
    
    Rs.
    65,129
    
    
    Rs.
    55,563
    
    
    Rs.
    27,777
    
    
    $
    546.0Aluminum:Operating income
    
    Rs.
    1,824
    
    
    Rs.
    3,496
    
    
    Rs.
    13,371
    
    
    Rs.
    11,581
    
    
    Rs.
    6,364
    
    
    $
    125.1Plus:Depreciation, depletion and amortization
    
    
    680
    
    
    
    1,256
    
    
    
    2,394
    
    
    
    2,663
    
    
    
    2,590
    
    
    
    50.9Segment profit
    
    Rs.
    2,504
    
    
    Rs.
    4,752
    
    
    Rs.
    15,765
    
    
    Rs.
    14,244
    
    
    Rs.
    8,954
    
    
    $
    176.0Power:(a)Operating income
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    184
    
    
    $
    3.6Plus:Depreciation, depletion and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    608
    
    
    
    12.0Segment profit
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    792
    
    
    $
    15.6Corporate
and others:(a)Operating income
    
    Rs.
    (1,177
    )
    
    Rs.
    (1,311
    )
    
    Rs.
    (3
    )
    
    Rs.
    (657
    )
    
    Rs.
    (6
    )
    
    $
    (0.1
    )Plus:Depreciation, depletion and amortization
    
    
    21
    
    
    
    3
    
    
    
    1
    
    
    
    413
    
    
    
    1
    
    
    
    0.0Impairment of assets
    
    
    1,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Guarantees, impairment of investments and loan
    
    
    
    
    
    
    1,300
    
    
    
    
    
    
    
    628
    
    
    
    137
    
    
    
    2.7Segment profit
    
    Rs.
    (100
    )
    
    Rs.
    (8
    )
    
    Rs.
    (2
    )
    
    Rs.
    384
    
    
    Rs.
    132
    
    
    $
    2.6
 
 (a)
    
    The corporate and other segment includes the results from the
power segment for the periods prior to the year ended March 31,
2009. 5




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##### Table of Contents



Year Ended March 31,2007
    
    2008
    
    2009(in US dollars per ton, except as indicated)Market and Cost Data:London Metal
Exchange (LME) price:(1)Copper
    
    $
    6,984
    
    
    $
    7,588
    
    
    $
    5,885Zinc
    
    
    3,581
    
    
    
    2,992
    
    
    
    1,563Aluminum
    
    
    2,663
    
    
    
    2,620
    
    
    
    2,234Treatment charge and refining charge (TcRc):(2)Copper
    
    
    31.1
    ¢/lb
    
    
    15.7
    ¢/lb
    
    
    11.7
    ¢/lbCost of production:(3)Copper smelting and refining(4)
    
    
    6.1
    ¢/lb
    
    
    1.8
    ¢/lb
    
    
    3.1
    ¢/lbZinc(5)
    
    $
    862
    
    
    $
    884
    
    
    $
    710Aluminum(6)
    
    $
    1,626
    
    
    
    1,720
    
    
    
    1,700
 
 Notes:
 (1)
    
    Calculated as the daily average cash seller settlement price for the period.(2)
    
    Represents our average realized TcRc for the period.(3)
    
    Cost of production is not a recognized measure under US GAAP. We have included cost of
production as a measure of effectiveness because we believe it is an indicative measure of our
operating performance and is used by investors and analysts to evaluate companies in our
industry. Our computation of cost of production should be considered in addition to, and not
as a substitute for, other measures of financial performance and liquidity reported in
accordance with US GAAP. We believe that the cost of production measure is a meaningful
measure of our production cost efficiency as it is more indicative of our production or
conversion costs and is a measure that our management considers to be controllable. Cost of
production is a measure intended for monitoring the operating performance of our operations.
This measure is presented by other non-ferrous metal companies, though our measure may not be
comparable to similarly titled measures reported by other companies. Cost of production as
reported for our metal products consists of direct cash cost of production and excludes
non-cash cost and indirect cost (such as depreciation and interest payments), and are offset
for any amounts we receive upon the sale of the by-products from the refining or smelting
process. 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 31,2007
    
    
    2008
    
    
    2009(in millions, except Production output and Cost of production)Copper:Segment sales
    
    Rs.
    115,192
    
    
    Rs.
    126,276
    
    
    Rs.
    116,670Less:Segment profit
    
    
    (17,689
    )
    
    
    (12,650
    )
    
    
    (12,574
    )Segment cost
    
    
    97,503
    
    
    
    113,626
    
    
    
    104,096Less:Purchased concentrate/rock
    
    
    (91,489
    )
    
    
    (107,422
    )
    
    
    (95,478
    )By-product/free copper net sales
    
    
    (1,935
    )
    
    
    (4,283
    )
    
    
    (4,337
    )Cost for downstream products
    
    
    (938
    )
    
    
    (1,197
    )
    
    
    (1,613
    )Others, net
    
    
    (1,236
    )
    
    
    (195
    )
    
    
    (1,690
    )Total expenses
    
    Rs.
    1,905
    
    
    Rs.
    529
    
    
    Rs.
    979Production output (in tons)
    
    
    312,720
    
    
    
    339,294
    
    
    
    312,833Cost of production(a)
    
    6.1¢/lb
    
    1.8¢/lb
    
    3.1¢/lb
 6




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##### Table of Contents



Year Ended March 31,2007
    
    
    2008
    
    
    2009(in millions, except Production output and Cost of production)Zinc:Segment sales
    
    Rs.
    85,963
    
    
    Rs.
    78,222
    
    
    Rs.
    55,724Less:Segment profit
    
    
    (65,129
    )
    
    
    (55,563
    )
    
    
    (27,777
    )Segment cost
    
    
    20,834
    
    
    
    22,659
    
    
    
    27,947Less:Cost of tolling including raw material cost
    
    
    (14
    )
    
    
    
    
    
    
    (409
    )Cost of intermediary product sold
    
    
    (2,487
    )
    
    
    (2,944
    )
    
    
    (1,301
    )By-product net sales
    
    
    (1,223
    )
    
    
    (2,637
    )
    
    
    (4,848
    )Cost of lead metal sold
    
    
    (1,463
    )
    
    
    (1,787
    )
    
    
    (2,079
    )Others, net
    
    
    (2,050
    )
    
    
    (118
    )
    
    
    (1,312
    )Total expenses
    
    Rs.
    13,598
    
    
    Rs.
    15,173
    
    
    Rs.
    17,998Production output (in tons)
    
    
    348,316
    
    
    
    426,323
    
    
    
    551,724Cost of production (per ton)(a)
    
    $
    862
    
    
    $
    884
    
    
    $
    710Aluminum:Segment sales
    
    Rs.
    41,002
    
    
    Rs.
    41,695
    
    
    Rs.
    39,336Less:Segment profit
    
    
    (15,765
    )
    
    
    (14,244
    )
    
    
    (8,954
    )Segment cost
    
    
    25,237
    
    
    
    27,451
    
    
    
    30,382Less:Cost of intermediary product sold
    
    
    (177
    )
    
    
    (118
    )
    
    
    By-product net sales
    
    
    (312
    )
    
    
    (367
    )
    
    
    (328
    )Cost for downstream products
    
    
    (1,323
    )
    
    
    (1,709
    )
    
    
    (1,966
    )Others, net
    
    
    (322
    )
    
    
    (181
    )
    
    
    (314
    )Total expenses
    
    Rs.
    23,103
    
    
    Rs.
    25,076
    
    
    Rs.
    27,774Production output (hot metal) (in tons)
    
    
    313,817
    
    
    
    362,296
    
    
    
    355,733Cost of production (per ton)(a)
    
    $
    1,626
    
    
    $
    1,720
    
    
    $
    1,700
 
 (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, 2007, 2008 and 2009 of
Rs. 45.29 per $1.00, Rs. 40.24 per $1.00, and Rs. 45.91 per $1.00, respectively. (4)
    
    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.(5)
    
    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 2009, or its exit cost of production for
fiscal 2009, was $594 per ton.(6)
    
    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 tons per annum, or 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 2009
was $1,146 per ton. B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
  7




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##### Table of Contents



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.
    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 in May 2006, and as a result of this interruption the 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 had an unscheduled shutdown for 20 days in
September 2008 in order to make structural repairs and reinforcements. 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.
 8




---



##### Table of Contents




    
    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,
rail, trucking, overland conveyor and other systems to deliver bauxite, alumina, zinc
concentrate, copper concentrate, coal and other supplies to our operations and to deliver
our products to customers. Any disruption to or increase in the cost of these transport
services, including as a result of interruptions that decrease the availability of these
transport services or as a result of increases in demand for transport services from our competitors or from other businesses, or any failure of these
transport services to be expanded in a timely manner to support an expansion of our
operations, could have a material adverse effect on our operations and operating results.
    
    Accidents at mines, smelters, refineries, cargo terminals and related facilities.Any
accidents or explosions causing personal injury, property damage or environmental damage at
or to our mines, smelters, refineries, cargo terminals and related facilities may result in
expensive litigation, imposition of penalties and sanctions or suspension or revocation of
permits and licenses. Risks associated with our open-pit mining operations include flooding
of the open-pit, collapses of the open-pit wall and operation of large open-pit mining and
rock transportation equipment. Risks associated with our underground mining operations
include underground fires and explosions (including those caused by flammable gas), cave-ins
or ground falls, discharges of gases or toxic chemicals, flooding, sinkhole formation and
ground subsidence and underground drilling, blasting and removal and processing of ore.
Injuries to and deaths of workers at our mines and facilities have occurred in the past and
may occur in the future. We are required by law to compensate employees for work-related
injuries. Failure to make adequate provisions for our workers compensation liabilities
could harm our future operating results.
    
    Strikes and industrial actions or disputes.The majority of the total workforce of our
consolidated group of companies is unionized. Strikes and industrial actions or disputes
have in the past and may in the future lead to business interruptions and halts in
production. For example, the trade unions of BALCO initiated a 67-day-long strike in May
2001 in opposition to the divestment of equity shares of BALCO by the Government of India.
We also experienced short strikes and work stoppages in 2005 and 2006. In addition, we may
be subject to union demands and litigation for pay raises and increased benefits, and our
existing arrangements with trade unions may not be renewed on terms favorable to us, or at
all. The wage settlement agreements entered into by HZL and BALCO
with their respective unions expired on July 1, 2007 and
April 1, 2009, respectively. We are currently
in negotiations with these unions to renew the wage settlement
agreements and work is
therefore ongoing at HZL and BALCO without collective agreements. 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.
    9




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##### Table of Contents



Our business requires substantial capital expenditures and the dedication of management and other
resources to maintain ongoing operations and to grow our business through projects, expansions and
acquisitions, which projects, expansions and acquisitions are subject to additional risks that
could adversely affect our business, financial condition and results of operations.
 Capital requirements.
  Cost overruns and delays.
 Demands on management.
 Acquisition risks.
  10




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##### Table of Contents



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.
  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.
    
    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.
  11




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##### Table of Contents



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.
  Our
proposed acquisition of Asarco faces competition from other
potential acquirors, is uncertain and on which investors should not
place undue reliance, and if it is not completed, we may be sued by
Asarco based on our prior agreement to acquire Asarco.
    If
we are successful in acquiring Asarco, we will be subject to a number
of risks, including risks relating to
the size of the acquisition, the acquisition price, our ability to integrate the acquired business,
an increase in the geographic scope of our operations that exposes us to extensive laws and
regulations in the United States and our ability to retain the senior management team and key
employees of the acquired business.
  
    
    It is a substantial acquisition and shareholders cannot be certain that we are paying an
appropriate price for Asarco. The Asarco acquisition will be the largest acquisition in
the history of our company, representing a significant investment of our companys
resources. While we have performed what we believe to be adequate diligence with respect
to Asarco, as we are purchasing Asarco out of bankruptcy, the information available to us
has been more limited than might otherwise be the case. In addition, as with any
acquisition, we cannot be certain that we have adequately accounted for all of the costs
and risks of the acquired business in the price we have negotiated. Similarly, our
shareholders cannot be certain that the price we are paying is an
appropriate price. Further, there can be no assurance the price we have currently negotiated will be the final
purchase price for the acquisition as the purchase consideration has been increased previously,
from $1.7 billion to $1.87 billion, mainly in line with expected changes in working capital at
closing, as agreed on June 12, 2009, and may be increased in the future.
    
    Integration of Asarcos business. We may be unsuccessful in integrating Asarcos
business and operations with our own in an effective and efficient manner, which may cause
us to fail to achieve the anticipated benefits of the acquisition and harm our business.
The difficulties of combining the two companies businesses potentially will include, among
other things:
 ¡
    
    the necessity of coordinating geographically separated organizations
and addressing possible differences in corporate cultures and management
philosophies, and the integration of certain operations following the transaction
will require the dedication of significant management resources, which may
temporarily distract managements attention from the day-to-day business of our
company;¡
    
    any inability of our management to integrate successfully the
operations of Asarco or to adapt to the copper mining, smelting and refining
business in the United States; and¡
    
    any inability of our management to cause best practices to be applied
to the business we are acquiring.
 12




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##### Table of Contents




    
    The geographic scope of our business will be increased to include the United States.
Asarcos business and assets are located in the United States. If the acquisition is
completed, we will be subject to extensive laws and regulations governing exploration,
development, production, occupational health, mine safety, toxic substances, waste
disposal, protection and remediation of the environment, protection of endangered and
protected species, and other related matters in the United States, including the US Federal
Clean Air Act and the US Federal Resource Conservation and Recovery Act, as well as local
and state laws in the states of Arizona and Texas. Our business will also become subject
to political, economic and social conditions in the United States. Because we presently
have no significant operations in the United States, these risks are different from and in
addition to those to which our business has historically been exposed.
    
    We may be unsuccessful in retaining the senior management team and other key employees
at Asarco. The success of our acquisition will depend in part upon our ability to retain
the senior management team and other key employees at Asarco. Competition for qualified
personnel can be very intense. In addition, senior management and key employees may depart
because of issues relating to the uncertainty or difficulty associated with the integration
of Asarco or a desire not to remain with our company. Accordingly, no assurance can be
given that we will be able to retain senior management and key employees at Asarco to the
extent necessary to successfully integrate its business with ours and make the acquired
business profitable.
 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.
     13




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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.
   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.
     14




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We are involved in a number of litigation matters, both civil and criminal in nature, and any final
judgments against us could have a material adverse effect on our business, results of operations,
financial condition and prospects.
  Defects in title or loss of any leasehold interests in our properties could limit our ability to
conduct operations on our properties or result in significant unanticipated costs.
    Our operations are subject to extensive governmental and environmental regulations which have in
the past and could in the future cause us to incur significant costs or liabilities or interrupt or
close our operations, any of which events may adversely affect our results of operations.
  15




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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.
  16




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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.
  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.
  17




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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.
    18




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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 your ability to influence matters requiring shareholder approval
will be extremely limited.
     19




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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;
    
    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.
   20




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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.
   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.
   21




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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.
  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.
  22




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Currency fluctuations among the Indian Rupee, the Australian dollar and the US dollar could have a
material adverse effect on our results of operations.
  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.
  23




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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.
  24




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




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26




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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,
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 and 2007-08), 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
     
    
    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.
 27




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Refined Copper Consumption
    Year Ended December 31,2005
    
    2006
    
    2007
    
    2008Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Rest of Asia(1)
    
    
    4,171
    
    
    
    24.6
    %
    
    
    4,246
    
    
    
    24.3
    %
    
    
    4,182
    
    
    
    23.3
    %
    
    
    4,153
    
    
    
    23.1
    %Western Europe
    
    
    3,565
    
    
    
    21.0
    
    
    
    3,923
    
    
    
    22.4
    
    
    
    3,661
    
    
    
    20.4
    
    
    
    3,413
    
    
    
    19.0China
    
    
    3,815
    
    
    
    22.5
    
    
    
    3,967
    
    
    
    22.7
    
    
    
    4,600
    
    
    
    25.7
    
    
    
    5,014
    
    
    
    27.9North America
    
    
    2,549
    
    
    
    15.0
    
    
    
    2,408
    
    
    
    13.8
    
    
    
    2,395
    
    
    
    13.4
    
    
    
    2,200
    
    
    
    12.2CEE(2) and CIS
    
    
    1,106
    
    
    
    6.5
    
    
    
    1,210
    
    
    
    6.9
    
    
    
    1,251
    
    
    
    7.0
    
    
    
    1,240
    
    
    
    6.9Latin America
    
    
    955
    
    
    
    5.6
    
    
    
    895
    
    
    
    5.1
    
    
    
    863
    
    
    
    4.8
    
    
    
    906
    
    
    
    5.0India
    
    
    415
    
    
    
    2.4
    
    
    
    458
    
    
    
    2.6
    
    
    
    568
    
    
    
    3.2
    
    
    
    598
    
    
    
    3.3Africa
    
    
    234
    
    
    
    1.4
    
    
    
    243
    
    
    
    1.4
    
    
    
    275
    
    
    
    1.5
    
    
    
    295
    
    
    
    1.6Oceania
    
    
    155
    
    
    
    0.9
    
    
    
    143
    
    
    
    0.8
    
    
    
    148
    
    
    
    0.8
    
    
    
    144
    
    
    
    0.8Total
    
    
    16,965
    
    
    
    100.0
    %
    
    
    17,493
    
    
    
    100.0
    %
    
    
    17,943
    
    
    
    100.0
    %
    
    
    17,963
    
    
    
    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, May 2009.
 Copper Supply
    28




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Year Ended December 31,2005
    
    2006
    
    2007
    
    2008Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Latin America
    
    
    3,985
    
    
    
    24.0
    %
    
    
    3,906
    
    
    
    22.6
    %
    
    
    3,953
    
    
    
    22.0
    %
    
    
    4,070
    
    
    
    22.2
    %Rest of Asia(1)
    
    
    2,738
    
    
    
    16.5
    
    
    
    2,953
    
    
    
    17.1
    
    
    
    2,995
    
    
    
    16.6
    
    
    
    2,927
    
    
    
    15.9China
    
    
    2,600
    
    
    
    15.6
    
    
    
    3,003
    
    
    
    17.4
    
    
    
    3,497
    
    
    
    19.4
    
    
    
    3,779
    
    
    
    20.6CEE(2) and CIS
    
    
    2,166
    
    
    
    13.1
    
    
    
    2,173
    
    
    
    12.6
    
    
    
    2,123
    
    
    
    11.8
    
    
    
    2,087
    
    
    
    11.4North America
    
    
    1,775
    
    
    
    10.7
    
    
    
    1,758
    
    
    
    10.2
    
    
    
    1,786
    
    
    
    9.9
    
    
    
    1,733
    
    
    
    9.4Western Europe
    
    
    1,841
    
    
    
    11.1
    
    
    
    1,877
    
    
    
    10.9
    
    
    
    1,846
    
    
    
    10.3
    
    
    
    1,945
    
    
    
    10.6Africa
    
    
    528
    
    
    
    3.2
    
    
    
    567
    
    
    
    3.3
    
    
    
    638
    
    
    
    3.5
    
    
    
    645
    
    
    
    3.5Australia
    
    
    461
    
    
    
    2.8
    
    
    
    430
    
    
    
    2.5
    
    
    
    443
    
    
    
    2.5
    
    
    
    502
    
    
    
    2.7India
    
    
    499
    
    
    
    3.0
    
    
    
    629
    
    
    
    3.6
    
    
    
    722
    
    
    
    4.0
    
    
    
    683
    
    
    
    3.7Total
    
    
    16,593
    
    
    
    100.0
    %
    
    
    17,296
    
    
    
    100.0
    %
    
    
    18,003
    
    
    
    100.0
    %
    
    
    18,371
    
    
    
    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, May 2009.
 Pricing
  Year Ended December 31,1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008($ per ton, except percentages)LME Cash Price($)
    
    
    1,573
    
    
    
    1,814
    
    
    
    1,577
    
    
    
    1,557
    
    
    
    1,779
    
    
    
    2,869
    
    
    
    3,683
    
    
    
    6,729
    
    
    
    7,124
    
    
    
    6,966% Change
    
    
    
    
    
    
    15.3
    
    
    
    (13.1
    )
    
    
    (1.3
    )
    
    
    14.3
    
    
    
    61.2
    
    
    
    28.4
    
    
    
    82.7
    
    
    
    5.9
    
    
    
    (2.2
    )
 
 Source: LME.     Year Ended December 31,1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008(US cents per lb, except percentages)TcRc(1)
    
    
    15.3
    
    
    
    15.9
    
    
    
    17.4
    
    
    
    15.5
    
    
    
    13.9
    
    
    
    13.0
    
    
    
    29.6
    
    
    
    45.9
    
    
    
    15.4
    
    
    
    11.5% Change
    
    
    
    
    
    
    3.9
    
    
    
    9.4
    
    
    
    (10.9
    )
    
    
    (10.3
    )
    
    
    (6.5
    )
    
    
    127.7
    
    
    
    55.1
    
    
    
    (66.4
    )
    
    
    (24.7
    )
 
 Note:
 (1)
    
    Includes price participation, if any.
 Source: Brook Hunt Copper Metal Service Report.
  29




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Indian Copper Market
 Background
  Consumption Pattern
  Pricing and Tariff
  Market Outlook
 Global Copper Outlook
     Indian Copper Outlook
  30




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##### Table of Contents



Zinc
 Global Zinc Market
 Background
    
    
    Miners, which mine the lead-zinc ore and produce zinc concentrate for sale to smelters,
and usually receive payment for 85% of the zinc contained in the concentrate less a Tc;
    
    Smelters, which purchase concentrate and sell refined metal, with some smelters also
having some integrated production downstream; and
    
    Integrated producers, which are involved in both the mining and smelting of zinc.
  Zinc Consumption
   31




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Year Ended December 31,2005
    
    2006
    
    2007
    
    2008Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Europe
    
    
    2,716
    
    
    
    25.0
    %
    
    
    2,843
    
    
    
    25.5
    %
    
    
    2,894
    
    
    
    25.2
    %
    
    
    2,592
    
    
    
    23.1
    %China
    
    
    2,853
    
    
    
    26.9
    
    
    
    3,166
    
    
    
    28.4
    
    
    
    3,531
    
    
    
    30.8
    
    
    
    3,795
    
    
    
    33.9India
    
    
    388
    
    
    
    3.7
    
    
    
    428
    
    
    
    3.8
    
    
    
    469
    
    
    
    4.1
    
    
    
    479
    
    
    
    4.3Rest of Asia(1)
    
    
    2,219
    
    
    
    20.9
    
    
    
    2,190
    
    
    
    19.6
    
    
    
    2,149
    
    
    
    18.7
    
    
    
    2,075
    
    
    
    18.5North America
    
    
    1,365
    
    
    
    12.9
    
    
    
    1,409
    
    
    
    12.6
    
    
    
    1,275
    
    
    
    11.1
    
    
    
    1,131
    
    
    
    10.1Latin America
    
    
    623
    
    
    
    5.9
    
    
    
    647
    
    
    
    5.8
    
    
    
    673
    
    
    
    5.9
    
    
    
    671
    
    
    
    6.0Oceania
    
    
    262
    
    
    
    2.5
    
    
    
    273
    
    
    
    2.4
    
    
    
    284
    
    
    
    2.5
    
    
    
    284
    
    
    
    2.5Africa
    
    
    185
    
    
    
    1.7
    
    
    
    193
    
    
    
    1.7
    
    
    
    198
    
    
    
    1.7
    
    
    
    178
    
    
    
    1.6Total
    
    
    10,611
    
    
    
    100.0
    %
    
    
    11,149
    
    
    
    100.0
    %
    
    
    11,473
    
    
    
    100.0
    %
    
    
    11,205
    
    
    
    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 2009
 Zinc Supply
      Year Ended December 31,2005
    
    2006
    
    2007
    
    2008Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Europe
    
    
    2,538
    
    
    
    25.1
    %
    
    
    2,436
    
    
    
    23.3
    %
    
    
    2,474
    
    
    
    22.2
    %
    
    
    2,454
    
    
    
    21.3
    %China
    
    
    2,761
    
    
    
    27.4
    
    
    
    3,163
    
    
    
    30.2
    
    
    
    3,728
    
    
    
    33.4
    
    
    
    3,909
    
    
    
    34.0India
    
    
    302
    
    
    
    3.0
    
    
    
    410
    
    
    
    3.9
    
    
    
    444
    
    
    
    4.0
    
    
    
    595
    
    
    
    5.2Rest of Asia(1)
    
    
    1,903
    
    
    
    18.9
    
    
    
    1,907
    
    
    
    18.2
    
    
    
    1,893
    
    
    
    17.0
    
    
    
    1,944
    
    
    
    16.9North America
    
    
    1,056
    
    
    
    10.5
    
    
    
    1,079
    
    
    
    10.3
    
    
    
    1,057
    
    
    
    9.5
    
    
    
    1,018
    
    
    
    8.8Latin America
    
    
    807
    
    
    
    8.0
    
    
    
    766
    
    
    
    7.3
    
    
    
    778
    
    
    
    7.0
    
    
    
    802
    
    
    
    7.0Australia
    
    
    456
    
    
    
    4.5
    
    
    
    461
    
    
    
    4.4
    
    
    
    501
    
    
    
    4.5
    
    
    
    506
    
    
    
    4.4Africa
    
    
    273
    
    
    
    2.7
    
    
    
    256
    
    
    
    2.4
    
    
    
    286
    
    
    
    2.6
    
    
    
    280
    
    
    
    2.4Total
    
    
    10,095
    
    
    
    100.0
    %
    
    
    10,475
    
    
    
    100.0
    %
    
    
    11,162
    
    
    
    100.0
    %
    
    
    11,541
    
    
    
    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 2009.
 32




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Pricing
    Year Ended December 31,Zinc Prices
    
    1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008($ per ton, except percentages)LME Cash Price
    
    
    1,076
    
    
    
    1,128
    
    
    
    885
    
    
    
    778
    
    
    
    827
    
    
    
    1,047
    
    
    
    1,381
    
    
    
    3,274
    
    
    
    3,240
    
    
    
    1,874% Change
    
    
    5.1
    
    
    
    4.8
    
    
    
    (21.5
    )
    
    
    (12.1
    )
    
    
    6.3
    
    
    
    26.6
    
    
    
    31.9
    
    
    
    137.0
    
    
    
    (1.0
    )
    
    
    (42.2
    )
 
 Source: LME. th
 Indian Zinc Market
 Background
  Consumption Pattern
   Pricing and Tariff
  33




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Market Outlook
 Global Zinc Outlook
   Indian Zinc Outlook
  Aluminum
 Global Aluminum Market
 Background
   Aluminum Consumption
  34




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##### Table of Contents



Year Ended December 31,2005
    
    2006
    
    2007
    
    2008Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)North America
    
    
    7,175
    
    
    
    22.5
    %
    
    
    7,219
    
    
    
    20.9
    %
    
    
    6,698
    
    
    
    17.6
    %
    
    
    6,152
    
    
    
    16.2
    %Western Europe
    
    
    6,512
    
    
    
    20.4
    
    
    
    6,797
    
    
    
    19.8
    
    
    
    7,160
    
    
    
    18.9
    
    
    
    6,883
    
    
    
    18.1China
    
    
    7,083
    
    
    
    22.2
    
    
    
    8,790
    
    
    
    25.6
    
    
    
    12,300
    
    
    
    32.4
    
    
    
    12,854
    
    
    
    33.9Rest of Asia(1)
    
    
    6,162
    
    
    
    19.3
    
    
    
    6,299
    
    
    
    18.3
    
    
    
    6,260
    
    
    
    16.5
    
    
    
    6,142
    
    
    
    16.2CEE(2)
    
    
    1,800
    
    
    
    5.6
    
    
    
    1,972
    
    
    
    5.7
    
    
    
    1,918
    
    
    
    5.0
    
    
    
    1,840
    
    
    
    4.8Latin America
    
    
    1,338
    
    
    
    4.2
    
    
    
    1,364
    
    
    
    4.0
    
    
    
    1,502
    
    
    
    4.0
    
    
    
    1,681
    
    
    
    4.4India
    
    
    958
    
    
    
    3.0
    
    
    
    1,080
    
    
    
    3.1
    
    
    
    1,207
    
    
    
    3.2
    
    
    
    1,312
    
    
    
    3.5Oceania
    
    
    451
    
    
    
    1.4
    
    
    
    422
    
    
    
    1.2
    
    
    
    444
    
    
    
    1.2
    
    
    
    461
    
    
    
    1.2Africa
    
    
    426
    
    
    
    1.3
    
    
    
    466
    
    
    
    1.3
    
    
    
    492
    
    
    
    1.3
    
    
    
    641
    
    
    
    1.7Total
    
    
    31,905
    
    
    
    100.0
    %
    
    
    34,408
    
    
    
    100.0
    %
    
    
    37,981
    
    
    
    100.0
    %
    
    
    37,966
    
    
    
    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 Aluminium Metal Service
Report, May 2009. Aluminum Supply
     Year Ended December 31,2005
    
    2006
    
    2007
    
    2008Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)China
    
    
    7,806
    
    
    
    24.4
    %
    
    
    9,349
    
    
    
    27.6
    %
    
    
    12,588
    
    
    
    33.0
    %
    
    
    13,177
    
    
    
    33.3
    %North America
    
    
    5,382
    
    
    
    16.8
    
    
    
    5,333
    
    
    
    15.7
    
    
    
    5,643
    
    
    
    14.8
    
    
    
    5,781
    
    
    
    14.6CEE(2)
    
    
    4,627
    
    
    
    14.5
    
    
    
    4,678
    
    
    
    13.8
    
    
    
    4,899
    
    
    
    12.8
    
    
    
    5,101
    
    
    
    12.9Western Europe
    
    
    4,345
    
    
    
    13.6
    
    
    
    4,174
    
    
    
    12.3
    
    
    
    4,321
    
    
    
    11.3
    
    
    
    4,627
    
    
    
    11.7Latin America
    
    
    2,390
    
    
    
    7.5
    
    
    
    2,493
    
    
    
    7.4
    
    
    
    2,559
    
    
    
    6.7
    
    
    
    2,663
    
    
    
    6.7Oceania
    
    
    2,252
    
    
    
    7.0
    
    
    
    2,274
    
    
    
    6.7
    
    
    
    2,316
    
    
    
    6.1
    
    
    
    2,297
    
    
    
    5.8Rest of Asia(1)
    
    
    2,447
    
    
    
    7.7
    
    
    
    2,626
    
    
    
    7.7
    
    
    
    2,763
    
    
    
    7.2
    
    
    
    2,994
    
    
    
    7.4Africa
    
    
    1,753
    
    
    
    5.5
    
    
    
    1,865
    
    
    
    5.5
    
    
    
    1,815
    
    
    
    4.8
    
    
    
    1,715
    
    
    
    4.3India
    
    
    965
    
    
    
    3.0
    
    
    
    1,115
    
    
    
    3.3
    
    
    
    1,222
    
    
    
    3.2
    
    
    
    1,296
    
    
    
    3.3Total
    
    
    31,968
    
    
    
    100.0
    %
    
    
    33,907
    
    
    
    100.0
    %
    
    
    38,127
    
    
    
    100.0
    %
    
    
    39,602
    
    
    
    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 Aluminium Metal Service Report, May 2009.
 35




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##### Table of Contents



Alumina
   Year Ended December 31,2005
    
    2006
    
    2007
    
    2008Region
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %
    
    Volume
    
    %(thousands of tons, except percentages)Oceania
    
    
    17,918
    
    
    
    26.9
    %
    
    
    18,607
    
    
    
    25.2
    %
    
    
    19,249
    
    
    
    23.8
    %
    
    
    19,728
    
    
    
    22.8
    %Latin America
    
    
    13,189
    
    
    
    19.8
    
    
    
    14,872
    
    
    
    20.1
    
    
    
    15,110
    
    
    
    18.7
    
    
    
    15,767
    
    
    
    18.2China
    
    
    8,536
    
    
    
    12.8
    
    
    
    13,740
    
    
    
    18.6
    
    
    
    20,900
    
    
    
    25.9
    
    
    
    25,137
    
    
    
    29.0North America
    
    
    6,929
    
    
    
    10.4
    
    
    
    6,799
    
    
    
    9.2
    
    
    
    6,076
    
    
    
    7.5
    
    
    
    6,160
    
    
    
    7.1Western Europe
    
    
    6,560
    
    
    
    9.9
    
    
    
    6,747
    
    
    
    9.1
    
    
    
    6,809
    
    
    
    8.4
    
    
    
    6,951
    
    
    
    8.0CEE(2)
    
    
    6,699
    
    
    
    10.1
    
    
    
    6,657
    
    
    
    9.0
    
    
    
    5,828
    
    
    
    7.2
    
    
    
    5,631
    
    
    
    6.5India
    
    
    3,065
    
    
    
    4.6
    
    
    
    2,991
    
    
    
    4.0
    
    
    
    3,178
    
    
    
    3.9
    
    
    
    3,572
    
    
    
    4.1Rest of Asia(1)
    
    
    2,904
    
    
    
    4.4
    
    
    
    2,996
    
    
    
    4.1
    
    
    
    3,056
    
    
    
    3.8
    
    
    
    3,111
    
    
    
    3.6Africa
    
    
    736
    
    
    
    1.1
    
    
    
    530
    
    
    
    0.7
    
    
    
    526
    
    
    
    0.7
    
    
    
    595
    
    
    
    0.7Total
    
    
    66,651
    
    
    
    100.0
    %
    
    
    74,168
    
    
    
    100.0
    %
    
    
    81,080
    
    
    
    100.0
    %
    
    
    86,651
    
    
    
    100.0
    %
 
 Notes:(1)
    
    Rest of Asia is Asia excluding China and India.(2)
    
    Central and Eastern Europe. Source:
Brook Hunt Aluminium Metal Service Report, May 2009.
   Year Ended December 31,2005
    
    2006
    
    2007
    
    2008(thousands of tons)Global Alumina Surplus/(Deficit)
    
    
    (1,657
    )
    
    
    1,704
    
    
    
    156
    
    
    
    3,241
 
 Source: Brook Hunt Aluminium Metal Service
Report, May 2009. Bauxite
  Pricing
  36




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##### Table of Contents



Year Ended December 31,1999
    
    2000
    
    2001
    
    2002
    
    2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2008($ per ton, except percentages)AluminumLME Cash Price(1)
    
    $
    1,362
    
    
    $
    1,549
    
    
    $
    1,444
    
    
    $
    1,349
    
    
    $
    1,432
    
    
    $
    1,716
    
    
    $
    1,897
    
    
    $
    2,566
    
    
    $
    2,639
    
    
    $
    2,571% Change
    
    
    0.4
    
    
    
    13.8
    
    
    
    (6.8
    )
    
    
    (6.6
    )
    
    
    6.1
    
    
    
    19.9
    
    
    
    10.5
    
    
    
    35.3
    
    
    
    2.8
    
    
    
    (2.6
    )AluminaSpot Price(2)
    
    $
    203
    
    
    $
    284
    
    
    $
    149
    
    
    $
    148
    
    
    $
    283
    
    
    $
    420
    
    
    $
    468
    
    
    $
    420
    
    
    $
    353
    
    
    $
    362% Change
    
    
    9.7
    
    
    
    39.9
    
    
    
    (47.5
    )
    
    
    (0.7
    )
    
    
    91.2
    
    
    
    48.4
    
    
    
    11.4
    
    
    
    (10.3
    )
    
    
    (16.0
    )
    
    
    2.5Alumina/Aluminum(%)
    
    
    14.9
    %
    
    
    18.3
    %
    
    
    10.3
    %
    
    
    11.0
    %
    
    
    19.8
    %
    
    
    24.5
    %
    
    
    24.7
    %
    
    
    16.4
    %
    
    
    13.4
    %
    
    
    14.1
    %
 
 (1)
    
    Source: LME.(2)
    
    Source: Bloomberg, Metal Bulletin; alumina metallurgical grade spot Free on Board, or FOB,
average for the year. th
   Indian Aluminum Market
 Background
   Supply and Demand
    Pricing and Tariff
   37




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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
    
    
    36,259
    
    
    
    46,812
    
    
    
    10,654
    
    
    
    93,725
    
    
    
    63.34
    %Hydro
    
    
    8,592
    
    
    
    27,056
    
    
    
    1,230
    
    
    
    36,878
    
    
    
    24.92
    %Nuclear
    
    
    4,120
    
    
    
    
    
    
    
    
    
    
    
    4,120
    
    
    
    2.78
    %Renewable Energy Source
    
    
    
    
    
    
    2,248
    
    
    
    10,995
    
    
    
    13,242
    
    
    
    8.95
    %Total
    
    
    48,971
    
    
    
    76,116
    
    
    
    22,879
    
    
    
    147,965
    
    
    
    100.0
    %
 
 Source: Central Electricity Authority of India. 38




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##### Table of Contents



Indian
states with more than 8 billion tons of coal reserves
    
    Total Coal Reserves(in billion tons)Charttisgarh
    
    
    41.4Jharkhand
    
    
    73.9Orissa
    
    
    62.0West Bengal
    
    
    27.8Andhra Pradesh
    
    
    17.1Madhya Pradesh
    
    
    19.8Maharashtra
    
    
    9.1
 
 Source: Ministry of Coal of the Government of
India. Future Capacity Additions
     Transmission and Distribution
   39




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##### Table of Contents



Consumption
  Power: Demand and Supply
 
 Power: Peak Demand and Supply
 
 
 Source: Ministry of Power of the Government of India.   Power: Category-wise Consumption (2005-06)
 
 
 Source: Central Electricity Authority of India. 40




---



##### 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).
 India Growth Pattern Over Years
 
 
 Source: Ministry of Power of the Government of India. 41




---



##### Table of Contents



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.
   Government Initiatives
    42




---



##### Table of Contents



OUR BUSINESS
 Overview
     43




---



##### 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
2008, and one of the largest in India by production volume in
fiscal 2008, according to Brook Hunt.
    
    Our zinc business operations are fully integrated with its own mining and captive power
generation capacities. HZL was the worlds third largest zinc mining company in 2008 based
on zinc mine production and is also one of the top ten lead mining companies by production
volume worldwide, according to Brook Hunt. In 2008, HZLs
Rampura Agucha mine was the largest lead-zinc mine in the world in terms of contained zinc deposits on a production basis
and the fourth largest on a reserve basis, according to Brook Hunt. HZL was in the lowest cost
quartile in terms of costs of production of all
zinc mining operations worldwide in 2008, the
fourth largest producer of zinc worldwide and the largest integrated
producer of zinc worldwide based on production volumes in 2008,
and HZLs Chanderiya hydrometallurgical zinc smelter was the third largest smelter on a
production basis worldwide in
2008, according to Brook Hunt.
 44




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##### Table of Contents




    
    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 lowest
cost quartile in terms of all aluminum smelter operations worldwide in 2007, 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. In March 2007, Vedanta Aluminium began the progressive commissioning
of a 1.0 million tpa greenfield alumina refinery project in Lanjigarh and an associated 75
MW captive power plant, expandable to 1.4 million tpa and 90 MW, respectively, subject to
governmental approvals. The Lanjigarh alumina refinery has started production from a single
stream operation and produced 585,597 tons of alumina in fiscal 2009. The second production
stream of the Lanjigarh alumina refinery was commissioned in April 2009.
  
    
    our focus on continually reducing manufacturing costs and seeking operational efficiency
improvements;
    
    our building and managing our own captive power plants to supply a substantial majority
of the power requirements of our operations; and
    
    the relatively large and inexpensive labor and talent pools in India.
  Leading non-ferrous metals and mining company in India with a diversified product portfolio
  
    
    we are one of two custom copper smelters in India, with a 45.7% primary market share by production volume in India in fiscal 2009, according to ICPCI;
    
    HZL is Indias only integrated zinc producer and had a 79.0% market share by production volume in
India in fiscal 2009, according to ILZDA; and
    
    BALCO is one of the five primary producers of aluminum in
India and had a 28.0% primary market share by production volume in India in fiscal 2009, according to AAI.
   Ideally positioned to capitalize on Indias growth and resource potential
  
    
    Indias large mineral reserves.According to the IBM, 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, as of April 1, 2005. According to the Geological Survey of India, the total coal resources of India are 264.5 billion tons as
of April 1, 2008, 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
US Geological Survey, Indias bauxite reserves are the seventh largest in the world with total recoverable
reserves estimated at 2,170 million tons.
 45




---



##### Table of Contents




    
    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 7.0% in fiscal
2010, according to the
Government of India, Economic Survey (2008 to 2009). That growth has been fueled in significant part by
domestic demand, with exports accounting for only approximately 23% of Indias real gross
domestic product in fiscal 2009, according to the Government of Indias Ministry of Statistics
and Programme Implementation. In addition, 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.
 Strong pipeline of growth projects
  
    
    Zinc segment:HZL has Rs. 28,800 million ($566.1 million) of expansion
projects to increase its total lead-zinc capacity to 1,065,000 tpa with fully integrated
mining and captive power generation capacities. These projects include:
 
    
    establishing two brownfield smelters which are expected to increase the
production capacities of zinc and lead by approximately 210,000 tons and 100,000
tons, respectively, at Rajpura Dariba in the State of Rajasthan, both of which are
expected to be completed by mid-2010;
    
    setting up an associated captive power plant with a capacity of 160 MW at
Rajpura Dariba, which is expected to be completed by mid-2010;
    
    expanding ore production capacity at the Rampura Agucha mine from
approximately 5.0 million tpa to 6.0 million tpa, which is scheduled for completion in mid-2010, and 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-2010. 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-2010, with the mine expected to have a production capacity of
360,000 tpa; and
    
    increasing silver production from the current levels of approximately 105
tpa to approximately 500 tpa, primarily from the Sindesar Khurd mine where silver
occurs at approximately 200 parts per million, or ppm.
 
    
    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 ($1,592.3 million). BALCO has commenced the implementation process of
the first phase of expansion for setting up a 325,000 tpa aluminum smelter 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 October 2010 and the target date of completion is by
September 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 ($914.1 million). The first phase of the power plant is
expected to be commissioned by June 2010 and the second phase is expected to be completed by
September 2011.
    
    Vedanta Aluminium is building a greenfield 500,000 tpa aluminum smelter,
together with an associated 1,215 MW captive power plant, in Jharsuguda in the State
of Orissa, in two phases of 250,000 tpa each at an estimated project cost of Rs. 95,583 million
($1,879.0 million). Commissioning of the first phase
commenced in May 2008, six months ahead of schedule, and was fully
commissioned in May 2009. The second phase is expected to be progressively commissioned
from June 2009 through the end of fiscal 2010, subject to the receipt of governmental approvals. The associated
1,215 MW thermal coal-based captive power plant will consist of nine units of 135 MW
each, five of which have been commissioned as part of the first phase. The commissioning of the captive power plant units is
scheduled to meet the power requirements of the new Jharsuguda smelter and all other
power requirements of the facility. In addition, Vedanta Aluminium is spending an estimated Rs. 116,800 million ($2,296.0 million) to
construct a second 1,250,000 tpa aluminum smelter in Jharsuguda which is expected to be progressive
commissioned from March 2010 and to be completed by September 2012.
 46




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##### Table of Contents




    
    Power segment:We are executing our plan to enter the commercial power generation
business with Sterlite Energys construction of a 2,400 MW thermal coal-based power facility
(comprising four units of 600 MW each) in Jharsuguda in the State of Orissa at an estimated cost of
Rs. 82,000 million ($1,612.0 million). The project is
expected to be progressively commissioned starting in the third
quarter of fiscal 2010, with full completion anticipated by the
second quarter of fiscal 2011. We have obtained coal block
allocations of 112.2 million tons from the Ministry of Coal to support this facility.
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 in April 2013.
 Experience for entry into commercial power generation business in India
  Experienced and entrepreneurial management team with outstanding track record
  
    
    selecting attractive acquisition opportunities and successfully improving the operations
and profitability of acquired businesses; and
    
    successfully implementing capital-intensive projects to increase our production
capacities.
  
    
    increasing HZLs production from 172,140 tpa of zinc ingots and 214,447 tpa of zinc mined
metal content when we acquired HZL in 2002 to 217,836 tpa of zinc ingots and 651,494 tpa of
zinc mined metal content in fiscal 2009, representing an increase of 26.5% and 203.8%,
respectively, by increasing the production of HZLs original two hydrometallurgical zinc
smelters, one lead-zinc smelter and four lead-zinc mines; and
    
    increasing the production of BALCOs original aluminum smelter from 89,164 tpa when we
acquired management control of BALCO in 2001 to 106,283 tpa in fiscal 2009, representing an
increase of 19.2%.
 47




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##### Table of Contents




    
    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 to bring the
total installed capacity to 345,000 tpa of aluminum in November 2006;
    
    completing a brownfield expansion with the addition of HZLs two hydrometallurgical zinc
smelters with a capacity of 170,000 tpa each, together with coal-based captive power plants
of 154 MW and 80 MW at Chanderiya in May 2005 and December 2007, respectively. The
capacities of the zinc smelters were further increased to 210,000 tpa through improvements
to the operational efficiencies of both smelters in April 2008;
    
    increasing the capacity of the Rampura Agucha lead-zinc mine and processing plant from
2.0 million tpa to 5.0 million tpa of ore to supply the brownfield zinc smelter expansion at
Chanderiya between 2003 and 2008;
    
    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; and
    
    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.
 Ability and capacity to finance world-class projects
  Strategy
  Continuing focus on asset optimization and reducing the cost of production
  
    
    seeking improvements in operations to maximize throughput and plant availability to
achieve production increases at our existing facilities with minimum capital expenditures to
optimize our asset utilization;
 48




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
    
    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 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 and of 31.5 million tons we
received from the Madanpur Coal
Block for use in HZLs captive power plants;
    
    seeking better utilization of by-products, including through adding additional processing
capabilities to produce end-products from the by-products that can be sold at higher prices
and help lower the cost of production of our core metals; and
    
    reducing greenhouse gas emissions from our operations through various projects, including
for example our recent installation of a back pressure turbine for 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, 2008 until February
29, 2009. Our wind power projects have also been registered for carbon emission reduction
credits.
  
    
    increased zinc production volume from fiscal 2008 to fiscal 2009;
    
    an increase in reserves at HZLs Rampura Agucha mine from 63.6 million tons as of March 31, 2008 to 67.9 million tons as of March 31, 2009; 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
  49




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Seeking further growth and acquisition opportunities that leverage our transactional, project
execution and operational skills and experience
  Consolidating our corporate structure and increasing our direct ownership of our underlying
businesses to derive additional synergies as an integrated group
  Basis of Presentation of Ore Reserves
     50




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Our Copper Business
 Overview
    Principal Products
 Copper Cathode
  Copper Rods
  Sulphuric Acid
  Phosphoric Acid
  Doré
Anodes
  Other By-products
  51




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Our Production Process
  
 Supply of Copper Concentrate
  Tuticorin Smelter
 TM
 Tuticorin Acid Plants
 TM
 Silvassa and Tuticorin Refineries
 TM
 Silvassa and Tuticorin Copper Rod Plants
  Doré Anode Plant
  Precious Metal Refinery
  Delivery to Customers
  Principal Facilities
 Overview
  
 52




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Our Copper Mine
    53




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54




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Proven Reserve
    
    Probable Reserve
    
    Total Proven and Probable ReservesQuantity
    
    Copper Grade
    
    Quantity
    
    Copper Grade
    
    Quantity
    
    Copper GradeMine
    
    Source
    
    (million tons)
    
    (%)
    
    (million tons)
    
    (%)
    
    (million tons)
    
    (%)Mt. Lyell
    
    In-situ ore
    
    
    3.0
    
    
    
    1.48
    
    
    
    1.6
    
    
    
    1.52
    
    
    
    4.6
    
    
    
    1.49Secondary ore
    
    
    
    
    
    
    
    
    
    
    6.5
    
    
    
    1.15
    
    
    
    6.5
    
    
    
    1.15Surface stockpile
    
    
    0.2
    
    
    
    1.25
    
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    1.25Total
    
    
    
    
    3.2
    
    
    
    1.47
    
    
    
    8.1
    
    
    
    1.22
    
    
    
    11.3
    
    
    
    1.29
 Our Smelter and Refineries
 Overview
  CapacityFacility
    
    Copper Anode(1)
    
    Copper Cathode(2)
    
    Copper Rods(2)
    
    Sulphuric Acid(3)
    
    Phosphoric Acid(3)
    
    Captive Power(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
 
 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
  55




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TM TM
 Silvassa
 TM
 Fujairah
  Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    2007
    
    2008
    
    2009(tons)Tuticorin
    
    Copper anode(1)
    
    
    313,117
    
    
    
    335,652
    
    
    
    313,284Sulphuric acid(2)
    
    
    946,539
    
    
    
    1,027,771
    
    
    
    987,511Phosphoric acid(2)
    
    
    172,125
    
    
    
    152,401
    
    
    
    163,607Copper cathode(3)
    
    
    150,565
    
    
    
    162,940
    
    
    
    139,706Copper rods(3)
    
    
    53,660
    
    
    
    81,698
    
    
    
    76,292Silvassa
    
    Copper cathode(3)
    
    
    162,155
    
    
    
    176,354
    
    
    
    173,127Copper rods(3)
    
    
    124,222
    
    
    
    143,060
    
    
    
    143,587Total
    
    Copper anode
    
    
    313,117
    
    
    
    335,652
    
    
    
    313,284Copper cathode
    
    
    312,720
    
    
    
    339,294
    
    
    
    312,833Copper rods
    
    
    177,882
    
    
    
    224,758
    
    
    
    219,879Sulphuric acid
    
    
    946,539
    
    
    
    1,027,771
    
    
    
    987,511Phosphoric acid
    
    
    172,125
    
    
    
    152,401
    
    
    
    163,607
 
 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
    
    2007
    
    2008
    
    2009(tons, except for percentages)Mt. Lyell (Underground)
    
    Ore mined
    
    
    2,486,525
    
    
    
    2,545,504
    
    
    
    2,558,094Ore grade
    
    
    1.3
    %
    
    
    1.2
    %
    
    
    1.5
    %Copper recovery
    
    
    91.0
    %
    
    
    90.9
    %
    
    
    90.2
    %Copper concentrate
    
    
    100,966
    
    
    
    99,388
    
    
    
    98,761Copper in concentrate
    
    
    28,378
    
    
    
    27,952
    
    
    
    27,421
 56




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Principal Raw Materials
 Overview
  Copper Concentrate
    Rock Phosphate
  Power
  Distribution, Logistics and Transport
  57




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Sales and Marketing
     Market Share and Competition
   Our Zinc Business
 Overview
   
    
    benefiting from low-cost production available from its two hydrometallurgical zinc
smelters with capacity of 210,000 tpa each at Chanderiya commissioned in May 2005 and
December 2007, and expanded in April 2008 together with associated captive power plants at
Chanderiya;
    
    increasing the total zinc smelting production capacity;
 58




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
    
    increasing the percentage of concentrates being sourced from its Rampura Agucha mine as
compared to its other mines to lower its cost of obtaining zinc concentrate;
    
    continuing its initiatives to improve operational efficiencies at its existing
operations;
    
    reducing power costs;
    
    reducing the size of its workforce including through a voluntary retirement plan; and
    
    increasing productivity and upgrading existing technology.
  Principal Products
 Zinc
  Lead
  Sulphuric Acid
  Silver
  Our Production Process
  
 Lead-Zinc Mines
  59




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Zinc Smelters
   TM
 Lead Smelters
 TM TM
  TM
 Delivery to Customers
  60




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Principal Facilities
 Overview
  
  
  
  
 61




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Mines
 Rampura Agucha
             62




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Rajpura Dariba
        63




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##### Table of Contents



Zawar
  64




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65




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Summary of Mine Reserves
  Proven Reserve
    
    
    Probable Reserve
    
    
    Total Proven and Probable ReservesZinc
    
    
    Lead
    
    
    Silver
    
    
    
    
    
    
    Zinc
    
    
    Lead
    
    
    Silver
    
    
    
    
    
    
    Zinc
    
    
    Lead
    
    
    SilverMine
    
    Quantity
    
    
    Grade
    
    
    Grade
    
    
    Grade
    
    
    Quantity
    
    
    Grade
    
    
    Grade
    
    
    Grade
    
    
    Quantity
    
    
    Grade
    
    
    Grade
    
    
    Grade(million tons)
    
    
    (%)
    
    
    (%)
    
    
    (g/t Ag)
    
    
    (million tons)
    
    
    (%)
    
    
    (%)
    
    
    (g/t Ag)
    
    
    (million tons)
    
    
    (%)
    
    
    (%)
    
    
    (g/t Ag)Rampura Agucha
    
    
    9.2
    
    
    
    13.95
    
    
    
    2.28
    
    
    
    
    
    
    
    58.7
    
    
    
    13.27
    
    
    
    1.81
    
    
    
    56.0
    
    
    
    67.9
    
    
    
    13.36
    
    
    
    1.87
    
    
    
    48.4Rajpura Dariba
    
    
    3.6
    
    
    
    5.87
    
    
    
    1.33
    
    
    
    102.0
    
    
    
    3.8
    
    
    
    6.64
    
    
    
    1.79
    
    
    
    64.0
    
    
    
    7.4
    
    
    
    6.26
    
    
    
    1.56
    
    
    
    82.6Sindesar Khurd
    
    
    0.9
    
    
    
    5.87
    
    
    
    2.55
    
    
    
    166.0
    
    
    
    5.5
    
    
    
    5.23
    
    
    
    2.79
    
    
    
    140.0
    
    
    
    6.4
    
    
    
    5.32
    
    
    
    2.76
    
    
    
    143.5Zawar
    
    
    3.7
    
    
    
    4.00
    
    
    
    2.03
    
    
    
    
    
    
    
    3.5
    
    
    
    3.52
    
    
    
    2.06
    
    
    
    
    
    
    
    7.3
    
    
    
    3.77
    
    
    
    2.04
    
    
    
    0.0Total
    
    
    17.4
    
    
    
    9.74
    
    
    
    2.04
    
    
    
    29.3
    
    
    
    71.5
    
    
    
    11.82
    
    
    
    1.90
    
    
    
    60.2
    
    
    
    88.9
    
    
    
    11.41
    
    
    
    1.93
    
    
    
    54.1
 Smelters
 Overview
  CapacityFacility
    
    Zinc
    
    Lead
    
    Silver
    
    Sulphuric Acid
    
    Captive Power(tpa)
    
    
    
    
    
    (MW)Chanderiya
    
    
    525,000
    
    
    
    85,000
    
    
    
    150
    
    
    
    828,500
    
    
    
    248.5Debari
    
    
    88,000
    
    
    
    
    
    
    
    
    
    
    
    419,000
    
    
    
    14.5Vizag
    
    
    56,000
    
    
    
    
    
    
    
    
    
    
    
    91,000
    
    
    
    Zawar
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86.0Total
    
    
    669,000
    
    
    
    85,000
    
    
    
    150
    
    
    
    1,338,500
    
    
    
    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 150 tpa silver ingots.
  66




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Debari
  Vizag
  Haridwar
  Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    2007
    
    2008
    
    2009(tons, except for silver which is in kgs)ChanderiyaISPTM pyrometallurgical lead-zinc smelter
    
    Zinc
    
    
    88,183
    
    
    
    86,080
    
    
    
    79,569Lead(2)
    
    
    16,630
    
    
    
    16,265
    
    
    
    18,938First hydrometallurgical zinc smelter(1)
    
    Zinc
    
    
    135,673
    
    
    
    165,391
    
    
    
    181,377Second hydrometallurgical zinc smelter
    
    Zinc
    
    
    
    
    
    
    42,070
    
    
    
    152,511AusmeltTMlead smelter
    
    Lead
    
    
    27,922
    
    
    
    41,982
    
    
    
    41,385Silver refinery
    
    Silver
    
    
    51,296
    
    
    
    80,405
    
    
    
    105,055Sulphuric acid plants
    
    Sulphuric acid
    
    
    413,222
    
    
    
    576,493
    
    
    
    611,871DebariHydrometallurgical zinc smelter
    
    Zinc
    
    
    74,353
    
    
    
    78,511
    
    
    
    85,191Sulphuric acid plant
    
    Sulphuric acid
    
    
    106,814
    
    
    
    105,485
    
    
    
    267,463VizagHydrometallurgical zinc smelter
    
    Zinc
    
    
    50,107
    
    
    
    54,271
    
    
    
    53,076Sulphuric acid plant
    
    Sulphuric acid
    
    
    71,405
    
    
    
    71,989
    
    
    
    74,935Total
    
    Zinc
    
    
    348,316
    
    
    
    426,323
    
    
    
    551,724Lead(2)
    
    
    44,552
    
    
    
    58,247
    
    
    
    60,323Silver
    
    
    51,296
    
    
    
    80,405
    
    
    
    105,055Sulphuric acid
    
    
    591,441
    
    
    
    753,966
    
    
    
    954,269
 
 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 5,634 tons, 5,319 tons and
5,009 tons in fiscal 2007, 2008 and 2009, respectively. 67




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##### Table of Contents



Year Ended March 31,Mine (Type of Mine)
    
    Product
    
    2007
    
    2008
    
    2009(tons, except percentages)Rampura Agucha (Open-pit)
    
    Ore mined
    
    
    3,748,840
    
    
    
    4,068,215
    
    
    
    4,953,110Ore grade  Zinc
    
    
    13.3
    %
    
    
    13.0
    %
    
    
    13.4
    %Lead
    
    
    2.0
    %
    
    
    1.9
    %
    
    
    1.9
    %Recovery   Zinc
    
    
    91.7
    %
    
    
    92.2
    %
    
    
    92.0
    %Lead
    
    
    60.4
    %
    
    
    61.2
    %
    
    
    60.6
    %Zinc concentrate
    
    
    851,089
    
    
    
    914,917
    
    
    
    1,114,048Lead concentrate
    
    
    69,905
    
    
    
    74,874
    
    
    
    92,151Rajpura
Dariba/Sindesar Khurd (Underground)
    
    Ore mined
    
    
    579,075
    
    
    
    813,249
    
    
    
    783,288Ore grade  Zinc
    
    
    5.1
    %
    
    
    4.9
    %
    
    
    5.8
    %Lead
    
    
    1.5
    %
    
    
    2.1
    %
    
    
    2.1
    %Recovery   Zinc
    
    
    80.6
    %
    
    
    81.4
    %
    
    
    81.8
    %Lead
    
    
    67.6
    %
    
    
    71.6
    %
    
    
    74.3
    %Zinc concentrate
    
    
    49,644
    
    
    
    66,235
    
    
    
    59,672Lead concentrate
    
    
    12,210
    
    
    
    23,706
    
    
    
    17,745Bulk
concentrate(1)
    
    
    
    
    
    
    
    
    
    
    8,687Zawar (Underground)
    
    Ore mined
    
    
    812,000
    
    
    
    901,635
    
    
    
    944,300Ore grade  Zinc
    
    
    3.5
    %
    
    
    3.7
    %
    
    
    3.8
    %Lead
    
    
    2.4
    %
    
    
    2.4
    %
    
    
    2.0
    %Recovery   Zinc
    
    
    88.7
    %
    
    
    89.0
    %
    
    
    89.4
    %Lead
    
    
    84.3
    %
    
    
    85.2
    %
    
    
    87.3
    %Zinc concentrate
    
    
    46,654
    
    
    
    54,676
    
    
    
    29,257Lead concentrate
    
    
    25,219
    
    
    
    27,175
    
    
    
    15,049Bulk
concentrate(1)
    
    
    
    
    
    
    
    
    
    
    29,924Total
    
    Ore mined
    
    
    5,139,915
    
    
    
    5,783,099
    
    
    
    6,680,698Zinc concentrate
    
    
    947,387
    
    
    
    1,035,828
    
    
    
    1,202,977Lead concentrate
    
    
    107,334
    
    
    
    125,755
    
    
    
    124,945Bulk
concentrate(1)
    
    
    
    
    
    
    
    
    
    
    38,611
 
 Note:(1)
    
    Bulk concentrate is concentrate that contains both zinc and
lead.


Principal Raw Materials




Zinc and Lead Concentrates




Power




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Metallurgical Coke
  Distribution, Logistics and Transport
  Sales and Marketing
    Projects and Developments
  
    
    Establishing two brownfield smelters which are expected to increase the production
capacities of zinc and lead by approximately 210,000 tons and 100,000 tons, respectively, at
HZLs Rajpura Dariba complex in the State of Rajasthan in Northwest India, and which are
expected to be completed by mid-2010;
    
    Expanding its ore production capacity at the Rampura Agucha mine from approximately 5.0
million tpa to 6.0 million tpa, which is scheduled for completion in
mid-2010, and 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-2010. 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;
    
    Starting mining activity at the Kayar mine which is expected
to begin progressively
from mid-2010 and to have a
production capacity of 360,000 tpa;
    
    Setting up an associated captive thermal power plant with a capacity of 160 MW at Rajpura Dariba
which is expected to be completed by mid-2010; and
    
    Increasing its silver production from the current levels of
approximately 105 tpa to
approximately 500 tpa in large part from additional production at the Sindesar Khurd mine.
  69




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Market Share and Competition
    Our Aluminum Business
 Overview
    Principal Products
 Primary Aluminum
  Rolled Products
  By-products
  70




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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.
 Bauxite Mines
  Alumina Refinery
  Additional Supply of Alumina
  Aluminum Smelters
   Fabrication Facility
  Delivery to Customers
  71




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##### Table of Contents



Principal Facilities
 Overview
  
 * Operations partially suspended from February 2009
and ceased on June 5, 2009.
  
 72




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##### Table of Contents



Bauxite Mines
 Chhattisgarh Mines
              73




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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
    
    
    3.5
    
    
    
    46.3
    
    
    
    
    
    
    
    
    
    
    
    3.5
    
    
    
    46.3Bodai-Daldali
    
    
    3.3
    
    
    
    46.4
    
    
    
    0.4
    
    
    
    46.0
    
    
    
    3.8
    
    
    
    46.3Total
    
    
    6.8
    
    
    
    46.3
    
    
    
    0.4
    
    
    
    46.0
    
    
    
    7.3
    
    
    
    46.3
 Korba Facility
 Overview
  CapacityFacility
    
    Alumina(1)
    
    Aluminum
    
    Captive Power(tpa)
    
    (MW)Korba
    
    
    200,000
    
    
    
    345,000(2)
    
    
    
    810
 
 Notes:(1)
    
    Alumina is used for production of aluminum. Approximately two tons of alumina is required for
the production of one ton of aluminum.(2)
    
    Includes 100,000 tpa of capacity from BALCOs older
aluminum smelter that uses VSS technology and which ceased operations
on June 5, 2009. Refinery
  Smelters
  74




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##### Table of Contents



Fabrication Facility
  Cast House
  Sheet Rolling Shop
  Captive Power Plants
  Production Volumes
  Year Ended March 31,Facility
    
    Product
    
    2007
    
    2008
    
    2009(tons)Korba
    
    Alumina(1)
    
    
    222,395
    
    
    
    217,185
    
    
    
    197,947Ingots
    
    
    182,921
    
    
    
    195,795
    
    
    
    172,263Rods
    
    
    72,981
    
    
    
    101,183
    
    
    
    127,120Rolled products
    
    
    57,287
    
    
    
    61,693
    
    
    
    57,399Total(2)
    
    
    
    
    313,189
    
    
    
    358,671
    
    
    
    356,782
 
 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.  Year Ended March 31,Mine (Type of Mine)
    
    Product
    
    2007
    
    2008
    
    2009(tons, except for percentages)Mainpat (Open-pit)
    
    Bauxite ore mined
    
    
    665,495
    
    
    
    628,925
    
    
    
    571,422Ore grade
    
    
    45.6
    %
    
    
    45.2
    %
    
    
    44.7
    %Bodai-Daldali (Open-pit)
    
    Bauxite ore mined
    
    
    331,950
    
    
    
    520,109
    
    
    
    300,250Ore grade
    
    
    50.0
    %
    
    
    49.5
    %
    
    
    49.1
    %Total
    
    
    
    
    997,445
    
    
    
    1,149,034
    
    
    
    871,672
 75




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##### Table of Contents



Principal Raw Materials
  Bauxite
  Alumina
  Power
  Water
  Carbon
   Caustic Soda
  76




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##### Table of Contents



Other Raw Materials
  Distribution, Logistics and Transport
  Sales and Marketing
     Projects and Developments
    Market Share and Competition
   77




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##### Table of Contents



Vedanta Aluminium
 Overview
   Projects and Developments
 Lanjigarh Alumina Refinery
     Jharsuguda Aluminum Smelter
 500,000 tpa Aluminum Smelter
  78




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##### Table of Contents



1,250,000 tpa Aluminum Smelter
  Our Commercial Power Generation Business
 Overview
   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 Coal2,078.7
 
 Notes:(1)
    
    Commissioned by BALCO prior to our acquisition of BALCO in 2001.(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. 79




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##### Table of Contents




    
    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-2010.
    
    BALCOs 1,200 MW thermal coal-based captive power plant in the
State of Chhattisgarh which is expected to be completed by September 2011.
    
    Sterlite Energys 2,400 MW thermal coal-based  power plant in Jharsuguda in the
State of Orissa which is expected to be progressively commissioned
starting in the third quarter of fiscal 2010 and is expected to be completed by the second quarter of fiscal 2011.
  Our Plans for Commercial Power Generation
 Sterlite Energy  Orissa
    80




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##### Table of Contents



Sterlite Energy  Talwandi Sabo
  HZL  Wind Power Plants
  Other Opportunities in Power
   Risks in Commercial Power Business
  Exploration and Development Activities
   81




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##### Table of Contents



Options to Increase Interests in HZL and BALCO
 Call Options Over Shares in HZL
        82




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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) ($0.96 per share) together with interest at
a rate of 14% per annum compounded half yearly from March 2, 2001 through the exercise date,
less all dividends received by the Government of India since March 2, 2001 through the
exercise date.
    Employees
  Company
    
    Location
    
    Primary Company Function
    
    Total EmployeesCopper
Sterlite Industries (India) Limited
    
    India
    
    Copper smelting and refining
    
    
    1,231Copper Mines of Tasmania Pty Ltd.
    
    Australia
    
    Copper mining
    
    
    98Zinc
Hindustan Zinc Limited
    
    India
    
    Zinc and lead production
    
    
    6,661AluminumBharat Aluminium Company Limited
    
    India
    
    Aluminum production
    
    
    5,310Power
Sterlite Energy Limited
    
    India
    
    Commercial power generation
    
    
    68
 83




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##### Table of Contents



Insurance
   Regulatory Matters
 Mining Laws
   84




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##### Table of Contents



Grant of a Mining Lease
    Protection of the Environment
  85




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##### Table of Contents



Labor Conditions
  Royalties
   Environment Laws
   The Environment (Protection) Act, 1986 (EPA)
  The Environment Impact Assessment Notification No: 1533(E), 2006 (EIA Notification)
  Forest (Conservation) Act, 1980 (Forest Act)
  Hazardous Wastes (Management and Handling) Rules, 1989 (Hazardous Wastes Rules)
  86




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##### Table of Contents



Water (Prevention and Control of Pollution) Act, 1974 (Water Act)
  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)
   87




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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)
  Employees Provident Funds and Miscellaneous Provisions Act, 1952 (EPFA)
  88




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##### Table of Contents



Other Laws
 Land Acquisition Act, 1894 (Land Acquisition Act)
  89




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##### Table of Contents



C. Corporate Structure
  
 *
    
    The corporate structure does not include our non-operating subsidiaries,
Sterlite Paper Limited, Thalanga Copper Mines Pty. Ltd., and
Sterlite (USA), Inc.**
    
    MALCO was delisted from the NSE and BSE on June 19,
2009.
 90




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##### Table of Contents



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 a call option to acquire from the Government of India a further 29.5% of HZL (or
26.0% if the Government of India exercises in full its right to sell 3.5% of HZL to HZL
employees) which remains exercisable so long as the Government of India has not sold its
remaining shares pursuant to a public offer. See  B. Business Overview  Our Business 
Options to Increase Interests in HZL and BALCO for more information.(3)
    
    We exercised our option to acquire the remaining 49.0% of BALCO owned by the Government of
India on March 19, 2004. The exercise of this option has been contested by the Government of
India. The Government of India has the right and has expressed an intention to sell 5.0% of
BALCO to BALCO employees. See  B. Business Overview  Our Business  Options to Increase
Interests in HZL and BALCO for more information.  
    
    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 61.5% of our issued share capital and has
management control of us. Vedantas 61.5% ownership interest in us is equal to the sum of
Twin Stars 58.1% ownership interest in us
plus 93.6% of the 3.6% ownership interest in us of MALCO (reflecting
Vedantas 93.6%
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 (38.3%). We operate our copper business within
Sterlite, except for our Australian copper mine, which is owned and operated by our
wholly-owned subsidiary CMT.
    
    Bharat Aluminium Company Limited.BALCO is incorporated in New Delhi, State of Delhi,
India and is headquartered at Korba in the State of Chhattisgarh. We own 51.0% of BALCOs
share capital and have management control of the company. The Government of India owns the
remaining 49.0%. We exercised an option to acquire the Government of Indias remaining
ownership interest in BALCO on March 19, 2004, which has been contested by the Government of
India. Further, the Government of India retains the right and has expressed an intention to
sell 5.0% of BALCO to BALCO employees. See  B. Business Overview  Our Business 
Options to Increase Interests in HZL and BALCO for more information. BALCO owns and
operates our aluminum business.
    
    Hindustan Zinc Limited.HZL is incorporated in Jaipur, State of Rajasthan, India and is
headquartered in Udaipur in Rajasthan. HZL is listed on the NSE and BSE. We own 64.9% of
HZLs share capital through our wholly-owned subsidiary SOVL. The remainder of HZLs share
capital is owned by the Government of India (29.5%) and institutional and public
shareholders and employees of HZL (5.6%). Through SOVL, we have management control of HZL,
which owns and operates our zinc business, and own a call option to acquire the Government
of Indias remaining ownership interest at a fair market value to be determined by an
independent appraiser. This call option is exercisable so long as the Government of India
has not sold its remaining interest pursuant to a public offer. See  B. Business Overview
  Our Business  Options to Increase Interests in HZL and BALCO for more information.
    
    Sterlite Energy Limited.Sterlite Energy is incorporated in Mumbai, State of Maharashtra,
India, and its registered office is located in 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 59.4% of the issued ordinary share capital of Vedanta.
 91




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##### Table of Contents




    
    Vedanta Resources plc.On April 22, 2003, Vedanta was created as a new company
wholly-owned by Volcan. We and a number of other companies owned directly or indirectly by
the Agarwal family at that time became subsidiaries of Vedanta. On December 10, 2003,
Vedanta completed an initial public offering of its shares in the United Kingdom and its
shares were listed on the LSE. Volcans ownership interest in
Vedanta is 59.4% as of June 30, 2009. 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. MALCO is a fully integrated aluminum producer and
its alumina and aluminum products are primarily sold in the domestic Indian market. MALCO, a competitor of BALCO, had a primary market share in the Indian market of 2% by volume in
fiscal 2009, compared to 28% by volume for BALCO and 3% by volume of Vedanta Aluminium, according
to AAI.
  D. Property, Plant and Equipment
  
 ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 The following discussion of our business, financial condition and results of operations should
be read in conjunction with our consolidated financial statements and the related notes included
elsewhere in this annual report. Some of the statements in the following discussion are
forward-looking statements that reflect our current views with respect to future events and
financial performance. Our actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, such as those set forth under Item 3.
Key Information  D. Risk Factors and elsewhere in this annual report.
 Overview
  92




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
    
    the net sales for each of our business segments as a percentage of our net sales on a
consolidated basis;
    
    the operating income for each of our business segments as a percentage of our operating
income on a consolidated basis; and
    
    the segment profit, calculated by adjusting operating income for depreciation, depletion
and amortization, voluntary retirement scheme expenses, impairment of assets and guarantees,
impairment of investments and loans and gain on sale of real estate, as applicable, for each
of our business segments as a percentage of our segment profit on a consolidated basis.
 Year Ended March 31,2007
    
    2008
    
    2009Net Sales:Copper
    
    
    47.8
    %
    
    
    51.3
    %
    
    
    54.9
    %Zinc
    
    
    35.6
    
    
    
    31.7
    
    
    
    26.3Aluminum
    
    
    16.6
    
    
    
    16.9
    
    
    
    18.4Power(1)
    
    
    
    
    
    
    
    
    
    
    0.4Corporate and others(1)
    
    
    
    
    
    
    0.1
    
    
    
    Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Operating income:Copper
    
    
    18.4
    %
    
    
    14.7
    %
    
    
    25.0
    %Zinc
    
    
    67.3
    
    
    
    70.8
    
    
    
    59.5Aluminum
    
    
    14.3
    
    
    
    15.4
    
    
    
    15.1Power(1)
    
    
    
    
    
    
    
    
    
    
    0.4Corporate and others(1)
    
    
    
    
    
    
    (0.9)
    
    
    
    (0.0
    )Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Segment profit:(2)Copper
    
    
    17.9
    %
    
    
    15.2
    %
    
    
    25.0
    %Zinc
    
    
    66.1
    
    
    
    67.1
    
    
    
    55.3Aluminum
    
    
    16.0
    
    
    
    17.2
    
    
    
    17.8Power(1)
    
    
    
    
    
    
    
    
    
    
    1.6Corporate and others(1)
    
    
    
    
    
    
    0.5
    
    
    
    0.3Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 
 Notes:
 (1)
    
    The corporate and other segment includes the results from the power segment for the periods prior to the year ended March 31, 2009.(2)
    
    Segment profit is calculated by adjusting operating income for depreciation, depletion and
amortization, voluntary retirement scheme expenses, guarantees, impairment of investments and
loans and gain on sale of real estate, as applicable. Segment profit
is not a recognized measurement under US GAAP. Our segment profit may not be comparable to similarly titled
measures reported by other companies due to potential inconsistencies in the method of
calculation. We have included our segment profit because we believe it is an indicative
measure of our operating performance and is used by investors and analysts to evaluate
companies in our industry. Our segment profit should be considered in addition to, and not as
a substitute for, other measures of financial performance and liquidity reported in accordance
with US GAAP. We believe that the inclusion of supplementary adjustments applied in our
presentation of segment profit are appropriate because we believe it is a more indicative
measure of our baseline performance as it excludes certain charges that our management
considers to be outside of our core operating results. In addition, our segment profit is
among the primary indicators that our management uses as a basis for planning and forecasting
of future periods. The following table reconciles operating income to segment profit for the
periods presented: 93




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##### Table of Contents



Year Ended March 31,2007
    
    
    2008
    
    
    2009
    
    
    2009Copper:Operating income
    
    Rs.
    17,235
    
    
    Rs.
    11,037
    
    
    Rs.
    10,557
    
    
    $
    207.5Plus:Depreciation, depletion and amortization
    
    
    1,440
    
    
    
    1,613
    
    
    
    2,017
    
    
    
    39.7Gain on sale of real estate
    
    
    (986
    )
    
    
    
    
    
    
    
    
    
    
    Segment profit
    
    Rs.
    17,689
    
    
    Rs.

    12,650
    
    
    Rs.

    12,574
    
    
    $
    247.2Zinc:Operating income
    
    Rs.
    62,908
    
    
    Rs.
    53,192
    
    
    Rs.
    25,148
    
    
    $
    494.4Plus:Depreciation, depletion and amortization
    
    
    2,124
    
    
    
    2,371
    
    
    
    2,629
    
    
    
    51.6Voluntary retirement scheme expenses
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    Segment profit
    
    Rs.
    65,129
    
    
    Rs.
    55,563
    
    
    Rs.
    27,777
    
    
    $
    546.0Aluminum:Operating income
    
    Rs.
    13,371
    
    
    Rs.

    11,581
    
    
    Rs.
    6,364
    
    
    $
    125.1Plus:Depreciation, depletion and amortization
    
    
    2,394
    
    
    
    2,663
    
    
    
    2,590
    
    
    
    50.9Segment profit
    
    Rs.
    15,765
    
    
    Rs.

    14,244
    
    
    Rs.

    8,954
    
    
    $
    176.0Power:(a)Operating income
    
    Rs.
    
    
    
    Rs.

    
    
    
    Rs.

    184
    
    
    $

    3.6Plus:Depreciation, depletion and amortization
    
    
    
    
    
    
    
    
    
    
    608
    
    
    
    12.0Segment profit
    
    Rs.
    
    
    
    Rs.
    
    
    
    Rs.
    792
    
    
    $
    15.6Corporate
and Others:(a)Operating income
    
    Rs.
    (3
    )
    
    Rs.
    (657
    )
    
    Rs.
    (6
    )
    
    $
    (0.1
    )Plus:Depreciation, depletion and amortization
    
    
    1
    
    
    
    413
    
    
    
    1
    
    
    
    (0.0
    )Guarantees, impairment of investments and loans
    
    
    
    
    
    
    628
    
    
    
    137
    
    
    
    2.7Segment profit
    
    Rs.
    (2
    )
    
    Rs.
    384
    
    
    Rs.
    132
    
    
    $
    2.6
 
 (a)
    
    The corporate and other segment includes the results from the
power segment for the periods prior to the year ended March 31,
2009. 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.
Net sales and operating income of our copper business have decreased from Rs. 126,276
million and Rs. 11,037 million in fiscal 2008 to
Rs. 116,525 million ($2,290.7 million) and
Rs. 10,557 million ($207.5 million) in fiscal 2009, representing decreases of 7.7% and 4.3%,
respectively.
    
    Zinc.Our zinc business is owned and operated by HZL, Indias leading zinc producer with a 79.0% market share
by production volume of the Indian zinc market in fiscal 2009,
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, three
hydrometallurgical zinc smelters, one lead smelter, one lead-zinc smelter, three 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.
Net sales and operating income of our zinc business have decreased from Rs. 78,222 million
and Rs. 53,192 million in fiscal 2008 to Rs. 55,724 million ($1,095.4 million) and Rs. 25,148 million ($494.4 million) in fiscal 2009, representing decreases of 28.8% and 52.7%,
respectively.
    
    Aluminum.Our aluminum business is primarily owned and operated by BALCO. We have a 51.0%
ownership interest in BALCO. The remainder of BALCO is owned by the Government of India. We
have exercised our option to acquire the Government of Indias remaining 49.0% ownership
interest, though the exercise of this option has been contested by the Government of India
and the Government of India retains the right and has expressed an intention to sell 5.0% of
BALCO to BALCO employees. BALCOs operations include two bauxite mines, one alumina
refinery, two aluminum smelters, a fabrication facility and two captive power plants in the
State of Chhattisgarh in Central India. BALCOs primary products
are aluminum ingots, rods and rolled products. Net sales and operating income of our aluminum
business have decreased from Rs. 41,596 million and Rs. 11,581 million in fiscal 2008 to Rs. 39,170 million ($770.0 million)
and Rs. 6,364 million ($125.1 million) in fiscal 2009,
representing decreases of 5.8% and 45.1%, respectively.
 94




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##### Table of Contents




    
    Power.Our commercial power generation business segment is one that we are developing primarily through
our wholly-owned subsidiary, Sterlite Energy. Sterlite Energy is
building a 2,400 MW thermal coal-based power facility (comprising four units of 600 MW each) in
Jharsuguda in the State of Orissa. The project is expected to be progressively commissioned
starting in the third quarter of fiscal 2010, with full completion
anticipated by the second 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. 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 in
April 2013. Our commercial power generation business also includes the 123.2 MW of wind power
plants commissioned by our 64.9%-owned subsidiary HZL and any additional wind power plants that HZL
may commission as part of the 300 MW of wind power plants approved by HZLs board of directors.
Net sales and operating income in our commercial power generation business segment was Rs. 773
million ($15.2 million) and Rs. 184 million ($3.6 million), respectively, in fiscal 2009. Our power
business is still under development, and we expect to have meaningful operating results for our
commercial power generation business segment in fiscal 2010, when Sterlite Energys first power project is
expected to begin commissioning.
    
    Corporate and Others.Our corporate and 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
      
    
    leveraging our operational and project execution skills to develop and optimize Asarcos
mines and plants;
    
    providing access to attractive mining assets with a long life;
    
    providing geographic diversification through entry into the North American market; and
    
    providing a stable operating and financial platform for Asarco.
  95




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##### Table of Contents



Raising of Additional Capital
  Factors Affecting Results of Operations
  Metal Prices and Copper TcRc
 Overview
   
    
    A 25.1% decrease in the average realized TcRc in our copper business and a 22.4%
decrease in the daily average LME price of copper, which decreases were due to coppers
use in a broad range of industries adversely affected by the economic downturn, including
construction, electronic products, industrial machinery, transportation equipment and
consumer products, with construction and electronic products, being the most significant
drivers of copper consumption and the construction industry being one of the most
adversely affected industries.
    
    A 47.8% decrease in the daily average zinc LME price, which decrease was particularly
significant as the primary driver of zinc demand is the steel galvanizing market, which
has principal applications in the construction and automotive industries, two of the
industries most adversely affected by the recent global economic downturn.
    
    A 14.8% decrease in the daily average aluminum LME price, which decrease was, as with
copper and zinc, due to aluminums use being concentrated in industries adversely affected
by the global economic downturn, specifically construction, electricals, transport and
packaging. The daily average aluminum LME price would have likely decreased considerably
more than it did if it were not for continued strong demand from China.
   96




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##### Table of Contents



Copper
  Year Ended March 31,2007
    
    2008
    
    2009(in US cents per pound)Copper TcRc
    
    
    31.1¢
    
    
    
    15.7¢
    
    
    
    11.7¢
  Year Ended March 31,2007
    
    2008
    
    2009(in US dollars per ton)Copper LME
    
    $
    6,984
    
    
    $
    7,588
    
    
    $
    5,885
 Zinc and Aluminum
  Year Ended March 31,2007
    
    2008
    
    2009(in US dollars per ton)Zinc LME
    
    $
    3,581
    
    
    $
    2,992
    
    
    $
    1,563Aluminum LME
    
    
    2,663
    
    
    
    2,620
    
    
    
    2,234
 India Market Premium
  Hedging
  Cost of Production
  97




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##### Table of Contents



Year Ended March 31,2007
    
    2008
    
    2009(in US dollars per ton, except as indicated)Treatment charge and refining charge (TcRc):(1)
    
    
    31.1
    ¢/lb
    
    
    15.7
    ¢/lb
    
    
    11.7
    ¢/lbCost of production:(2)Copper smelting and refining(3)
    
    
    6.1
    ¢/lb
    
    
    1.8
    ¢/lb
    
    
    3.1
    ¢/lbZinc(4)
    
    $
    862
    
    
    $
    884
    
    
    $
    710Aluminum(5)
    
    
    1,626
    
    
    
    1,720
    
    
    
    1,700
 
 Notes:(1)
    
    Represents our average realized TcRc for the period.(2)
    
    Cost of production is not a recognized measure under US GAAP. We have included cost of
production as a measure of effectiveness because we believe it is an indicative measure of our
operating performance and is used by investors and analysts to evaluate companies in our
industry. Our computation of cost of production should be considered in addition to, and not
as a substitute for, other measures of financial performance and liquidity reported in
accordance with US GAAP. We believe that the cost of production measure is a meaningful
measure of our production cost efficiency as it is more indicative of our production or
conversion costs and is a measure that our management considers to be controllable. Cost of
production is a measure intended for monitoring the operating performance of our operations.
This measure is presented by other non-ferrous metal companies, though our measure may not be
comparable to similarly titled measures reported by other companies. Cost of production as
reported for our metal products consists of direct cash cost of production and excludes
non-cash cost and indirect cost (such as depreciation and interest payments), and are offset
for any amounts we receive upon the sale of the by-products from the refining or smelting
process. 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 31,2007
    
    
    2008
    
    
    2009(in millions, except Production output and Cost of production)Copper:Segment sales
    
    Rs.
    115,192
    
    
    Rs.
    126,276
    
    
    Rs.
    116,670Less:Segment profit
    
    
    (17,689
    )
    
    
    (12,650
    )
    
    
    (12,574
    )Segment cost
    
    
    97,503
    
    
    
    113,626
    
    
    
    104,096Less:Purchased concentrate/rock
    
    
    (91,489
    )
    
    
    (107,422
    )
    
    
    (95,478
    )By-product/free copper net sales
    
    
    (1,935
    )
    
    
    (4,283
    )
    
    
    (4,337
    )Cost for downstream products
    
    
    (938
    )
    
    
    (1,197
    )
    
    
    (1,613
    )Others, net
    
    
    (1,236
    )
    
    
    (195
    )
    
    
    (1,690
    )Total expenses
    
    Rs.
    1,905
    
    
    Rs.
    529
    
    
    Rs.
    979Production output (in tons)
    
    
    312,720
    
    
    
    339,294
    
    
    
    312,833Cost of production(a)
    
    
    6.1
    ¢/lb
    
    
    1.8
    ¢/lb
    
    
    3.1
    ¢/lb
 98




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##### Table of Contents



Year Ended March 31,2007
    
    
    2008
    
    
    2009(in millions, except Production output and Cost of production)Zinc:Segment sales
    
    Rs.
    85,963
    
    
    Rs.
    78,222
    
    
    Rs.
    55,724Less:Segment profit
    
    
    (65,129
    )
    
    
    (55,563
    )
    
    
    (27,777
    )Segment cost
    
    
    20,834
    
    
    
    22,659
    
    
    
    27,947Less:Cost of tolling including raw material cost
    
    
    (14
    )
    
    
    
    
    
    
    (409
    )Cost of intermediary product sold
    
    
    (2,487
    )
    
    
    (2,944
    )
    
    
    (1,301
    )By-product net sales
    
    
    (1,223
    )
    
    
    (2,637
    )
    
    
    (4,848
    )Cost of lead metal sold
    
    
    (1,463
    )
    
    
    (1,787
    )
    
    
    (2,079
    )Others, net
    
    
    (2,050
    )
    
    
    (118
    )
    
    
    (1,312
    )-Total expenses
    
    Rs.
    13,598
    
    
    Rs.
    15,173
    
    
    Rs.
    17,998Production output (in tons)
    
    
    348,316
    
    
    
    426,323
    
    
    
    551,724Cost of production(a)
    
    $
    862
    
    
    $
    884
    
    
    $
    710Aluminum:Segment sales
    
    Rs.
    41,002
    
    
    Rs.
    41,695
    
    
    Rs.
    39,336Less:Segment profit
    
    
    (15,765
    )
    
    
    (14,244
    )
    
    
    (8,954
    )Segment cost
    
    
    25,237
    
    
    
    27,451
    
    
    
    30,382Less:Cost of intermediary product sold
    
    
    (177
    )
    
    
    (118
    )
    
    
    By-product net sales
    
    
    (312
    )
    
    
    (367
    )
    
    
    (328
    )Cost for downstream products
    
    
    (1,323
    )
    
    
    (1,709
    )
    
    
    (1,966
    )Others, net
    
    
    (322
    )
    
    
    (181
    )
    
    
    (314
    )Total expenses
    
    Rs.
    23,103
    
    
    Rs.
    25,076
    
    
    Rs.
    27,774Production output (hot metal) (in tons)
    
    
    313,817
    
    
    
    362,296
    
    
    
    104,553Cost of production(a)
    
    $
    1,626
    
    
    $
    1,720
    
    
    $
    1,700
 
 (a)
    
    Exchange rates used in calculating cost of production were based on the daily RBI reference rates for the years ended March 31, 2007, 2008 and 2009 of
Rs. 45.29 per $1.00, Rs. 40.24 per $1.00, and Rs. 45.91 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 2009, or its exit cost of production for
fiscal 2009, was $594 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
2009 was $1,146 per ton. 99




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##### Table of Contents



Production Volume and Mix
  Year Ended March 31,Product
    
    2007
    
    
    2008
    
    
    2009(tons)Copper
    
    Copper cathode(1)
    
    
    312,720
    
    
    
    339,294
    
    
    
    312,833Copper rods
    
    
    177,882
    
    
    
    224,758
    
    
    
    219,879Zinc
    
    Zinc(2) (3)
    
    
    348,316
    
    
    
    426,323
    
    
    
    551,724Lead
    
    
    44,552
    
    
    
    58,247
    
    
    
    60,323Aluminum
    
    Ingots
    
    
    182,921
    
    
    
    195,795
    
    
    
    172,263Rods
    
    
    72,981
    
    
    
    101,183
    
    
    
    127,120Rolled Products
    
    
    57,287
    
    
    
    61,693
    
    
    
    57,399Total Aluminum
    
    
    313,189
    
    
    
    358,671
    
    
    
    356,782
 
 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.(3)
    
    Excludes tolled metal in fiscal 2007 of 251 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
    %
 100




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##### Table of Contents



Export Incentives
   July 15, 2006 to Present(percentage of FOB value of exports)Copper cathode
    
    
    2.2
    %(1)Copper rods
    
    
    2.2
    %(2)
 
 Notes:(1)
    
    Subject to a cap of Rs. 7,500 per ton.(2)
    
    Subject to a cap of Rs. 7,760 per ton.  April 1, 2007
    
    October 9, 2007 to
    
    
    
    
    
    November 5, 2008to October 8, 2007
    
    November 3, 2008
    
    November 4, 2008
    
    to Present(percentage of FOB value of exports)Zinc concentrate
    
    
    5.0
    %
    
    
    3.0
    %
    
    
    2.0
    %
    
    
    3.0
    %Zinc ingots
    
    
    7.0
    %
    
    
    5.0
    %
    
    
    4.0
    %
    
    
    5.0
    %Lead concentrate
    
    
    5.0
    %
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    3.0
    %
  April 1, 2007 to October 8, 2007
    
    October 9, 2007 to Present(percentage of FOB value of exports)Aluminum ingots
    
    
    5.0
    %
    
    
    3.0
    %Aluminum rods
    
    
    5.0
    %
    
    
    5.0
    %Aluminum rolled products
    
    
    6.0
    %
    
    
    4.0
    %
  101




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##### Table of Contents



Taxes and Royalties
       
    
    profits from newly established units in special economic zones are entitled to a tax
holiday for a specified period;
    
    profits from newly constructed power plants (including for captive use) benefit from a
tax holiday for a specified period;
    
    investments in projects where alternative energy such as wind energy is generated can
claim large tax depreciation in the first year of operations; and
    
    income from investment in mutual funds is exempt from a tax subject to certain
deductions.
  Exchange Rates
  102




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##### Table of Contents



Power Business
  Critical Accounting Estimates
  Mine Properties
      Useful Economic Lives of Assets and Impairment
  103




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##### Table of Contents



Asset Retirement Obligations
  Commitments, Contingencies and Guarantees
  Income Tax
   104




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##### Table of Contents



Results of Operations
 Overview
 Consolidated Statement of Operations Data
  Year Ended March 31,2007
    
    
    2008
    
    
    2009Consolidated Statement of Operations Data:Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Other operating revenues
    
    
    0.9
    
    
    
    1.1
    
    
    
    1.7Total revenue
    
    
    100.9
    
    
    
    101.1
    
    
    
    101.7Cost of sales
    
    
    (60.0
    )
    
    
    (66.9
    )
    
    
    (77.6
    )Selling and distribution expenses
    
    
    (1.4
    )
    
    
    (1.5
    )
    
    
    (1.8
    )General and administration expenses
    
    
    (1.1
    )
    
    
    (1.9
    )
    
    
    (2.4
    )Other income/(expenses):Gain on sale of real estate
    
    
    0.4
    
    
    
    
    
    
    
    Voluntary retirement scheme expenses
    
    
    (0.0
    )
    
    
    
    
    
    
    Guarantees, impairment of investments and loans
    
    
    
    
    
    
    (0.3
    )
    
    
    (0.1
    )Operating income
    
    
    38.8
    
    
    
    30.5
    
    
    
    19.8Interest and dividend income
    
    
    0.9
    
    
    
    2.7
    
    
    
    7.9Interest expense
    
    
    (1.8
    )
    
    
    (1.4
    )
    
    
    (3.2
    )Net realized and unrealized investment gains
    
    
    0.9
    
    
    
    1.8
    
    
    
    1.1Income before income taxes, minority interests and equity in net (loss)/income of associate
    
    
    38.8
    
    
    
    33.6
    
    
    
    25.6Income taxesCurrent
    
    
    (9.6
    )
    
    
    (7.5
    )
    
    
    (3.8
    )Deferred
    
    
    (0.8
    )
    
    
    (1.3
    )
    
    
    0.8Income after income taxes, before minority interests and equity in net (loss)/income of
associate
    
    
    28.4
    
    
    
    24.8
    
    
    
    22.6Minority interests
    
    
    (8.7
    )
    
    
    (7.7
    )
    
    
    (5.8
    )Equity in net (loss)/income of associate, net of taxes
    
    
    0.0
    
    
    
    0.2
    
    
    
    (2.8
    )Net income
    
    
    19.7
    %
    
    
    17.3
    %
    
    
    14.0
    %
 Net Sales by Geographic Location
  Year Ended March 31,2007
    
    
    2008
    
    
    2009(in millions, except percentages)% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    
    
    
    
    % ofNet Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net Sales
    
    
    Net SalesIndia
    
    Rs.
    114,222
    
    
    
    47.3
    %
    
    Rs.
    140,503
    
    
    
    57.0
    %
    
    Rs.
    140,330
    
    
    $
    2,758.6
    
    
    
    66.1
    %Far East(1)
    
    
    69,624
    
    
    
    28.9
    
    
    
    62,303
    
    
    
    25.3
    
    
    
    27,803
    
    
    
    546.6
    
    
    
    13.1Other(2)
    
    
    57,400
    
    
    
    23.8
    
    
    
    43,608
    
    
    
    17.7
    
    
    
    44,059
    
    
    
    866.1
    
    
    
    20.8Total
    
    Rs.
    241,246
    
    
    
    100.0
    %
    
    Rs.
    246,414
    
    
    
    100.0
    %
    
    Rs.
    212,192
    
    
    $
    4,171.3
    
    
    
    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. 105




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##### Table of Contents



Customer Concentration
  
    
    the percentage of our net sales accounted for by our ten largest customers on a
consolidated basis; and
 
    
    for each of our three primary businesses, the percentage of the net sales of such
business accounted for by the ten largest customers of such business.
 Year Ended March 31,2007
    
    2008
    
    2009Consolidated
    
    
    22.2
    %
    
    
    26.5
    %
    
    
    32.4
    %Copper
    
    
    33.9
    
    
    
    16.8
    
    
    
    32.5Zinc
    
    
    47.0
    
    
    
    36.4
    
    
    
    23.6Aluminum
    
    
    39.9
    
    
    
    37.2
    
    
    
    44.6
  Comparison of Years Ended March 31, 2008 and March 31, 2009
 Net Sales, Other Operating Revenues and Operating Income
 Consolidated
    
    
    Cost of sales decreased slightly from Rs. 164,869 million in fiscal 2008 to Rs.
164,566 million ($3,235.1 million) in fiscal 2009, a decrease of Rs. 303 million, or 0.2%.
Cost of sales decreased primarily due to a reduction in global commodity and crude prices,
lower input prices and lower production volumes in our copper and aluminum business, which
was partly offset by higher realization from the sale of by-products in our zinc business.
Cost of sales as a percentage of net sales increased from 66.9% in
fiscal 2008 to 77.6% in
fiscal 2009 primarily due to the significant decrease in net sales, due in significant
part to lower daily average copper, zinc and aluminum LME prices in fiscal 2009, as
compared to only a slight decrease in the cost of sales.
    
    Selling and distribution expenses increased slightly from Rs. 3,808 million in fiscal
2008 to Rs. 3,847 million ($75.6 million) in fiscal 2009, an increase of Rs. 39 million,
or 1.0%. This increase was due to increased sales volumes in our zinc business as some of
the selling and distribution expenses are proportional to the sales volume. As a
percentage of net sales, however, selling and distribution expenses increased from 1.5% in
fiscal 2008 to 1.8% in fiscal 2009.
    
    General and administrative expenses increased from Rs. 4,572 million in fiscal 2008
to Rs. 5,078 million ($99.8 million) in fiscal 2009, an increase of Rs. 506 million, or
11.1%, primarily as a result of an increase in exploration and technical consultancy costs
at HZL and an increase in salaries and other general costs as a result of expansion of our
business. As a percentage of net sales, general and administrative expenses increased from
1.9% in fiscal 2008 to 2.4% in fiscal 2009. These expenses increased primarily in our zinc and aluminum business as a result of an increase in
capacities and the scale of our operations.
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
    
    Pursuant to the approval of the Board for Industrial and Financial Reconstruction, or
BIFR, for the rehabilitation scheme of India Foils Limited, or IFL, in fiscal 2009, we were allotted preference
shares of IFL amounting to Rs. 1,520 million in payment of the net loans and guarantees
aggregating to Rs. 1,549 million that were devolved on us in fiscal 2009. Thereafter,
in November 2008, we sold the preference shares for a nominal value and incurred a loss of
Rs. 1,520 million ($29.9 million). Other expenses for guarantees, impairment of
investments and loans in fiscal 2009 represent the difference of Rs. 137 million between
the loss of Rs. 1,520 million on the sale of the preference shares, an additional charge
of Rs. 29 million and the write-back of the provision of Rs. 1,412 million made
previously. In fiscal 2008, other expenses for guarantees, impairment of investments and
loans was Rs. 628 million, due to provisions made for corporate guarantees provided to
banks and financial institutions.
    
    Depreciation, depletion and amortization increased from Rs. 7,060 million in fiscal
2008 to Rs. 7,845 million ($154.2 million) in fiscal 2009, an increase of Rs. 785 million,
or 11.1%. This increase related primarily to the capitalization of our expanded capacities
in our zinc and aluminum businesses.
 Copper
  
    
    Copper cathode production decreased from 339,294 tons in fiscal 2008 to 312,833 tons
in fiscal 2009, a decrease of 7.8%. This decrease was primarily due to the planned
bi-annual plant maintenance shut down for 26 days in May and June 2008 and stabilization
issues faced during the post shut down ramp up. In fiscal 2009 we
recognized Rs. 491 million in amounts due to us from an insurance policy covering loss of profit on account
of an unplanned 34-day interruption in production between November and December 2008 due to damage to the cooling tower at our Tuticorin
facility, which covered a substantial portion of our estimated losses. Copper cathode sales decreased from 112,410 tons in fiscal
2008 to 92,163 tons
in fiscal 2009, a decrease of 18.0%, due to lower production.
    
    Production of copper rods decreased from 224,758 tons in fiscal 2008 to 219,879 tons
in fiscal 2009, a decrease of 2.2%, due to the planned bi-annual plant maintenance shut
down for 26 days in May and June 2008. Copper rod sales decreased from 224,662 tons in
fiscal 2008 to 220,409 tons in fiscal 2009, a decrease of 1.9%. The decrease in sales was
due to the decrease in production.
    
    Sales of copper in the Indian market increased from 157,037 tons in fiscal 2008 to
198,457 tons in fiscal 2009, an increase of 26.4%, and our exports decreased from 180,035
tons in fiscal 2008 to 114,115 tons in fiscal 2009, a decrease of 36.6%. 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
46.6% in fiscal 2008 to 63.5% in fiscal 2009 as the demand in the domestic market
increased while our production volume decreased.
    
    The daily average copper cash settlement price on the LME decreased from $7,588 per
ton in fiscal 2008 to $5,885 per ton in fiscal 2009, a decrease of 22.4%.
  
    
    TcRc rates decreased from an average of 15.7¢/lb realized in fiscal 2008 as compared
to an average of 11.7¢/lb realized in fiscal 2009 as a result of a global weakening of the
TcRc market resulting in a significant decrease in the market TcRc rate.
    
    Cost of production, which consists of cost of smelting and refining costs, increased
significantly from 1.8¢/lb in fiscal 2008 to 3.1¢/lb in fiscal 2009, primarily due to
lower realization on the sale of sulphuric acid by-product.
    
    Lower copper LME prices contributed to decreased profitability of our mining
operations.
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Zinc
  
    
    Zinc ingot production increased from 426,323 tons in fiscal 2008 to 551,724 tons in
fiscal 2009, an increase of 29.4%, as a result of increased production from HZLs second
210,000 tpa hydrometallurgical zinc smelter at Chanderiya that was commissioned in
December 2007. The second hydrometallurgical zinc smelter at Chanderiya produced 103,980
tons of zinc ingots in fiscal 2009 as compared to 42,071 tons in fiscal 2008 as production
from the smelter was ramped up. Zinc ingot sales increased from 425,531 tons in fiscal
2008 to 552,328 tons in fiscal 2009, an increase of 29.8%, enabled by the higher
production.
    
    Zinc ingot sales in the domestic market decreased from 337,672 tons in fiscal 2008
to 331,704 tons in fiscal 2009, a decrease of 1.8%, primarily due to a significant decrease
in the production and sales of galvanized plain and corrugated sheets. There was a net
decrease of 9.9% in production and 6.7% in sales in galvanized iron in fiscal 2009 as
compared to fiscal 2008. The color coated industrys performance decreased 24% in fiscal
2009 as compared to fiscal 2008. Indian galvanized plain and corrugated sheets exports to
the United States and Europe accounted for approximately 60% of total Indian galvanized
plain and corrugated sheets exports. As a result of the global economic downturn, the
automobile, housing and consumer durables sectors in Europe and the United States were
severely affected and the export oriented demand of Indian galvanized plain and corrugated
sheets was reduced substantially, resulting in a fall of galvanized plain and corrugated
sheet production and, as a result, a reduction in the demand for zinc. Our domestic sales
as a percentage of total sales decreased from 79.4% in fiscal 2008 to 60.1% in fiscal 2009
as the demand in the domestic market decreased. Export sales increased from 87,860 tons of
zinc in fiscal 2008 to 220,627 tons of zinc in fiscal 2009, an increase of 151%, as a
result of the reduction in domestic demand which left more zinc available for export. The
zinc markets in the Middle East, South East Asia and Far East Asia were also further
developed. HZLs LME registration also increased the marketability of our zinc products.
    
    The daily average zinc cash settlement price on the LME decreased from $2,992 per ton
in fiscal 2008 to $1,563 per ton in fiscal 2009, a decrease of 47.8%.
    
    We also sold surplus zinc concentrate of 231,797 dmt in fiscal 2008 and 76,261 dmt in
fiscal 2009 to third parties, a decrease of 67.1%. The decrease was due to increased
internal consumption of zinc concentrate with the commissioning of our second
hydrometallurgical zinc smelter at Chanderiya in December 2007. We sold surplus lead
concentrate of 65,418 dmt in fiscal 2008 and 56,487 dmt in fiscal 2009 to third parties, a
decrease of 13.7%, due to the improved production of lead through ISPTM at the
pyrometallurgical smelter which involved higher consumption of lead to produce metal with
a higher concentration of lead in fiscal 2009.
    
    Lead ingot production increased from 58,247 tons in fiscal 2008 to 60,323 tons in
fiscal 2009, an increase of 3.6%, as a result of improved production of lead from the
pyrometallurgical process. Lead ingot sales increased from 58,298 tons in fiscal 2008 to
60,564 tons in fiscal 2009, an increase of 3.9%, enabled by the increase in production.
    
    Silver ingot production increased from 80,405 kg in fiscal 2008 to 105,555 kg in
fiscal 2009, an increase of 30.7%, with silver ingot sales at similar levels to
production. Combined with a 5.1% decrease in the average silver
London Bullion Metal Association, or LBMA, price in fiscal 2009 as
compared to fiscal 2008, net sales from the sale of silver ingots
increased from Rs. 1,583 million in fiscal 2008 to Rs. 2,099 million ($41.3 million) in fiscal 2009, an
increase of 32.6%.
    
    The daily average lead cash settlement price on the LME decreased from $2,875 per ton
in fiscal 2008 to $1,660 per ton in fiscal 2009, a decrease of 42.3%.
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Aluminum
  
    
    Aluminum production decreased slightly by 0.5%, from 358,671 tons in fiscal 2008 to
356,782 tons in fiscal 2009. Our new Korba smelter of 245,000 tpa capacity increased
production from 249,392 tons in fiscal 2008 to 250,499 tons in fiscal 2009, which was
fully offset by the decrease in the existing smelter production from 109,279 tons in
fiscal 2008 to 106,283 tons in fiscal 2009, primarily due to the
planned permanent shutdown of 204 out of 408
pots at the old Korba smelter in February and March 2009 due to the smelters higher cost
of production.The export of power in fiscal 2009 increased to 320 million units from 194
million units in fiscal 2008, due to the sale of surplus power from captive power plants
during the period that the old Korba smelter was partially shut down.
    
    Aluminum sales decreased from 358,328 tons in fiscal 2008 to 356,512 tons in fiscal
2009, a decrease of 0.5%. Sales of aluminum ingots decreased from 195,785 tons in fiscal
2008 to 172,173 tons in fiscal 2009, a decrease of 12.1%, as a result of the partial shut
down of the old Korba smelter in the fourth quarter of fiscal 2009 due to higher
operational costs. Wire rod sales increased from 101,316 tons in fiscal 2008 to 127,019
tons in fiscal 2009, an increase of 25.4%, as a result of increased production due to the
addition of a wire rod mill at the new Korba smelter 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 decreased from 61,693 tons in fiscal
2008 to 57,399 tons in fiscal 2009, a decrease of 7.0%, primarily due to decreased demand
in the construction and transport sector.
    
    Aluminum sales in the domestic market increased from 265,839 tons in fiscal 2008 to
289,991 tons in fiscal 2009, an increase of 9.1%, as a result of increased demand in the
electrical sector. Our aluminum exports decreased from 92,489 tons in fiscal 2008 to
66,523 tons in fiscal 2009, a decrease of 28.1%, as a result of lower premiums globally
and higher demand 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 74.2% in fiscal 2008 to 81.3% in
fiscal 2009 as the demand in the domestic market increased while our production volume
decreased slightly.
    
    The daily average aluminum cash settlement price on the LME declined from $2,620 per
ton in fiscal 2008 to $2,234 per ton in fiscal 2009, a decrease of 14.8%.
  Power
  Corporate and Others
  Interest and Dividend Income
  Interest Expense
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Net Realized and Unrealized Investment Gains
  Income Taxes
  Minority Interests
  Equity in Net (Loss)/Income of Associate, Net of Tax
  Comparison of Years Ended March 31, 2007 and March 31, 2008
 Net Sales, Other Operating Revenues and Operating Income
 Consolidated
    
    
    Cost of sales increased from Rs. 144,798 million in fiscal 2007 to Rs. 164,869
million in fiscal 2008, an increase of Rs. 20,071 million, or 13.9%. Cost of sales
increased primarily due to increases in production volumes across all our businesses and
higher cost of purchased copper concentrate, resulting from higher daily average copper
LME prices. The increases in production volume were primarily due to a capacity expansion
at our Tuticorin facility in our copper business, our new Korba smelter in our aluminum
business and our second new hydrometallurgical zinc smelter at Chanderiya in our zinc
business. Cost of sales as a percentage of net sales increased from 60.0% in fiscal 2007
to 66.9% in fiscal 2008, primarily due to higher commodity prices relative to the costs of
production.
    
    Selling and distribution expenses increased from Rs. 3,444 million in fiscal 2007 to
Rs. 3,808 million in fiscal 2008, an increase of Rs. 364 million, or 10.6%. This increase
was due to increased sales volumes across all our businesses as most of
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the selling and distribution expenses are proportional to the sales volume. As a percentage
of net sales, however, selling and distribution expenses increased marginally from 1.4% in
fiscal 2007 to 1.5% in fiscal 2008.
    
    General and administrative expenses increased from Rs. 2,633 million in fiscal 2007
to Rs. 4,572 million in fiscal 2008, an increase of Rs. 1,939 million, or 73.6%, primarily
as a result of an increase in exploration and technical consultancy costs at HZL and an
increase in salaries and other general costs as a result of expansion of our business. As
a percentage of net sales, general and administrative expenses increased from 1.1% in
fiscal 2007 to 1.9% in fiscal 2008. These expenses increased primarily in our zinc and
aluminum business as a result of an increase in capacities and scale of operations.
    
    We did not have a gain on sale of real estate in fiscal 2008, compared to Rs. 986
million in fiscal 2007 from the sale of property in Mumbai comprising land and building
for an amount of Rs. 1,000 million.
    
    We did not incur any voluntary retirement scheme expenses in fiscal 2008, compared to
Rs. 97 million in fiscal 2007.
    
    We incurred guarantees, impairment of investments and loans in fiscal 2008 of Rs. 628
million, compared to nil in fiscal 2007. This was due to provisions made for corporate
guarantees provided to banks and financial institutions.
    
    Depreciation, depletion and amortization increased from Rs. 5,959 million in fiscal
2007 to Rs. 7,060 million in fiscal 2008, an increase of Rs. 1,101 million, or 18.5%. This
increase related primarily to the capitalization of our expanded capacities in our copper,
zinc, aluminum and wind power businesses.
 Copper
  
    
    Copper cathode production increased from 312,720 tons in fiscal 2007 to 339,294 tons
in fiscal 2008, an increase of 8.5%, enabled by a capacity expansion at our Tuticorin
facility which increased the anode and cathode capacities to 400,000 tpa in November 2006.
Copper cathode sales decreased from 133,402 tons in fiscal 2007 to 112,411 tons in fiscal
2008, a decrease of 15.7%, as we converted a higher percentage of our copper cathode
production into copper rods in fiscal 2008 as compared to fiscal 2007.
    
    Production of copper rods increased from 177,882 tons in fiscal 2007 to 224,758 tons
in fiscal 2008, an increase of 26.4%. This increase in production was enabled by the
increase in rod plant capacity at Tuticorin in the second half of fiscal 2007. Copper rod
sales increased from 177,746 tons in fiscal 2007 to 224,662 tons in fiscal 2008, an
increase of 26.4%. The increase in sales was due to the increase in production.
    
    Sales of copper in the Indian market increased from 116,522 tons in fiscal 2007 to
157,037 tons in fiscal 2008, an increase of 34.8%, and our exports decreased from 194,626
tons in fiscal 2007 to 180,035 tons in fiscal 2008, a decrease of 7.5%. We endeavor to
sell as large a quantity of our products as possible domestically, where we receive an
Indian market premium. Our domestic sales as a percentage of total sales increased from
37.5% in fiscal 2007 to 46.6% in fiscal 2008 as the demand in the domestic market
increased more rapidly than our production volume growth.
    
    The daily average copper cash settlement price on the LME increased from $6,984 per
ton in fiscal 2007 to $7,588 per ton in fiscal 2008, an increase of 8.6%.
  
    
    TcRc rates decreased from an average of 31.1¢/lb realized in fiscal 2007 to an
average of 15.7¢/lb realized in fiscal 2008 as a result of a global weakening of the TcRc
market resulting in a significant decrease in the market TcRc rate.
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
    
    Cost of production, which consists of cost of smelting and refining costs, was
reduced significantly from 6.1¢/lb in fiscal 2007 to 1.8¢/lb in fiscal 2008, primarily due
to improved copper recovery, improved by-product management and higher realization on the
sale of sulphuric acid by-product.
    
    Higher copper LME prices contributed to increased profitability of our mining
operations, which was partially offset by slightly reduced production at our sole
remaining copper mine, Mt. Lyell.
    
    We earned a profit of Rs. 986 million in fiscal 2007 from the sale of real estate in
Mumbai, with no such profit in fiscal 2008.
 Zinc
  
    
    Zinc ingot production increased from 348,316 tons in fiscal 2007 to 426,323 tons in
fiscal 2008, an increase of 22.4%, as a result of the contribution of a full years
production from our first hydrometallurgical zinc smelter at Chanderiya and the
contribution from our second hydrometallurgical zinc smelter at Chanderiya which was
commissioned in December 2007, in addition to marginal increases in production from other
smelters. Zinc ingot sales increased from 349,615 tons in fiscal 2007 to 425,531 tons in
fiscal 2008, an increase of 21.7%, enabled by higher production.
    
    Zinc ingot sales in the domestic market increased from 204,286 tons in fiscal 2007 to
337,672 tons in fiscal 2008, an increase of 65.3%. We endeavor to sell as large a quantity
of our products as possible domestically, where we receive an Indian market premium. Our
domestic sales as a percentage of total sales increased from 58.4% in fiscal 2007 to 79.4%
in fiscal 2008 as the demand in the domestic market increased more rapidly than our
production volume growth.
    
    The daily average zinc cash settlement price on the LME decreased from $3,581 per ton
in fiscal 2007 to $2,992 per ton in fiscal 2008, a decrease of 16.4%.
    
    We also sold surplus zinc concentrate of 254,249 dmt in fiscal 2007 and 231,797 dmt
in fiscal 2008 to third parties, a decrease of 8.8%. The decrease was due to increased
internal consumption of zinc concentrate with the commissioning of our second
hydrometallurgical zinc smelter at Chanderiya in December 2007. We sold surplus lead
concentrate of 59,050 dmt in fiscal 2007 and 65,418 dmt in fiscal 2008 to third parties,
an increase of 10.8%, which was enabled by higher mining output in fiscal 2008.
    
    Lead ingot production increased from 44,552 tons in fiscal 2007 to 58,247 tons in
fiscal 2008, an increase of 30.7%, as a result of increased production from the AusmeltTM
plant. Lead ingot sales increased from 44,916 tons in fiscal 2007 to 58,298 tons in fiscal
2008, an increase of 29.8%.
    
    Silver ingot production increased from 51,296 kg in fiscal 2007 to 80,405 kg in fiscal 2008,
an increase of 56.7%, with silver ingot sales at similar levels to production. Combined with a 16.1% increase
in the average silver LBMA price in fiscal 2008 as compared to fiscal 2007, net sales from the sale of
silver ingots increased from Rs. 920 million in fiscal 2007 to Rs. 1,583 million in fiscal 2008, an
increase of 72.1%.
    
    The daily average lead cash settlement price on the LME increased from $1,426 per ton
in fiscal 2007 to $2,875 per ton in fiscal 2008, an increase of 101.6%.
  Aluminum
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
    
    Aluminum production increased from 313,189 tons in fiscal 2007 to 358,671 tons in
fiscal 2008, an increase of 14.5%, as our new Korba smelter of 245,000 tpa capacity
increased production from 207,643 tons in fiscal 2007 to 249,392 tons in fiscal 2008. The
existing smelter production increased from 105,546 tons in fiscal 2007 to 109,279 tons in
fiscal 2008, an increase of 3.5%, primarily due to improvements in operational efficiency.
Due to higher production volume from the new smelter, wheeling income from the sale of
surplus power was reduced in fiscal 2008 as compared to fiscal 2007.
    
    Aluminum sales increased from 315,002 tons in fiscal 2007 to 358,328 tons in fiscal
2008, an increase of 13.8%. Sales of aluminum ingots increased from 184,482 tons in fiscal
2007 to 195,785 tons in fiscal 2008, an increase of 6.1%, as production from the new Korba
smelter was primarily sold in ingot form. Wire rod sales increased from 72,948 tons in
fiscal 2007 to 101,316 tons in fiscal 2008, an increase of 38.9% as a result of increased
production due to the addition of two wire rod mills at the new Korba smelter. Rolled
product sales increased from 57,572 tons in fiscal 2007 to 61,227 tons in fiscal 2008, an
increase of 6.3%. The increases in sales of wire rods and rolled products reflect
increased demand for these products, particularly in the electrical and construction
sectors, and our continued focus on the sale of value-added products.
    
    Aluminum sales in the domestic market increased from 224,163 tons in fiscal 2007 to
265,839 tons in fiscal 2008, an increase of 18.6%, as a result of increased production.
Our aluminum exports increased from 90,839 tons in fiscal 2007 to 92,489 tons in fiscal
2008. We endeavor to sell as large a quantity of our products as possible domestically,
where we receive an Indian market premium. Our domestic sales as a percentage of total
sales increased from 71.2% in fiscal 2007 to 74.2% in fiscal 2008 as the demand in the
domestic market increased more rapidly than our production volume growth.
    
    The daily average aluminum cash settlement price on the LME declined marginally from
$2,663 per ton in fiscal 2007 to $2,620 per ton in fiscal 2008, a decrease of 1.6%.
  Power
  Corporate and Others
  Interest and Dividend Income
  Interest Expense
  Net Realized and Unrealized Investment Gains
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Income Taxes
  Minority Interests
  Equity in Net (Loss)/Income of Associate, Net of Taxes
  Income from Divested Business, Net of Tax
  Liquidity and Capital Resources
 Liquidity
  Capital Requirements
  
    
    capital expenditures, towards expansion of capacities in existing businesses including
modernization of facilities;
    
    the establishment of our planned commercial power generation business;
    
    consolidation of our ownership in our various subsidiaries; and
    
    acquisitions of complementary businesses that we determine to be attractive
opportunities, including Asarco.
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115




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Capital Resources
  Net Cash Provided by or Used in Operating Activities
  Net Cash Used in Investing Activities
   Net Cash Provided by or Used in Financing Activities
 net
 116




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Outstanding Loans
  Working Capital Loans
  Foreign Currency Loans
  .
  117




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Term Loans


Buyers Credit






Non-Convertible Debentures




pari passu


Principal loans entered into by us and our subsidiaries after March 31, 2009





    
    On June 29, 2009, Sterlite Energy obtained an Indian Rupee term loan facility from a
syndicate of banks, with SBI acting as facility agent, of Rs. 55,690 million ($1,094.8 million), to
finance the cost of building a 2,400 MW thermal coal-based power
facility at Jharsuguda in the State of Orissa at an interest
rate of 11.5% per annum until June 28, 2010. Thereafter, the interest rate will be reset on
a yearly basis to a rate that is 25 basis points below the State Bank of India Benchmark
Advance Rate. The facility is secured by, among other things, a first charge over the
movable and immovable properties and tangible or intangible assets of Sterlite Energy as
well as charges over certain of its bank accounts. The loan is repayable in 48 quarterly
installments beginning on a date falling six months after the date of commercial operation
of the last unit of the power facility. As of June 30, 2009, Sterlite Energy has not drawn
down on the loan. All amounts drawn down by Sterlite Energy under the loan facilities granted by IDBI and SBI on
September 2008 and January 2009, respectively, will be deemed to be a draw down under this loan
facility from the initial draw down date of this facility.



    
    On June 29, 2009, Sterlite Energy entered into US dollar denominated secured term loan
facility of $140.0 million (Rs. 7,121.8 million) with India
Infrastructure Finance Company (UK) Limited as lender and SBI as facility agent to finance the costs of purchasing
machinery and equipment from overseas supplied in connection with the building of its 2,400
MW thermal coal-based power facility in Jharsuguda in the State of Orissa. The rate of
interest payable under this facility is six-month LIBOR plus 5.35% per annum to be reset
semi-annually. 60% of the loan is repayable in 48 quarterly installments beginning on a date falling six months
after the date of commercial operation of the last unit of the power facility, 36% of the loan
amount is repayable at the end of 12 years from June 29, 2009 in a single installment and the
balance 4% of the outstanding loan is repayable in eight quarterly installments commencing from
December 2022. The facility is secured by, among other things, a first charge over the movable
and immovable properties and tangible or intangible assets of Sterlite Energy as well as
charges over certain of its bank accounts. As of June 30, 2009, Sterlite Energy has not
drawn down on the loan.  118




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Export Obligations
  Guarantees
  
    
    Guarantees on the issuance of customs and excise duty bonds amounting to Rs. 879 million
($17.3 million) for import of goods including capital equipment at concessional rates of
duty. We do not anticipate any liability on these guarantees.
    
    Corporate guarantee of Rs. 21,000 million ($412.8 million) on behalf of Vedanta Aluminium
for obtaining credit facilities. We also issued corporate guarantees totaling of Rs. 14,704
million ($289.1 million) for importing capital equipment at concessional rates of duty under
the Export Promotion Capital Goods Scheme enacted by the Government of India and Rs. 134
million ($2.6 million) for raw material imports. Vedanta Aluminium is obligated to export
goods worth eight times the value of concessions enjoyed in a period of eight years
following the date of import, failing which we will be liable to pay the dues to the
Government of India. As of March 31, 2009, we determined that we have no liability on either
of these corporate guarantees.
    
    Bank guarantee of AUD 5.0 million (Rs. 175 million or $3.4 million) in favor of the
Ministry for Economic Development, Energy and Resources of Australia as a security against
rehabilitation liability on behalf of CMT. This guarantee is backed up by the issuance of a
corporate guarantee of Rs. 320 million ($6.3 million). These liabilities are fully
recognized in the consolidated financial statements. We do not
anticipate any additional liability on
this guarantee.
    
    Bank indemnity guarantees amounting to AUD 2.9 million (Rs. 100 million or $2.0 million)
in favor of the State Government of Queensland, Australia, as a security against
rehabilitation liabilities that are expected to occur at the closure of the mine. The
environmental liability has been fully recognized in our consolidated financial statements.
We do not anticipate any additional liability on these guarantees.
    
    Performance bank guarantees amounting to Rs. 2,809 million ($55.2 million). 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. 2,047 million ($40.2 million). We have also issued bank guarantees
in the normal course of business for an aggregate value of Rs. 493 million ($9.7 million)
for litigations, against provisional valuation and for other liabilities. We do not
anticipate any liability on these guarantees.
    
    Two irrevocable letters of credit of $50 million each in favor of Asarco, one of which we
gave as a security deposit at the time of signing the previous agreement with Asarco on
February 4, 2009 and the second of which we gave as an additional security deposit at the
time of signing the current agreement with Asarco on March 6, 2009.
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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.
    34,586
    
    
    $
    679.9
    
    
    Rs.
    20,202
    
    
    $
    397.1
    
    
    Rs.
    9,688
    
    
    $
    190.5
    
    
    Rs.
    
    
    
    $
    
    
    
    Rs.
    4,696
    
    
    $
    92.3Capital commitments
    
    
    67,607
    
    
    
    1,329.0
    
    
    
    39,211
    
    
    
    770.8
    
    
    
    28,391
    
    
    
    558.1
    
    
    
    5
    
    
    
    0.1
    
    
    
    
    
    
    
    Total
    
    Rs.
    102,193
    
    
    $
    2,008.9
    
    
    Rs.
    59,413
    
    
    $
    1,167.9
    
    
    Rs.
    38,079
    
    
    $
    748.6
    
    
    Rs.
    5
    
    
    $
    0.1
    
    
    Rs.
    4,696
    
    
    $
    92.3
   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 31,2007
    
    2008
    
    2009(in millions)Capital Expenditures
    
    $
    588.4
    
    
    $
    635.4
    
    
    $
    808.1
   Contingencies
  120




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Recent Accounting Pronouncements
 Statement
of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements
    SFAS
No 159, The Fair Value Option for Financial Assets and Financial Liabilities
Including an amendment of FASB Statement No. 115
  SFAS
No. 160, Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB
No. 51
  SFAS
No 141 (R), Business Combination
  121




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SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities  an amendment of
FASB Statement No. 133
  FASB
Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments
  FASB
Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments
  FSP
FAS 142-3, Determination of the Useful Life of Intangible Assets
 Goodwill and Other Intangible Assets,
 FSP
FAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets
  FSP SFAS 165, Subsequent Events
  FSP SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles
  FASB Staff Position No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies
  Emerging Issues Task Force (EITF) 08-6, Equity Method Investment Accounting Considerations
  EITF 08-7, Accounting for Defensive Intangible Assets
  122




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##### Table of Contents



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 A. Directors and Senior Management
   Name
    
    Age
    
    PositionDirectorsAnil Agarwal(1)
    
    
    56
    
    
    Non-Executive ChairmanNavin Agarwal(2)
    
    
    48
    
    
    Executive Vice-ChairmanDindayal
Jalan(2)(3)(4)(5)
    
    
    52
    
    
    Whole Time DirectorBerjis
Minoo
Desai(4)(5)(6)(7)(8)
    
    
    52
    
    
    Non-Executive DirectorGautam
Bhailal
Doshi(1)(5)(7)(9)
    
    
    56
    
    
    Non-Executive DirectorSandeep
H.
Junnarkar(6)(7)(10)
    
    
    57
    
    
    Non-Executive DirectorExecutive OfficersMahendra
Singh Mehta
    
    
    53
    
    
    Group Chief Executive OfficerRajagopal
Kishore Kumar(11)
    
    
    46
    
    
    Chief Executive Officer, SIIL and
Chief Executive Officer, Copper and Zinc DivisionsVinod
Bhandawat(12)
    
    
    41
    
    
    Chief Financial OfficerTarun
Jain(13)
    
    
    49
    
    
    Director of FinanceA.
Thirunavukkarasu
    
    
    48
    
    
    Group Head of Corporate Human
ResourceDilip Golani
    
    
    43
    
    
    President and Group Head of Management AssuranceOther Significant EmployeesCopper BusinessJeyakumar Janakaraj
    
    
    38
    
    
    Chief Executive Officer, CMTPuneet Jagatramka
    
    
    37
    
    
    Chief Marketing Officer, Copper and Zinc DivisionsC.V. Krishnan
    
    
    59
    
    
    Head of Business Development, SIILZinc BusinessAkhilesh Joshi(2)
    
    
    55
    
    
    Chief Operating Officer and
Whole Time Director, HZLShyam Lal Bajaj
    
    
    55
    
    
    Chief Financial Officer, HZLAluminum BusinessMansoor Siddiqi
    
    
    55
    
    
    Chief Executive Officer, Aluminum DivisionV. Ramanathan
    
    
    49
    
    
    Chief Financial Officer, Aluminum DivisionPramod Suri(2)
    
    
    51
    
    
    Chief Executive Officer  Operations,
Aluminum Division and Whole Time
Director, BALCOGunjan Gupta(2)
    
    
    42
    
    
    Chief Executive Officer and Whole Time Director, BALCOPower BusinessPankaj Khanna
    
    
    43
    
    
    Executive Director  Jharsuguda
 
 Notes:(1)
    
    Member of the Remuneration Committee.(2)
    
    A Whole Time Director is a director who is employed full-time in rendering services to the
management of the company with respect to which he is a director. An individual can be a whole
time director with respect to only one company, although he or she may accept the position of
non-whole time director in other companies. In addition to Messrs. Dindayal Jalan, Akhilesh
Joshi 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. Directors
 Anil
Agarwal
 123




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Navin Agarwal
 Dindayal Jalan
 Berjis Minoo Desai
 Gautam Bhailal Doshi
 Sandeep H. Junnarkar
 Executive Officers
 Mahendra
Singh Mehta
 Rajagopal Kishore Kumar
 124




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##### Table of Contents



Vinod Bhandawat
 Tarun
Jain
 A.
Thirunavukkarasu
 Dilip
Golani
 Other Significant Employees
 Copper Business
 Jeyakumar Janakaraj
 Puneet Jagatramka
 C.V.
Krishnan
 Zinc Business
 Akhilesh
Joshi
 Shyam Lal Bajaj
 Aluminum Business
 Mansoor Siddiqi
 V. Ramanathan
 125




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##### Table of Contents



Pramod Suri
 Gunjan
Gupta
 Power Business
 Pankaj Khanna
 B. Compensation
 Compensation of Directors and Executive Officers
   Salary, Bonuses,
    
    Fair Value of Share
    
    Contribution toAllowances and
    
    Options granted under
    
    Provident andName
    

Perquisites
    
    the Vedanta LTIP
    
    Superannuation Funds(in million)Navin Agarwal
    
    Rs.
    59.09
    
    
    Rs.
    6.57
    
    
    Rs.
    6.08Kuldip Kumar Kaura(1)
    
    
    38.18
    
    
    
    4.63
    
    
    
    1.16Dindayal Jalan
    
    
    13.58
    
    
    
    2.89
    
    
    
    1.10Mahendra Singh Mehta
    
    
    14.19
    
    
    
    2.89
    
    
    
    0.93Rajagopal Kishore
Kumar(3)
    
    
    10.20
    
    
    
    1.80
    
    
    
    0.88Tarun Jain (2)
    
    
    28.95
    
    
    
    4.63
    
    
    
    2.76A. Thirunavukkarasu
    
    
    6.76
    
    
    
    1.35
    
    
    
    0.37Dilip Golani
    
    
    9.29
    
    
    
    1.66
    
    
    
    0.51
 
 Notes:(1)
    
    Mr. Kuldip Kumar Kaura ceased to be our Managing Director and Chief Executive Officer
effective October 1, 2008 on the expiration of his employment contract. Mr. Rajagopal Kishore
Kumar is our new Chief Executive Officer.(2)
    
    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.(3)
    
    Appointed as Chief Executive Officer of SIIL with effect from
October 1, 2008.   Outstanding Awards or Options
  Employee Benefit Plans
  126




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Provident Fund
  Gratuity
  Superannuation Fund
  Compensated Absence
  Vedanta Long-Term Incentive Plan
     Limitations on Liability and Indemnification Matters
   C. Board Practices
 Composition of the Board
    127




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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
    
    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
   128




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Shareholders and Investors Grievance Committee
   D. Employees
  E. Share Ownership for Directors and Executive Officers
  Equity Shares Beneficially OwnedName
    
    Number
    
    PercentAnil Agarwal(1)
    
    
    436,919,733
    
    
    
    61.7
    %Navin Agarwal
    
    
    
    
    
    
    Kuldip Kumar Kaura(2)
    
    
    
    
    
    
    Tarun Jain(3)
    
    
    
    
    
    
    Dindayal Jalan(4)
    
    
    
    
    
    
    Dwarka
Prasad Agarwal(3)
    
    
    
    
    
    
    Berjis Minoo Desai
    
    
    
    
    
    
    Gautam Bhailal Doshi
    
    
    
    
    
    
    Sandeep H. Junnarkar
    
    
    18,000
    
    
    
    *Ishwarlal Patwari(5)
    
    
    
    
    
    
    Mahendra Singh Mehta
    
    
    250
    
    
    
    *Rajagopal
Kishore Kumar(6)
    
    
    
    
    
    
    Vinod
Bhandawat(7)
    
    
    
    
    
    
    A. Thirunavukkarasu
    
    
    
    
    
    
    Dilip Golani
    
    
    250
    
    
    
    *All our
directors and executive officers as a group (15 persons)
    
    
    436,938,233
    
    
    
    61.7
    %
 
 Notes:*
    
    Represents beneficial ownership of less than 1.0%.(1)
    
    Consists of 436,919,733 equity shares beneficially owned by
Vedanta. Volcan owns 59.4% 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.(2)
    
    Mr. Kuldip Kumar Kaura, ceased to be our Managing Director and Chief Executive Officer
effective October 1, 2008, on the expiry of his employment contract. Mr. Rajagopal Kishore
Kumar is our new Chief Executive Officer.(3)
    
    Resigned as Whole Time Director effective March 31, 2009, following which he is no longer a
director of the Company. However, he remains an executive officer of the company as our Director of Finance.(4)
    
    Appointed as Whole Time Director effective December 24, 2008.(5)
    
    Mr. Ishwarlal Patwari passed away and ceased be a director of the Company on July 8, 2008.(6)
    
    Appointed as Chief Executive Officer of SIIL with effect from
October 1, 2008.(7)
    
    Appointed as Chief Financial Officer with effect from
June 15, 2009. 129




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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)
    
    
    436,919,733
    
    
    
    61.7
    %
 
 Note:(1)
    
    Vedanta has beneficial ownership of 436,919,733 equity
shares, consisting of 411,306,333 equity shares held by Twin Star and 25,613,400 equity shares held by MALCO. Twin Star is the owner
of 93.6% 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 59.4% 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 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
  130




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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;
    
    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:
 131




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##### Table of Contents




    
    the acquisition or ownership by the Volcan Parties of not more than 5% in aggregate
of any class of shares, debentures or other securities in issue from time to time of any
company which engages in the smelting, refining or mining of base metals or minerals
which is for the time being listed on any stock exchange; or
    
    the acquisition or ownership, directly or indirectly, by the Volcan Parties of any
interest in, a base metal or mineral property or asset (together with any associated
property, plant and equipment), which is not adjacent or geographically proximate to an
existing property or operation of Vedanta group so as to give them operational synergies,
where the acquisition cost (including assumed indebtedness), including any related
capital expenditures committed at the date of acquisition for the following 12 months, is
equal to $50 million or less, for which purpose any acquisitions of two or more related
or adjacent base metal or mineral properties or assets shall be aggregated when
calculating the acquisition cost, provided that the relevant interested party (i) is not
an officer or director of a Vedanta group company; and (ii) before acquiring such
property or asset, first made the opportunity to acquire such property or asset available
to the Vedanta group, with a reasonable period for the independent directors of Vedanta
to consider the opportunity, on terms no less favorable than those on which they are
proposed to be acquired by the interested party and a majority of the independent
directors has determined that the Vedanta group should not make the acquisition; and
 
    
    Transactions and relationships between Vedanta and the Volcan Parties must be conducted
at arms length and on a normal commercial basis, including those to be provided under the
shared services agreement.
 Related Transactions
 Shared Services Agreement  STL, Sterlite Gold 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;
    
    the cost of access to certain of the directors, officers and employees of such member of
the Vedanta group shall be paid by STL or Sterlite Gold, as the case may be, to us or
Vedanta, as appropriate; and
    
    the cost of the services provided pursuant to the shared services agreement is calculated
by apportioning the total salary cost to us or the Vedanta group of the employment of the
relevant director, officer or employee to STL or Sterlite Gold, as appropriate based on the
time spent for each such member of the Vedanta group.
  
    
    amend the list of employees of Vedanta who may be hired under the shared services
agreement to reflect only those individuals who actually performed the services;
    
    amend the amount to be paid to Vedanta based on estimated cost plus 20%; and
 132




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##### Table of Contents




    
    allow only 25% of Mr. Anil Agarwals salary costs to be taken into account when
determining the charge to STL and Sterlite Gold, to reflect the limited services provided to
STL and Sterlite Gold since the listing of Vedanta.
 Representative Office Agreement  Vedanta and Sterlite
  Consultancy
Agreement  Vedanta and Sterlite
  Sale of Aluminum Conductor Business  Sterlite and STL
  Issuance of Equity Shares by Vedanta Aluminium  Sterlite, Twin Star and Vedanta Aluminium
  Issuance of Debentures by Vedanta Aluminium  Sterlite and Vedanta Aluminium
   133




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Loan Agreement  Sterlite and Vedanta Aluminium
  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
  Payable to Monte Cello Corporation NV  Monte Cello Corporation NV and CMT
  Conflicts of Interest and Allocations of Business Opportunities
  134




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135




---



##### 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.
  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.
   136




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##### Table of Contents



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.
    BALCO is involved in various litigations in relation to the alleged encroachment of land on which
the Korba facility is situated and the State Government of Chhattisgarh has issued notices to BALCO
alleging that BALCO had encroached on state-owned land.
   137




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##### Table of Contents



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.
   138




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Certain of our subsidiaries have been named in legal actions by third party claimants and by Indian
sales tax, excise and related tax authorities for additional sales tax, excise and indirect duties.
  Dividend Policy
    
    
    the rate of dividend to be declared shall not exceed the average of the rates at which
dividends were declared in the five years immediately preceding that year or 10.0% of our
paid-up share capital, whichever is less;
    
    the total amount to be drawn from the accumulated profits earned in previous years and
transferred to the reserves shall not exceed an amount equal to one-tenth of the sum of our
paid-up share capital and net reserves, and the amount so drawn shall first be utilized to
set off the losses incurred in the financial year before any dividend in respect of
preference or equity share is declared; and
    
    the balance of the reserves after such withdrawal shall not fall below 15.0% of our
paid-up share capital.
    B. Significant Changes
  139




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ITEM 9. THE OFFER AND LISTING
 A. Offer and Listing Details
    
    
    the reported high and low trading prices for our ADSs on the NYSE;
    
    the imputed high and low trading prices for our equity shares, translated into US
dollars, based on the Indian Rupee prices for such equity shares as quoted in the official
list of each of the NSE and BSE and the noon buying rate of the
Federal Reserve Bank of New York on the last
business day of each period presented; and
    
    the average of the aggregate trading volume of our ADSs on the NYSE and our equity shares
on the NSE and BSE,
  Average
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AverageNYSE Daily
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    BSE DailyADS
    
    NSE Price
    
    NSE Daily 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(2)
    
    
    14.93
    
    
    
    6.70
    
    
    
    1,446,308
    
    
    
    15.39
    
    
    
    7.26
    
    
    
    3,770,209
    
    
    
    15.48
    
    
    
    7.24
    
    
    
    909,329Fiscal Quarters20081st Quarter(1)
    
    
    15.14
    
    
    
    14.00
    
    
    
    3,651,575
    
    
    
    15.18
    
    
    
    10.23
    
    
    
    952,915
    
    
    
    15.09
    
    
    
    10.23
    
    
    
    322,6802nd Quarter
    
    
    19.00
    
    
    
    11.12
    
    
    
    1,499,510
    
    
    
    19.67
    
    
    
    12.65
    
    
    
    851,020
    
    
    
    19.72
    
    
    
    12.65
    
    
    
    224,6723rd Quarter
    
    
    28.97
    
    
    
    18.03
    
    
    
    2,299,630
    
    
    
    29.18
    
    
    
    18.37
    
    
    
    2,353,671
    
    
    
    28.73
    
    
    
    18.31
    
    
    
    483,0894th Quarter
    
    
    27.05
    
    
    
    16.31
    
    
    
    1,366,820
    
    
    
    27.05
    
    
    
    13.87
    
    
    
    1,365,643
    
    
    
    27.11
    
    
    
    14.00
    
    
    
    294,56220091st 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
    
    
    
    15.39
    
    
    
    7.26
    
    
    
    3,770,209
    
    
    
    15.48
    
    
    
    7.24
    
    
    
    909,329Last Six MonthsJanuary 2009
    
    
    6.79
    
    
    
    4.65
    
    
    
    1,303,355
    
    
    
    6.95
    
    
    
    4.82
    
    
    
    2,925,030
    
    
    
    6.94
    
    
    
    4.81
    
    
    
    970,690February 2009
    
    
    5.87
    
    
    
    4.55
    
    
    
    1,426,695
    
    
    
    5.70
    
    
    
    4.37
    
    
    
    2,874,295
    
    
    
    5.70
    
    
    
    4.67
    
    
    
    850,184March 2009
    
    
    7.29
    
    
    
    4.23
    
    
    
    1,175,541
    
    
    
    7.46
    
    
    
    4.23
    
    
    
    3,930,525
    
    
    
    7.45
    
    
    
    4.60
    
    
    
    1,179,145April 2009
    
    
    8.72
    
    
    
    6.70
    
    
    
    1,301,448
    
    
    
    8.68
    
    
    
    6.97
    
    
    
    4,026,612
    
    
    
    8.73
    
    
    
    6.95
    
    
    
    980,718May 2009
    
    
    13.27
    
    
    
    8.35
    
    
    
    1,745,075
    
    
    
    13.51
    
    
    
    8.92
    
    
    
    4,099,055
    
    
    
    13.48
    
    
    
    8.86
    
    
    
    1,058,265June 2009
    
    
    14.93
    
    
    
    11.35
    
    
    
    1,312,977
    
    
    
    15.39
    
    
    
    11.63
    
    
    
    3,273,128
    
    
    
    15.48
    
    
    
    11.65
    
    
    
    718,769
 
 Notes:(1)
    
    From June 20, 2007 for trading prices for our ADSs on the NYSE.(2)
    
    Through June 30, 2009. 140




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B. Plan of Distribution
  C. Markets
  D. Selling Shareholders
  E. Dilution
  F. Expenses of the Issue
  
 ITEM 10. ADDITIONAL INFORMATION
 A. Share Capital
  B. Memorandum and Articles of Association
 General
   141




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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
   142




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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
   143




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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.
 Dividends
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
    
    the rate of dividend to be declared shall not exceed the lesser of 10% of our paid-up
capital or the average of the rates at which dividends were declared in the five years
immediately preceding that year;
    
    the total amount to be drawn from the accumulated profits may not exceed 10% of the sum
of our paid-up capital and free reserves and any amount so drawn shall first be used to set
off any losses incurred in that financial year; and
    
    the balance of our reserves following such withdrawal shall not fall below 15% of our
paid-up capital.
 Distribution of Assets on a Winding-up
  Transfer of Shares
      145




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Disclosure of Ownership Interest
   Alteration of Shareholder Rights
  Share Register and Record Dates
    146




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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.
   147




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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;
    
    a special resolution authorizing the buy-back must be passed in a general meeting;
    
    the buy-back is limited to 25% of the companys total
paid up capital and free reserves 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.
   148




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Rights of Minority Shareholders
   
    
    that the companys affairs are being conducted in a manner prejudicial to public interest
or in a manner oppressive to any member or members or in a manner prejudicial to the
interests of the company; or
    
    that a material change has taken place in the management or control of the company,
whether by a change in its board of directors or management or in the ownership of the
companys shares and by reason of such change, it is likely that the affairs of the company
will be conducted in a manner prejudicial to public interest or in a manner prejudicial to
the interests of the company.
 Provisions on Squeeze Out of Minority Shareholders
    149




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Book-Entry Shares and Liquidity
  Comparison of Shareholders Rights
   Delaware Law
    
    Indian LawAnnual and Special Meetings of ShareholdersShareholders of a Delaware corporation generally
do not have the right to call meetings of
shareholders unless that right is granted in the
certificate of incorporation or bylaws. However,
if a corporation fails to hold its annual meeting
within a period of 30 days after the date
designated for the annual meeting, or if no date
has been designated for a period of 13 months
after its last annual meeting, the Delaware Court
of Chancery may order a meeting to be held upon
the application of a shareholder.
    
    While shareholders of a company do not have any right to
call for an annual general meeting, shareholders holding
one-tenth of the voting share capital of the company have
a right to request an extraordinary general meeting.
However, in the event the company defaults in holding an
annual general meeting within 15 months from the date of
its last annual general meeting, the Government of India
may order a meeting to be held upon the application of
any shareholder.Quorum Requirements for Meetings of ShareholdersA Delaware corporations certificate of
incorporation or bylaws can specify the number of
shares which constitute the quorum required to
conduct business at a meeting, provided that in
no event shall a quorum consist of less than
one-third of the shares entitled to vote at a
meeting.
    
    Our Articles of Association specify that five members
personally present constitute the quorum required to
conduct business at a general meeting, which is
consistent with Indian law requirements.Board of DirectorsA typical certificate of incorporation and bylaws
would provide that the number of directors on the
board of directors will be fixed from time to
time by a vote of the majority of the authorized
directors. Under Delaware law, a board of
directors can be divided into classes and
cumulative voting in the election of directors is
only permitted if expressly authorized in a
corporations certificate of incorporation.
    
    Our Articles of Association provide that unless otherwise
determined by the shareholders at a general meeting, the
number of directors shall not be less than three or more
than 12.
Under Indian law, the appointment and removal of
directors (other than additional directors) is required
to be approved by the shareholders.
There is no concept under Indian law as to division of
the board of directors into different classes or
cumulative voting.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.
 150




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Delaware Law
    
    Indian LawFilling Vacancies on the Board of DirectorsA typical certificate of incorporation and bylaws
provide that, subject to the rights of the
holders of any preferred stock, any vacancy,
whether arising through death, resignation,
retirement, disqualification, removal, an
increase in the number of directors or any other
reason, may be filled by a majority vote of the
remaining directors, even if such directors
remaining in office constitute less than a
quorum, or by the sole remaining director. Any
newly elected director usually holds office for
the remainder of the full term expiring at the
annual meeting of stockholders at which the term
of the class of directors to which the newly
elected director has been elected expires.
    
    The board of directors has the power to fill a vacancy on
the board and any director so appointed shall hold office
only so long as the vacating director would have held
such office if no vacancy had occurred.Interested Director TransactionsUnder Delaware law, some contracts or
transactions in which one or more of a Delaware
corporations directors has an interest are not
void or voidable because of such interest
provided that some conditions, such as obtaining
the required approval and fulfilling the
requirements of good faith and full disclosure,
are met. For an interested director transaction
not to be voided, either the stockholders or the
board of directors must approve in good faith any
such contract or transaction after full
disclosure of the material facts or the contract
or transaction must have been fair as to the
corporation at the time it was approved. If board
approval is sought, the contract or transaction
must be approved in good faith by a majority of
disinterested directors after full disclosure of
material facts, even though less than a majority
of a quorum.
    
    Under Indian law, contracts or arrangements in which one
or more directors of an Indian company has an interest
are not void or voidable because of such interest,
provided that certain conditions, such as obtaining the
required approval of the board of directors and
disclosing the nature of the interest to the board of
directors, are satisfied. Subject to a few exceptions,
for an interested director transaction not to be voided,
(a) the interested director is required to disclose the
nature of his concern or interest at a meeting of the
board of directors; (b) the board of directors is
required to grant its consent to the contract or
arrangement; (c) the interested director is not permitted
to take part in the discussion of, or vote on, the
contract or arrangement; and (d) the approval of the
Government of India is required to be obtained in the
event the paid up share capital of the company is more
than Rs. 10 million. An interested director is not to be
counted for the purposes of quorum at the time of any
such discussion or vote and if the interested director
does vote, the vote shall be void. The contravention of
relevant provisions is punishable with fine.
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Delaware Law
    
    Indian LawCumulative VotingDelaware law does not require that a Delaware
corporation provide for cumulative voting.
However, the certificate of incorporation of a
Delaware corporation may provide that
shareholders of any class or classes or of any
series may vote cumulatively either at all
elections or at elections under specified
circumstances.
    
    There is no concept of cumulative voting under Indian law.Shareholder Action Without a MeetingUnless otherwise specified in a Delaware
corporations certificate of incorporation, any
action required or permitted to be taken by
shareholders at an annual or special meeting may
be taken by shareholders without a meeting,
without notice and without a vote, if consents,
in writing, setting forth the action, are signed
by shareholders with not less than the minimum
number of votes that would be necessary to
authorize the action at a meeting. All consents
must be dated. No consent is effective unless,
within 60 days of the earliest dated consent
delivered to the corporation, written consents
signed by a sufficient number of holders to take
the action are delivered to the corporation.
    
    There is no concept of shareholder action without a
meeting under Indian law.Business CombinationsWith certain exceptions, a merger, consolidation
or sale of all or substantially all the assets of
a Delaware corporation must be approved by the
board of directors and a majority (unless the
certificate of incorporation requires a higher
percentage) of the outstanding shares entitled to
vote thereon.
    
    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.Delaware law also requires a special vote of
stockholders in connection with a business
combination with an interested stockholder as
defined in Section 203 of the Delaware General
Corporation Law. See  Interested Stockholders
below.
    
    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% or more of the
corporations outstanding voting stock (including
any rights to acquire stock pursuant to an
option, warrant, agreement, arrangement or
understanding, or upon the exercise of conversion
or exchange rights, and stock with respect to
which the person has voting rights only), or is
an affiliate or associate of the corporation and
was the owner of 15% or more of the voting stock
at any time within the previous three years.
    
    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% or more of the voting power in the
company.
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Delaware Law
    
    Indian LawLimitations 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.Indemnification 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
    
    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.   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
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Delaware Law
    
    Indian Lawto indemnity for the expenses
which the court deems to be proper.To the extent a director, officer, employee or
agent is successful in the defense of such an
action, suit or proceeding, the corporation is
required by Delaware law to indemnify such person
for reasonable expenses incurred thereby.
Expenses (including attorneys fees) incurred by
such persons in defending any action, suit or
proceeding may be paid in advance of the final
disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of
that person to repay the amount if it is
ultimately determined that that person is not
entitled to be so indemnified.Appraisal RightsA shareholder of a Delaware corporation
participating in certain major corporate
transactions may, under certain circumstances, be
entitled to appraisal rights pursuant to which
the shareholder may receive cash in the amount of
the fair value of the shares held by that
shareholder (as determined by a court) in lieu of
the consideration the shareholder would otherwise
receive in the transaction.
    
    There is no concept of appraisal rights under Indian law.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
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Delaware Law
    
    Indian Lawmeetings 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.Amendment 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% of the shares of the company.Distributions and Dividends; Repurchases and RedemptionsDelaware law permits a corporation to declare and
pay dividends out of statutory surplus or, if
there is no surplus, out of net profits for the
fiscal year in which the dividend is declared
and/or for the preceding fiscal year as long as
the amount of capital of the corporation
following the declaration and payment of the
dividend is not less than the aggregate amount of
the capital represented by the issued and
outstanding stock of all classes having a
preference upon the distribution of assets.
Under Delaware law, any corporation may purchase
or redeem its own shares, except that generally
it may not purchase or redeem those shares if the
capital of the corporation is impaired at the
time or would become impaired as a result of the
redemption. A corporation may, however, purchase
or redeem capital shares that are entitled upon
any distribution of its assets to a preference
over another class or series of its shares if the
shares are to be retired and the capital reduced.
    
    Under Indian law, a company may only pay a dividend in an
amount in excess of 10% of its paid up capital out of the
profits of that year after it has transferred to the
reserves of the company a percentage of its profits for
that year ranging between 2.5% to 10% depending on the
rate of dividend proposed to be declared in that year. If
the profits for a year are insufficient, the dividend for
that year may be declared out of the accumulated profits
earned in previous years and transferred to reserves,
subject to the following conditions: (i) the rate of
dividend to be declared may not exceed the lesser of the
average of the rates at which dividends were declared in
the five years immediately preceding the year, or 10% of
paid-up capital; (ii) the total amount to be drawn from
the accumulated profits from previous years and
transferred to the reserves may not exceed an amount
equivalent to one tenth of the paid-up capital and free
reserves and the amount so drawn is first to be used to
set off the losses incurred in the financial year before
any dividends in respect of preference or equity shares;
and (iii) the balance of reserves after withdrawals must
not be below 15% of paid-up capital. Shareholders have a
right to claim a dividend, after such dividend has been
declared by the company at a general meeting.
Shareholders also have a right to claim the interim
dividends, which may be declared only pursuant to a
resolution of the companys board of directors. Dividends
may be paid only in cash. Where a dividend has been
declared by a company but has not been paid within 30
days from the date of declaration to any shareholder
entitled to the payment of such dividend, a penalty can
be imposed on a director who is knowingly a party to such
default.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
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Delaware Law
    
    Indian Lawpurchase 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% of the outstanding shares in
the general meeting of the company authorizing the
buy-back; (c) the buy-back is limited to 25% of the total
paid up capital and free reserves; (d) the ratio of debt
owed by the company must not be more than twice the
capital and free reserves after such buy-back; and (e)
the buy-back must be in accordance with the SEBI
(Buy-Back of Securities) Regulations, 1998.Conditions (a) and (b) mentioned above would not be
applicable if the buy-back is for less than 10% of the
total paid-up equity capital and free reserves of the
company and such buy-back has been authorized by the
board of directors of the company. Further, a company
buying back its securities is not permitted to buy-back
any additional securities for a period of one year after
the buy-back or to issue any securities 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.
 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
    
    If the Chairman of the board of directors is an
executive director, at least 50% of the board of
directors should comprise of independent directors. If
the Chairman of the board of directors is a
non-executive director, then at least one third of the
board should comprise of independent directors,
provided that where the non-executive Chairman is a
promoter of the company or is related to any promoter
or person occupying a management position at the board
of directors level or at one level below that,
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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSEwith 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.)
    
    at least 50% of the board of directors should comprise of
independent directors. Clause 49 of the listing
agreements define an independent director to mean a
non-executive director who (i) is receiving directors
remuneration and does not have any other material
pecuniary relationship or transaction with the
company, its promoters, its directors, its senior
management or its holding company or its subsidiaries
or its associates, which may affect the independence
of the director; (ii) is not related to promoters or
management at the board level or at one level below
the board; (iii) has not been an executive of the
company in the immediately preceding three financial
years; (iv) is not a partner or an executive and has
not been a partner or executive during the preceding
three financial years, of the statutory audit firm or
the internal audit firm or the legal firm and
consulting firm of the company; (v) is not a material
supplier, service provider, customer, lessee, or
lessor of the company; (vi) is not a shareholder,
owning 2% 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.Audit 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.
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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSE   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.The audit committee must consist of at least three
members, and each member must be independent within the
meaning established by the NYSE and Rule 10A-3 under the
Exchange Act.
The audit committee members must be financially literate
or become financially literate within a reasonable
period of their appointment to the audit committee.
Each listed company must have disclosed whether its
board of directors has identified an audit committee
financial expert (as defined under applicable rules of
the 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.
    
    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.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.
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Requirements under our Listing AgreementsStandard for NYSE-Listed Companies
    
    with the NSE and BSEThe 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 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.The committee must report regularly to the board.(The NYSE audit committee requirements apply to us as
foreign private issuers are not exempt from this
requirement.)Compensation CommitteeListed companies must have a compensation committee
composed entirely of independent board members as
defined by the NYSE listing standards.
The committee must have a written charter that addresses
its purpose and responsibilities.
    
    The listing agreements state that a company may set up
a remuneration committee, which should be comprised of
at least three directors, all of whom shall be
non-executive directors and the chairman of the
remuneration committee shall be an independent
director.These responsibilities include (i) reviewing and
approving corporate goals and objectives relevant to CEO
compensation; (ii) evaluating CEO performance and
compensation in light of such goals and objectives for
the CEO; (iii) based on such evaluation, reviewing and
approving CEO compensation levels; (iv) recommending to
the board non-CEO compensation, incentive compensation
plans and equity-based plans; and (v) producing a report
on executive compensation as required by the 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.)
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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.
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C. Material Contracts
  Shared Services Agreement dated December 5, 2003 among STL, Sterlite Gold, Vedanta and Sterlite
  Consultancy Agreement dated March 29, 2005 between Vedanta and Sterlite
  Representative Office Agreement dated March 29, 2005 between Vedanta and Sterlite
  Agreement dated August 30, 2006 between STL and Sterlite for the sale of Sterlites aluminum
conductor business
  Agreement dated October 3, 2006 between Sterlite and Twin Star Infrastructure Limited, Mr. Anil
Agarwal and Mr. Dwarka Prasad Agarwal for the acquisition of Sterlite Energy
  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
  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.
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Settlement
and Purchase
and Sale Agreement dated March 6, 2009 among Asarco, AR Silver Bell, Inc., Copper Basin
Railway, Inc., Asarco Santa Cruz, Inc., Sterlite USA and
Sterlite, and amendments thereto dated April 15, 2009,
April 22, 2009, and June 12, 2009
  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
  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.
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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
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Fungibility of ADSs
  
    
    the shares of the Indian company are purchased on a recognized stock exchange in India;
    
    the shares of the Indian company are purchased on a recognized stock exchange with the
permission of the domestic custodian for the ADSs issued by the Indian company and such shares are deposited with the custodian after purchase;
    
    the Indian company has authorized the custodian to accept shares from non-resident
investors for re-issuance of ADSs;
    
    the number of shares of the Indian company so purchased does not exceed the ADSs
converted into underlying shares (and 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. 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%
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.
 Investment by Foreign Institutional Investors
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Portfolio Investment by Non-Resident Indians
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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%;
    
    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.
    Exchange Rates
   Period End(1)
    
    Average(1) (2)
    
    High
    
    LowFiscal Year:2005
    
    
    43.62
    
    
    
    44.86
    
    
    
    46.45
    
    
    
    43.272006
    
    
    44.48
    
    
    
    44.17
    
    
    
    46.26
    
    
    
    43.052007
    
    
    43.10
    
    
    
    44.93
    
    
    
    46.83
    
    
    
    42.782008
    
    
    40.02
    
    
    
    40.13
    
    
    
    43.05
    
    
    
    38.482009
    
    
    50.87
    
    
    
    46.32
    
    
    
    51.96
    
    
    
    39.732010
(through June 30, 2009)
    
    
    47.74
    
    
    
    48.18
    
    
    
    50.48
    
    
    
    46.78Month:December 2008
    
    
    48.58
    
    
    
    48.51
    
    
    
    50.05
    
    
    
    46.74January 2009
    
    
    48.83
    
    
    
    48.70
    
    
    
    49.07
    
    
    
    48.25February 2009
    
    
    50.88
    
    
    
    49.25
    
    
    
    50.88
    
    
    
    48.37March 2009
    
    
    50.87
    
    
    
    51.13
    
    
    
    51.96
    
    
    
    50.21April 2009
    
    
    49.70
    
    
    
    49.97
    
    
    
    50.48
    
    
    
    49.55May 2009
    
    
    47.11
    
    
    
    48.51
    
    
    
    49.75
    
    
    
    46.95June 2009
    
    
    47.74
    
    
    
    47.67
    
    
    
    48.50
    
    
    
    46.78
 
 Notes:(1)
    
    The noon buying rate at each period end and the average rate for each
period may have differed from the exchange rates used in the preparation of financial
statements included elsewhere in this annual report.(2)
    
    Represents the average of the exchange rates on the last day of each
month during the period for all fiscal years presented and the
average of the noon buying rate for all days during the period for all months presented. 166




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##### Table of Contents



Period End(1)
    
    Average(1) (2)
    
    High
    
    LowFiscal Year:2005
    
    
    1.29
    
    
    
    1.35
    
    
    
    1.46
    
    
    
    1.252006
    
    
    1.40
    
    
    
    1.33
    
    
    
    1.42
    
    
    
    1.282007
    
    
    1.23
    
    
    
    1.30
    
    
    
    1.39
    
    
    
    1.232008
    
    
    1.10
    
    
    
    1.15
    
    
    
    1.27
    
    
    
    1.062009
    
    
    1.44
    
    
    
    1.31
    
    
    
    1.65
    
    
    
    1.022010
(through June 30, 2009)
    
    
    1.24
    
    
    
    1.29
    
    
    
    1.44
    
    
    
    1.22Month:December 2008
    
    
    1.43
    
    
    
    1.49
    
    
    
    1.58
    
    
    
    1.43January 2009
    
    
    1.57
    
    
    
    1.48
    
    
    
    1.57
    
    
    
    1.39February 2009
    
    
    1.56
    
    
    
    1.54
    
    
    
    1.58
    
    
    
    1.46March 2009
    
    
    1.44
    
    
    
    1.50
    
    
    
    1.59
    
    
    
    1.42April 2009
    
    
    1.37
    
    
    
    1.40
    
    
    
    1.44
    
    
    
    1.37May 2009
    
    
    1.25
    
    
    
    1.31
    
    
    
    1.37
    
    
    
    1.25June 2009
    
    
    1.24
    
    
    
    1.25
    
    
    
    1.27
    
    
    
    1.22
 
 Notes:(1)
    
    The noon buying rate at each period end and the average rate for each
period may have differed from the exchange rates used in the preparation of financial
statements included elsewhere in this annual report.(2)
    
    Represents the average of the exchange rates on the last day of each
month during the period for all fiscal years presented and the average of the noon buying rate for all days during the period for all months presented.  E. Taxation
 India Taxation
  167




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##### Table of Contents



Residence
  Taxation
of Sale of the ADSs
  Withdrawal of Equity Shares in Exchange for the ADSs
  Taxation of Dividends
   Taxation of Sale of the Equity Shares
  168




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##### Table of Contents



Sale of the Equity Shares on a Recognized Stock Exchange
   .
 Securities Transaction Tax
  Sale of the Equity Shares otherwise than on a Recognized Stock Exchange
  Capital Losses
  Tax Treaties
  169




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##### Table of Contents



Withholding Tax on Capital Gains
  Buy-Back of Securities
  Stamp Duty
  Wealth Tax, Gift Tax and Inheritance Tax
  Service Tax
  Minimum Alternate Tax
  Fringe Benefit Tax
  Tax Credit
  170




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##### Table of Contents



United States Federal Income Taxation
   
    
    banks;
    
    certain financial institutions;
    
    insurance companies;
    
    broker dealers;
    
    United States expatriates;
    
    traders that elect to mark-to-market;
    
    tax-exempt entities;
    
    persons liable for the alternative minimum tax;
    
    persons holding an ADS or equity share as part of a straddle, hedging, conversion or
integrated transaction;
    
    persons that actually or constructively own 10.0% or more of our voting stock;
    
    persons who acquired ADSs or equity shares pursuant to the exercise of any employee share
option or otherwise as compensation; or
    
    persons holding ADSs or equity shares through partnerships or other pass-through
entities.
 INVESTORS SHOULD CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE UNITED STATES FEDERAL
TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF ADSs OR EQUITY SHARES.
  
    
    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.
  171




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Taxation of Dividends and Other Distributions on the ADSs or Equity Shares
     Taxation of a Disposition of ADSs or Equity Shares
  172




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##### Table of Contents



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).
    
    
    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.
   173




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de minimis
  Information Reporting and Backup Withholding
   F. Dividends and Paying Agents
  G. Statements by Experts
  174




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##### Table of Contents



H. Documents on Display
  www.sec.gov
 I. Subsidiary Information
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Qualitative Analysis
 Currency Risk
  10% movement in currency
    

For Rs./ $
    
    

For AUD/ $(in millions)Copper
    
    Rs.
    598.8
    

    
    $
    13.0
   
    
    Rs.
    610.8
    
    

    $
    13.3Zinc
    
    
    3,475.9
    
    
    
    75.7
    
    
    
    
    
    
    
    Aluminum
    
    
    3,333.8
    
    
    
    72.6
    
    
    
    
    
    
    
    Total
    
    Rs.
    7,408.6
    
    
    $
    161.3
    
    
    Rs.
    610.8
    
    
    $
    13.3
    Interest Rate Risk
    US DollarMovement in interest rates
    
    Interest Rates(in millions)0.5%
    
    Rs.
    259.1
        
    $
    5.11.0%
    
    
    518.2
    
    
    
    10.22.0%
    
    
    1,036.3
    
    
    
    20.4
 175




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##### Table of Contents



Commodity Price Risk
     $100 movement in LME price
    
    Change in Operating Income(in millions)Copper
    
    Rs.
    140.3
    
    
    $
    3.1Zinc
    
    
    2,661.1
    
    
    
    58.0Aluminum
    
    
    1,703.5
    
    
    
    37.1Total
    
    Rs.
    4,504.9
    
    
    $
    98.2
 Quantitative Analysis
  March 31,2008
    
    
    2009
    
    
    2009Asset
    
    
    Liability
    
    
    Asset
    
    
    Liability
    
    
    Asset
    
    
    Liability(in millions)Cash flow hedges:Commodity contracts
    
    Rs.
    
    
    
    Rs.
    19
    
    
    Rs.
    
    
    
    Rs.
    
    
    
    $
    
    
    
    $
    Forward foreign currency contracts
    
    
    18
    
    
    
    307
    
    
    
    1,189
    
    
    
    501
    
    
    
    23.4
    
    
    
    9.8Fair value hedges:Commodity contracts
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    0.2Forward foreign currency contracts
    
    
    183
    
    
    
    283
    
    
    
    323
    
    
    
    
    
    
    
    6.3
    
    
    
    Non-qualifying hedges:Commodity contracts
    
    
    1,426
    
    
    
    
    
    
    
    26
    
    
    
    2,128
    
    
    
    0.5
    
    
    
    41.9Fair value
    
    Rs.
    1,627
    
    
    Rs.
    639
    
    
    Rs.
    1,538
    
    
    Rs.
    2,639
    
    
    $
    30.2
    
    
    $
    51.9
 
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  
 PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  176




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ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
    
 ITEM 15. CONTROLS AND PROCEDURES
 (a) Disclosure Controls and Procedures
   (b) Managements Annual Report on Internal Control over Financial Reporting
       177




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(c) Attestation Report of the Registered Public Accounting Firm
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
         
 (d) Changes in Internal Control over Financial Reporting
  178




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##### Table of Contents



ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16B. CODE OF ETHICS
 www.sterlite-industries.com Information contained in our website does not constitute a part of
this annual report.
 
 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    Fiscal2008
    
    
    2009(in thousands)Audit fees (audit and review of financial statements)
    
    $
    1,171.4
    
    
    $
    1,040.7Audit-related fees (including fees related to the ADS offering and other
miscellaneous audit related certifications)
    
    
    638.5
    
    
    
    1.8Tax fees (tax audit, other certifications and tax advisory services)
    
    
    91.4
    
    
    
    29.1All other fees (certification on corporate governance and advisory services)
    
    
    21.8
    
    
    
    78.2Total
    
    $
    1,923.1
    
    
    $
    1,149.8
 Audit Committee Pre-approval Process
 de minimus
 
 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  
 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  Maximum Number (orTotal Number of
    
    Approximate DollarShares Purchased as
    
    Value) of SharesAverage Price Paid per
    
    Part of Publicly
    
    that May Yet BeTotal Number of Shares
    
    Share
    
    Announced Plans or
    
    Purchased Under thePurchased
    
    Rs.
    
    $
    
    Programs High
    
    Plans or ProgramsPeriod:December 1, 2008 to December 31, 2008
    
    
    2,525,443
    (1)
    
    Rs.
    246.04
    
    
    $
    4.84
    
    
    
    
    
    
    Not applicableJanuary 1, 2009 to January 31, 2009
    
    
    1,425,000
    (1)
    
    
    307.03
    
    
    
    6.04
    
    
    
    
    
    
    Not applicableTotal
    
    
    3,950,443
    (1)
    
    Rs.
    268.04
    
    
    $
    5.27
    
    
    
    
    
    
    Not applicable
 
 Note:(1)
    
    Open market purchases of SIILs equity shares by MALCO. Of the 3,950,443 equity shares
purchased by MALCO, 3,246,124 were subsequently sold by MALCO to Twin Star in February 2009. 
 ITEM 16F.
CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
  179




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##### Table of Contents



ITEM 16G. CORPORATE GOVERNANCE
    
 PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
  
    
    Report of Independent Registered Public Accounting Firm.
    
    Consolidated Statements of Operations for the years ended
March 31, 2007, 2008 and 2009.
    
    Consolidated Balance Sheets as of March 31, 2008 and
2009.
    
    Consolidated Statements of Cash Flows for the years ended
March 31, 2007, 2008 and 2009.
    
    Consolidated Statements of Changes in Shareholders Equity for the years ended March 31,
2007, 2008 and 2009.
    
    Notes to the Consolidated Financial Statements.
    
    Schedule II  Valuation and Qualifying Accounts.
 
 ITEM 19. EXHIBITS
  1.1
    
    Certificate of Incorporation of
Sterlite Industries (India) Limited, as amended 
incorporated by reference to Exhibit 3.1 of Amendment No. 5 to the Registration Statement on
Form F-1 (File No. 333-138739), as filed with the 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, 2007.2.2
    
    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, 2006.4.2
    
    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.
 180




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##### Table of Contents



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, 2006.4.14
    
    $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.
 181




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##### Table of Contents



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, 2006.4.24
    
    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.
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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 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.
 183




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##### Table of Contents



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**
    
    Settlement and Purchase and Sale 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.4.43**
    
    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.4.44**
    
    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.4.45**
    
    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.4.46**
    
    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.4.47**
    
    Credit Agreement Letter dated February 7, 2005 between India Foils Limited and ICICI Bank Limited.4.48**
    
    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.4.49**
    
    Credit Agreement Letter dated August 4, 2005 between India Foils Limited and ICICI Bank Limited.4.50**
    
    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.4.51**
    
    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.4.52**
    
    $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.4.53**
    
    Sponsor Support Agreement dated June 29, 2009 among Sterlite Industries (India) Limited, Sterlite Energy
Limited, and the State Bank of India as facility agent.4.54**
    
    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.4.55**
    
    Agreement dated February 18, 2009 between the Orissa Mining Corporation Limited and Sterlite Industries (India) Limited.8.1**
    
    List of subsidiaries of Sterlite Industries (India) Limited.12.1**
    
    Certification by the Chief Executive Officer pursuant to 17 CFR 240. 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.12.2**
    
    Certification by the Chief Financial Officer pursuant to 17 CFR 240. 15D-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.13.1**
    
    Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.13.2**
    
    Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 **
    
    Filed herewith 184




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##### Table of Contents



SIGNATURES
   STERLITE INDUSTRIES (INDIA) LIMITEDBy:

/s/
Vinod BhandawatName:
    Vinod BhandawatTitle:
    Chief Financial Officer 185




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##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Statements of Operations for the years ended March 31, 2007, 2008 and 2009
    
    F-3Consolidated Balance Sheets as of March 31, 2008 and 2009
    
    F-4Consolidated Statements of Cash Flows for the years ended March 31, 2007, 2008 and 2009
    
    F-5Consolidated Statements of Changes in Shareholders Equity for the years ended March 31, 2007, 2008 and 2009
    
    F-6Notes to the Consolidated Financial Statements
    
    F-8Schedule II  Valuation and Qualifying Accounts
    
    F-47
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
        
 F-2




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 For the Year Ended March 31,
    
    2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollars inmillions(Note 2)Sales External
    
    
    254,388
    
    
    
    263,395
    
    
    
    221,855
    
    
    
    4,361.2 Related parties
    
    
    4,523
    
    
    
    4,692
    
    
    
    6,632
    
    
    
    130.4Less: Excise duty
    
    
    (17,665
    )
    
    
    (21,673
    )
    
    
    (16,295
    )
    
    
    (320.3
    )Net Sales
    
    
    241,246
    
    
    
    246,414
    
    
    
    212,192
    
    
    
    4,171.3Other operating revenues
    
    
    2,251
    
    
    
    2,616
    
    
    
    3,683
    
    
    
    72.4Total revenue
    
    
    243,497
    
    
    
    249,030
    
    
    
    215,875
    
    
    
    4,243.7Cost of sales
    
    
    (144,798
    )
    
    
    (164,869
    )
    
    
    (164,566
    )
    
    
    (3,235.1
    )Selling and distribution expenses
    
    
    (3,444
    )
    
    
    (3,808
    )
    
    
    (3,847
    )
    
    
    (75.6
    )General and administration expenses
    
    
    (2,633
    )
    
    
    (4,572
    )
    
    
    (5,078
    )
    
    
    (99.8
    )Other
income/(expenses) (Note 24(i))Gain on sale of real estate
    
    
    986
    
    
    
    
    
    
    
    
    
    
    
    Voluntary retirement scheme
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    Guarantees, impairment of investments and loans
    
    
    
    
    
    
    (628
    )
    
    
    (137
    )
    
    
    (2.7
    )Operating income
    
    
    93,511
    
    
    
    75,153
    
    
    
    42,247
    
    
    
    830.5Interest and
dividend income (Note 24(ii))
    
    
    2,072
    
    
    
    6,548
    
    
    
    16,728
    
    
    
    328.8Interest expense
    
    
    (4,329
    )
    
    
    (3,386
    )
    
    
    (6,874
    )
    
    
    (135.1
    )Net realized and unrealized investment gains
    
    
    2,280
    
    
    
    4,511
    
    
    
    2,254
    
    
    
    44.3Income before income taxes, minority interests and
equity in net (loss)/income of associate
    
    
    93,534
    
    
    
    82,826
    
    
    
    54,355
    
    
    
    1,068.5Income taxes Current
    
    
    (23,192
    )
    
    
    (18,410
    )
    
    
    (8,041
    )
    
    
    (158.1
    ) Deferred
    
    
    (1,967
    )
    
    
    (3,214
    )
    
    
    1,595
    
    
    
    31.4Income after income taxes, before minority interests and
equity in net (loss)/income of associate
    
    
    68,375
    
    
    
    61,202
    
    
    
    47,909
    
    
    
    941.8Minority interests
    
    
    (21,053
    )
    
    
    (19,093
    )
    
    
    (12,346
    )
    
    
    (242.7
    )Equity in net (loss)/income of associate, net of taxes
    
    
    24
    
    
    
    491
    
    
    
    (6,001
    )
    
    
    (118.0
    )Net income from continuing operations
    
    
    47,346
    
    
    
    42,600
    
    
    
    29,562
    
    
    
    581.1Discontinued operations:Income from divested business, net of tax
    
    
    86
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    47,432
    
    
    
    42,600
    
    
    
    29,562
    
    
    
    581.1Basic and diluted earnings per share:Income from continuing operations
    
    
    84.78
    
    
    
    63.16
    
    
    
    41.7
    
    
    
    0.8Income from discontinued operations
    
    
    0.15
    
    
    
    
    
    
    
    
    
    
    
    Basic and diluted earnings per share
    
    
    84.93
    
    
    
    63.16
    
    
    
    41.7
    
    
    
    0.8Weighted average number of equity shares used in
computing earnings per share
    
    
    558,494,411
    
    
    
    674,478,018
    
    
    
    708,494,411
    
    
    
    708,494,411
  F-3




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 As of March 31,
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millions(Note 2)ASSETSCurrent assetsCash and cash equivalents
    
    
    12,363
    
    
    
    2,701
    
    
    
    53.1Restricted  cash, deposits and investments
    
    
    1,659
    
    
    
    3,776
    
    
    
    74.2Short-term investments and deposits
    
    
    154,364
    
    
    
    186,302
    
    
    
    3,662.3Accounts receivable, net
    
    
    13,340
    
    
    
    7,639
    
    
    
    150.2Inventories
    
    
    33,358
    
    
    
    24,622
    
    
    
    484.0Deferred income taxes
    
    
    421
    
    
    
    625
    
    
    
    12.3Related party receivable
    
    
    2,312
    
    
    
    1,299
    
    
    
    25.5Loan to
related parties
    
    
    3,890
    
    
    
    12,214
    
    
    
    240.1Other current assets, net
    
    
    10,248
    
    
    
    12,834
    
    
    
    252.3Total current assets
    
    
    231,955
    
    
    
    252,012
    
    
    
    4,954.0Non-current assetsLong-term investments
    
    
    1,123
    
    
    
    1,044
    
    
    
    20.5Investment in associate
    
    
    19,524
    
    
    
    12,692
    
    
    
    249.5Deferred income taxes
    
    
    374
    
    
    
    2,503
    
    
    
    49.2Property, plant and equipment, net
    
    
    121,582
    
    
    
    164,243
    
    
    
    3,228.7Loan to
related parties
    
    
    
    
    
    
    8,490
    
    
    
    167.0Other non-current assets, net
    
    
    1,621
    
    
    
    2,102
    
    
    
    41.3Total non-current assets
    
    
    144,224
    
    
    
    191,074
    
    
    
    3,756.2Total assets
    
    
    376,179
    
    
    
    443,086
    
    
    
    8,710.2LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesShort-term and current portion of long-term debt
    
    
    9,909
    
    
    
    19,351
    
    
    
    380.4Short-term
loan from related parties
    
    
    281
    
    
    
    851
    
    
    
    16.7Accounts payable
    
    
    43,865
    
    
    
    54,636
    
    
    
    1,074.1Related party payable
    
    
    996
    
    
    
    1,735
    
    
    
    34.1Accrued expenses
    
    
    1,921
    
    
    
    4,080
    
    
    
    80.2Current income taxes payable
    
    
    1,067
    
    
    
    570
    
    
    
    11.2Deferred income taxes
    
    
    765
    
    
    
    208
    
    
    
    4.1Other current liabilities
    
    
    7,255
    
    
    
    8,330
    
    
    
    163.7Total current liabilities
    
    
    66,059
    
    
    
    89,761
    
    
    
    1,764.5Non-current liabilitiesLong-term debt, net of current portion
    
    
    9,949
    
    
    
    14,384
    
    
    
    282.8Deferred income taxes
    
    
    16,369
    
    
    
    17,291
    
    
    
    339.9Related party payable
    
    
    3,607
    
    
    
    
    
    
    
    Other non-current liabilities
    
    
    974
    
    
    
    4,908
    
    
    
    96.5Total non-current liabilities
    
    
    30,899
    
    
    
    36,583
    
    
    
    719.2Total liabilities
    
    
    96,958
    
    
    
    126,344
    
    
    
    2,483.7Commitments and contingencies (Note 20)Minority interests
    
    
    58,098
    
    
    
    69,877
    
    
    
    1,373.6Shareholders equityEquity shares  par value Rs. 2 per equity share
(925,000,000 equity shares authorized as of
March 31, 2008 and 2009; 708,494,411 equity
shares issued and outstanding as of March 31,
2008 and March 31, 2009) (Note 18)
    
    
    1,417
    
    
    
    1,417
    
    
    
    27.9Additional paid-in-capital
    
    
    106,426
    
    
    
    106,426
    
    
    
    2,092.1Retained earnings
    
    
    113,598
    
    
    
    139,845
    
    
    
    2,749.1Accumulated other comprehensive losses
    
    
    (318
    )
    
    
    (823
    )
    
    
    (16.2
    )Total shareholders equity
    
    
    221,123
    
    
    
    246,865
    
    
    
    4,852.9Total liabilities and shareholders equity
    
    
    376,179
    
    
    
    443,086
    
    
    
    8,710.2
  F-4




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 For the Year Ended March 31,
    
    2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millions(Note 2)Cash flows from operating activitiesNet income
    
    
    47,432
    
    
    
    42,600
    
    
    
    29,562
    
    
    
    581.1Adjustments to reconcile net income to net cash provided by
/ (used in) operating activitiesDepreciation, depletion and amortization
    
    
    5,970
    
    
    
    7,060
    
    
    
    7,845
    
    
    
    154.2Net realized and unrealized investment gains
    
    
    (2,280
    )
    
    
    (4,511
    )
    
    
    (2,254
    )
    
    
    (44.3
    )(Gain)/loss on sale of property, plant and equipment, net
    
    
    36
    
    
    
    (8
    )
    
    
    (10
    )
    
    
    (0.2
    )Gain on sale of real estate
    
    
    (986
    )
    
    
    
    
    
    
    
    
    
    
    Equity in net loss/(income) of associate
    
    
    (24
    )
    
    
    (491
    )
    
    
    6,001
    
    
    
    118.0Guarantees, impairment of investments and loans
    
    
    
    
    
    
    628
    
    
    
    137
    
    
    
    2.7Deferred income taxes
    
    
    1,967
    
    
    
    3,214
    
    
    
    (1,595
    )
    
    
    (31.4
    )Unrealized exchange
gains
    
    
    
    
    
    
    
    
    
    
    (1,534
    )
    
    
    (30.2
    )Minority interests
    
    
    21,053
    
    
    
    19,093
    
    
    
    12,346
    
    
    
    242.7Changes in assets and liabilities:Accounts receivable, net
    
    
    (4,976
    )
    
    
    117
    
    
    
    6,715
    
    
    
    132.0Other current and non-current assets
    
    
    (5,909
    )
    
    
    730
    
    
    
    (901
    )
    
    
    (17.7
    )Inventories
    
    
    (10,532
    )
    
    
    (4,715
    )
    
    
    8,738
    
    
    
    171.8Accounts payable and accrued expenses
    
    
    8,885
    
    
    
    3,611
    
    
    
    4,108
    
    
    
    80.8Other current and non-current liabilities
    
    
    3,956
    
    
    
    3,099
    
    
    
    498
    
    
    
    9.8Short-term investments
    
    
    (24,174
    )
    
    
    (88,021
    )
    
    
    8,548
    
    
    
    168.0Net cash provided by / (used in) operating activities
    
    
    40,418
    
    
    
    (17,594
    )
    
    
    78,204
    
    
    
    1,537.3Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (25,362
    )
    
    
    (25,430
    )
    
    
    (41,105
    )
    
    
    (808.1
    )Proceeds from sale of property, plant and equipment
    
    
    1,171
    
    
    
    24
    
    
    
    66
    
    
    
    1.3Net changes in restricted  deposits and investments
    
    
    20
    
    
    
    (600
    )
    
    
    (2,115
    )
    
    
    (41.5
    )Loan to related party
    
    
    
    
    
    
    
    
    
    
    (3,931
    )
    
    
    (77.3
    )Investment in subsidiaries
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    Investment
in/Loan to associate
    
    
    (1,315
    )
    
    
    (19,890
    )
    
    
    (11,450
    )
    
    
    (225.1
    )Short-term deposits
    
    
    
    
    
    
    (10,508
    )
    
    
    (36,923
    )
    
    
    (725.8
    )Proceeds from sale of non-core business
    
    
    1,485
    
    
    
    
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (24,006
    )
    
    
    (56,404
    )
    
    
    (95,458
    )
    
    
    (1,876.5
    )Cash flows from financing activitiesProceeds from issuance of equity shares
    
    
    
    
    
    
    80,506
    
    
    
    
    
    
    
    Net changes in restricted cash
    
    
    (9
    )
    
    
    34
    
    
    
    (2
    )
    
    
    (0
    )Proceeds
from/(repayment of) working capital loan
    
    
    221
    
    
    
    6,119
    
    
    
    (3,588
    )
    
    
    (70.5
    )Proceeds
from other short-term debt
    
    
    
    
    
    
    
    
    
    
    4,500
    
    
    
    88.4Proceeds from long-term debt
    
    
    3,809
    
    
    
    3,156
    
    
    
    14,790
    
    
    
    290.7Repayment of long-term debt
    
    
    (15,481
    )
    
    
    (12,203
    )
    
    
    (3,902
    )
    
    
    (76.7
    )Payment of dividends, including dividend tax
    
    
    (4,450
    )
    
    
    (1,030
    )
    
    
    (3,812
    )
    
    
    (74.9
    )Net cash (used in)/provided by financing activities
    
    
    (15,910
    )
    
    
    76,582
    
    
    
    7,986
    
    
    
    157.0Effect of exchange rate changes on cash and cash equivalents
    
    
    (324
    )
    
    
    343
    
    
    
    (394
    )
    
    
    (7.7
    )Net increase in cash and cash equivalents
    
    
    178
    
    
    
    2,927
    
    
    
    (9,662
    )
    
    
    (189.9
    )Cash and cash equivalents at the beginning of the year
    
    
    9,258
    
    
    
    9,436
    
    
    
    12,363
    
    
    
    243.0Cash and cash equivalents at the end of the year
    
    
    9,436
    
    
    
    12,363
    
    
    
    2,701
    
    
    
    53.1Supplementary information:Interest paid
    
    
    3,724
    
    
    
    2,760
    
    
    
    3,415
    
    
    
    67.1Income taxes paid
    
    
    22,489
    
    
    
    18,530
    
    
    
    8,649
    
    
    
    170.0Supplementary
disclosure of non-cash investing activities:Payables for
purchase of property, plant and equipment
    
    
    2,804
    
    
    
    4,924
    
    
    
    14,383
    
    
    
    282.7
 F-5




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 (Indian Rupees in millions except share or per share amounts unless otherwise stated)
 AccumulatedEquity shares
    
    
    
    
    
    
    
    
    
    other
    
    
    
    
    
    TotalNo. of
    
    Par
    
    Additional
    
    Retained
    
    comprehensive
    
    Comprehensive
    
    shareholdersshares
    
    value
    
    paid-in-capital
    
    earnings
    
    income/(loss)
    
    income/(loss)
    
    equityBalance at April 1, 2006
    
    
    558,494,411
    
    
    
    559
    
    
    
    26,883
    
    
    
    26,575
    
    
    
    (519
    )
    
    
    
    
    
    
    53,498Stock split from Rs. 5
par value to Rs. 2 par
value resulting in
additional issuance of
2.5 shares per share
held (111,738,469 shares
to 279,346,173 shares)Stock Split effected in
the form of dividend
    
    
    
    
    
    
    558
    
    
    
    (558
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,432
    
    
    
    
    
    
    
    47,432
    
    
    
    47,432Dividend (including
dividend tax) (Note 18)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,544
    )
    
    
    
    
    
    
    
    
    
    
    (3,544
    )Unrealized gain on
available-for-sale
securities, net of tax
of Rs. 24 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    48
    
    
    
    48Loss on sale of
conductor division
    
    
    
    
    
    
    
    
    
    
    (105
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (105
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13
    
    
    
    13Unrealized loss on cash
flow hedges, net of tax benefit of Rs. 98 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (382
    )
    
    
    (382
    )
    
    
    (382
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,111Balance at March 31, 2007
    
    
    558,494,411
    
    
    
    1,117
    
    
    
    26,220
    
    
    
    70,463
    
    
    
    (840
    )
    
    
    
    
    
    
    96,960Balance at April 1, 2007
    
    
    558,494,411
    
    
    
    1,117
    
    
    
    26,220
    
    
    
    70,463
    
    
    
    (840
    )
    
    
    
    
    
    
    96,960Adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    535
    
    
    
    
    
    
    
    
    
    
    
    535Share issued
    
    
    150,000,000
    
    
    
    300
    
    
    
    80,206
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,506Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,600
    
    
    
    
    
    
    
    42,600
    
    
    
    42,600Unrealized loss on
available-for-sale
securities, net of tax benefit of Rs. 6 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )
    
    
    (11
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    315
    
    
    
    315
    
    
    
    315Unrealized gain on cash
flow hedges, net of tax
of Rs. 139 million
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    218
    
    
    
    218
    
    
    
    218Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,122Balance at March 31, 2008
    
    
    708,494,411
    
    
    
    1,417
    
    
    
    106,426
    
    
    
    113,598
    
    
    
    (318
    )
    
    
    
    
    
    
    221,123
  F-6




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
(Indian Rupees in millions except share or per share amounts unless otherwise stated)
 AccumulatedEquity shares
    
    
    
    
    
    
    
    
    
    other
    
    
    
    
    
    TotalNo. of
    
    Par
    
    Additional
    
    Retained
    
    comprehensive
    
    Comprehensive
    
    shareholdersshares
    
    value
    
    paid-in-capital
    
    earnings
    
    income/(loss)
    
    income/(loss)
    
    equity
    
    TotalUS dollarsin millions(Note 2)Balance at April 1, 2008
    
    
    708,494,411
    
    
    
    1,417
    
    
    
    106,426
    
    
    
    113,598
    
    
    
    (318
    )
    
    
    
    
    
    
    221,123
    
    
    
    4,346.8Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,562
    
    
    
    
    
    
    
    29,562
    
    
    
    29,562
    
    
    
    581.1Dividend (including
dividend tax)-(Note-18)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,315
    )
    
    
    
    
    
    
    
    
    
    
    (3,315
    )
    
    
    (65.1
    )Unrealized loss on
available-for-sale
securities, net of tax benefit of Rs. 30 million ($ 0.6 million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49
    )
    
    
    (49
    )
    
    
    (49
    )
    
    
    (1.0
    )Foreign currency
translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (328
    )
    
    
    (328
    )
    
    
    (328
    )
    
    
    (6.4
    )Unrealized loss on cash
flow hedges, net of tax benefit
of Rs 132 million ($2.6
million)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (128
    )
    
    
    (128
    )
    
    
    (128
    )
    
    
    (2.5
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,057Balance at March 31, 2009
    
    
    708,494,411
    
    
    
    1,417
    
    
    
    106,426
    
    
    
    139,845
    
    
    
    (823
    )
    
    
    
    
    
    
    246,865
    
    
    
    4,852.9Balance at March 31,
2009 in US dollar in
millions (Note 2)
    
    
    
    
    
    
    27.9
    
    
    
    2,092.1
    
    
    
    2,749.1
    
    
    
    (16.2
    )
    
    
    571.2
    
    
    
    4,852.9
  F-7




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##### Table of Contents



STERLITE INDUSTRIES (INDIA) LIMITED AND SUBSIDIARIES
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 1. Background and Operations
          F-8




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##### Table of Contents



2. Significant Accounting Policies
 Basis of preparation
   Consolidation of
Variable Interest Entities (revised December 2003), an
interpretation of ARB No. 51
   Cash and cash equivalents
  Investments
 Short-term investments and deposits
   Long-term investments
    F-9




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##### Table of Contents



Allowances for doubtful accounts
  Inventories
  
    
    Purchased ore or concentrate is recorded at cost on a first-in, first-out basis;
    
    All other materials including stores and spares are recorded on a weighted average basis;
    
    Finished products are valued at raw material cost plus costs of conversion, comprising
labor costs and an attributable proportion of manufacturing overheads; and
    
    By-products and scrap are valued at the lower of cost and net realizable value. Net
realizable value is determined based on an estimated selling price, less further costs
expected to be incurred for completion and disposal.
  Equity investment in associate
   Property, plant and equipment
  Mine properties
   F-10




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##### Table of Contents



Other property, plant and equipment
  Depreciation, depletion and amortization
   Buildings:Operations
    
    30 yearsAdministration
    
    50 yearsPlant and machinery
    
    10-20 yearsOffice equipment and fixtures
    
    3-20 years
 Impairment
     F-11




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##### Table of Contents



Assets under construction
  Business combinations
    Debt
   Capitalization of interest
   Employee benefit schemes
  F-12




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##### Table of Contents



Share-based payment
  Earnings
per share (EPS)
   Asset retirement obligations
   Environmental costs and liabilities
  Derivative financial instruments
   Fair value hedges
  F-13




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##### Table of Contents



Cash flow hedges
    Foreign currency transactions
  Revenue recognition
    Income taxes
       F-14




---



##### Table of Contents



Accumulated other comprehensive income
  Shares issued by subsidiary/affiliate
  Convenience translation
  Use of estimates
    Recently issued accounting pronouncements
 SFAS No. 157, Fair Value Measurements
  F-15




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##### Table of Contents



SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including
an amendment of FASB Statement No. 115.
  SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements an amendment of
ARB No. 51
  SFAS No. 141 (R), Business Combination
  SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities  an amendment
of FASB Statement No. 133
  SFAS
No. 165, Subsequent Events
  SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles  a replacement of FASB Statement
No. 162
  F-16




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##### Table of Contents



FASB Staff Position No. FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments
  FASB Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of
Financial Instruments.
 Disclosures about Fair Value of Financial Instruments, Interim Financial Reporting,
 FSP FAS 142-3 Determination of the Useful
Life of Intangible Assets Goodwill and Other
Intangible Assets
 FSP FAS 132 (R)-1 Employers Disclosures
about Postretirement Benefit Plan Assets Employers Disclosures about Pensions and Other Postretirement Benefits
 FASB Staff Position No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed
in a Business Combination That Arise from Contingencies
  Emerging Issues Task Force (EITF) 08-6, Equity Method Investment Accounting Considerations
  EITF 08-7, Accounting for Defensive Intangible Assets
  F-17




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##### Table of Contents



3. Cash and Cash Equivalents
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsCash in hand
    
    
    5
    
    
    
    4
    
    
    
    0.1Cash at banks
    
    
    2,344
    
    
    
    1,218
    
    
    
    23.9Short-term deposit
    
    
    10,014
    
    
    
    1,479
    
    
    
    29.1Cash and cash equivalents
    
    
    12,363
    
    
    
    2,701
    
    
    
    53.1
 4. Restricted  Cash, Deposits and Investments
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsDividend, debenture, debenture interest account
    
    
    59
    
    
    
    61
    
    
    
    1.2Short-term investment securities
    
    
    1,600
    
    
    
    1,765
    
    
    
    34.7Short-term deposits with banks
    
    
    
    
    
    
    1,950
    
    
    
    38.3Restricted  cash, deposits and investments
    
    
    1,659
    
    
    
    3,776
    
    
    
    74.2
   5. Short-Term and Long-Term Investments
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsShort-term investments and depositsTrading securities and deposits
    
    
    150,567
    
    
    
    184,814
    
    
    
    3,633.0Net unrealized holding gains
    
    
    3,797
    
    
    
    1,488
    
    
    
    29.3Fair value
    
    
    154,364
    
    
    
    186,302
    
    
    
    3,662.3Long-term investmentsInvestments at cost
    
    
    984
    
    
    
    984
    
    
    
    19.3Available for sale (AFS) securitiesCarrying value
    
    
    52
    
    
    
    52
    
    
    
    1.0Net unrealized holding gains
    
    
    87
    
    
    
    8
    
    
    
    0.2Fair value
    
    
    139
    
    
    
    60
    
    
    
    1.2Long-term investments
    
    
    1,123
    
    
    
    1,044
    
    
    
    20.5
   F-18




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##### Table of Contents



6. Accounts Receivable, net
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsAccounts receivable
    
    
    13,352
    
    
    
    7,659
    
    
    
    150.6Allowances for doubtful accounts
    
    
    (12
    )
    
    
    (20
    )
    
    
    (0.4
    )Accounts receivable, net
    
    
    13,340
    
    
    
    7,639
    
    
    
    150.2
 7. Accounts Payable
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsAccounts payable
    
    
    16,761
    
    
    
    18,805
    
    
    
    369.7Acceptances
    
    
    27,104
    
    
    
    35,831
    
    
    
    704.4Accounts payable
    
    
    43,865
    
    
    
    54,636
    
    
    
    1,074.1
  8. Inventories
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsFinished goods
    
    
    1,233
    
    
    
    1,157
    
    
    
    22.7Work-in-progress
    
    
    11,580
    
    
    
    8,359
    
    
    
    164.3Raw materials
    
    
    16,554
    
    
    
    10,594
    
    
    
    208.3Stores and spares
    
    
    3,991
    
    
    
    4,512
    
    
    
    88.7Inventories
    
    
    33,358
    
    
    
    24,622
    
    
    
    484.0
 9. Property, Plant and Equipment, net
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsLand  freehold
    
    
    255
    
    
    
    269
    
    
    
    5.3Land development
    
    
    237
    
    
    
    238
    
    
    
    4.7Buildings
    
    
    11,093
    
    
    
    11,692
    
    
    
    229.8Mine properties
    
    
    17,215
    
    
    
    17,028
    
    
    
    334.7Plant and machinery
    
    
    114,541
    
    
    
    121,553
    
    
    
    2,389.5Office equipment and fixtures
    
    
    1,365
    
    
    
    1,597
    
    
    
    31.4Total cost
    
    
    144,706
    
    
    
    152,377
    
    
    
    2,995.4Accumulated depreciation, depletion and amortization
    
    
    (47,481
    )
    
    
    (54,796
    )
    
    
    (1,077.1
    )Property, plant and equipment, net of
depreciation, depletion and amortization before
assets under construction
    
    
    97,225
    
    
    
    97,581
    
    
    
    1,918.3Assets under construction
    
    
    24,357
    
    
    
    66,662
    
    
    
    1,310.4Property, plant and equipment, net
    
    
    121,582
    
    
    
    164,243
    
    
    
    3,228.7
   F-19




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##### Table of Contents



10.
    
    Investment in Associate
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsEquity investment in associate
    
    
    3,524
    
    
    
    
    
    
    
    Investment in Optionally fully convertible debentures of associate(1)
    
    
    16,000
    
    
    
    12,692
    
    
    
    249.5Investment in associate
    
    
    19,524
    
    
    
    12,692
    
    
    
    249.5
 
 (1)
    
    secured by way of first charge on immovable
properties of the associate, convertible at the option of the Company
based on fair value of shares.
   2007
    
    2008
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millionsIn equity investment
    
    
    24
    
    
    
    491
    
    
    
    (6,182
    )In investment in OFCD
    
    
    
    
    
    
    
    
    
    
    (650
    )
 11. Other Current and Non-Current Assets, net
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsAdvances to suppliers
    
    
    4,491
    
    
    
    5,172
    
    
    
    101.7Advances to employees
    
    
    378
    
    
    
    342
    
    
    
    6.7Deposits
    
    
    1,285
    
    
    
    2,021
    
    
    
    39.7Prepaid lease rentals
    
    
    468
    
    
    
    925
    
    
    
    18.2Fair value of derivatives  current
    
    
    1,627
    
    
    
    1,538
    
    
    
    30.2Others
    
    
    3,780
    
    
    
    5,096
    
    
    
    100.2Total other current and non-current assets
    
    
    12,029
    
    
    
    15,094
    
    
    
    296.7Allowances for doubtful advances
    
    
    (160
    )
    
    
    (158
    )
    
    
    (3.1
    )Other current and non-current assets, net
    
    
    11,869
    
    
    
    14,936
    
    
    
    293.6Balance sheet classification of the above assets is as follows:Current
    
    
    10,248
    
    
    
    12,834
    
    
    
    252.3Non-current
    
    
    1,621
    
    
    
    2,102
    
    
    
    41.3
 12. Other Current Liabilities
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsUnclaimed dividend
    
    
    38
    
    
    
    37
    
    
    
    0.7Advances received
    
    
    617
    
    
    
    818
    
    
    
    16.1Interest accrued
    
    
    147
    
    
    
    809
    
    
    
    15.9Security deposits received
    
    
    2,145
    
    
    
    2,470
    
    
    
    48.5Fair value of derivatives
    
    
    639
    
    
    
    2,639
    
    
    
    51.9Provision for guarantee
    
    
    1,412
    
    
    
    
    
    
    
    Others
    
    
    2,257
    
    
    
    1,557
    
    
    
    30.6Other current liabilities
    
    
    7,255
    
    
    
    8,330
    
    
    
    163.7
  F-20




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##### Table of Contents



13. Other Non-Current Liabilities
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsRetirement benefits
    
    
    647
    
    
    
    710
    
    
    
    14.0Provision for asset retirement obligations
    
    
    307
    
    
    
    323
    
    
    
    6.3Capital project retentions
    
    
    
    
    
    
    3,862
    
    
    
    75.9Others
    
    
    20
    
    
    
    13
    
    
    
    0.3Other non-current liabilities
    
    
    974
    
    
    
    4,908
    
    
    
    96.5
 14. Asset Retirement Obligations
       2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsAsset retirement obligations, beginning of year
    
    
    296
    
    
    
    314
    
    
    
    6.2Accretion expense
    
    
    15
    
    
    
    47
    
    
    
    0.9Revision for changes in estimate
    
    
    (3
    )
    
    
    (5
    )
    
    
    (0.1
    )Settlement and others
    
    
    (8
    )
    
    
    (6
    )
    
    
    (0.1
    )Foreign exchange (gain) loss
    
    
    14
    
    
    
    (14
    )
    
    
    (0.3
    )Asset retirement obligations, end of year
    
    
    314
    
    
    
    336
    
    
    
    6.6Balance sheet classification of the above obligations is as follows:Current
    
    
    7
    
    
    
    13
    
    
    
    0.3Non-current
    
    
    307
    
    
    
    323
    
    
    
    6.3
 F-21




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##### Table of Contents



15. Short-Term and Long-Term Debt
  Working capital loans
  Foreign currency loans
    Term loans
    F-22




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##### Table of Contents



Buyers credit
   Non-convertible debentures
     2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsShort-term debt with banks and financial institutions
    
    
    6,119
    
    
    
    7,031
    
    
    
    138.2Current portion of long-term debt(1)
    
    
    4,071
    
    
    
    13,171
    
    
    
    258.9Short-term and current portion of long-term debt
    
    
    10,190
    
    
    
    20,202
    
    
    
    397.1Weighted average interest rate on short-term debt
    
    
    4.6
    %
    
    
    6.8
    %
    
    
    6.8
    %Unused line of credit on short-term facilities
    
    
    46,393
    
    
    
    60,937
    
    
    
    1,197.9
 
 Note:(1)
    
    Include debts outstanding to related parties of Rs. 281 million and Rs. 851 million ($ 16.7 million) as of March 31, 2008 and March 31, 2009, respectively. F-23




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##### Table of Contents



2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsBank and financial institutions
    
    
    12,293
    
    
    
    20,128
    
    
    
    395.7Non-convertible debentures
    
    
    1,000
    
    
    
    5,996
    
    
    
    117.9Others(1)
    
    
    727
    
    
    
    1,431
    
    
    
    28.1Long-term debt
    
    
    14,020
    
    
    
    27,555
    
    
    
    541.7Less: Current portion of long-term debt
    
    
    (4,071
    )
    
    
    (13,171
    )
    
    
    (258.9
    )Long-term debt, net of current portion
    
    
    9,949
    
    
    
    14,384
    
    
    
    282.8
 
 (1)
    
    Include debts outstanding to related parties of Rs.
281 million and Rs. 851 million ($ 16.7 million) as of March 31, 2008 and March 31, 2009, respectively.  US dollarsAs of March 31,
    
    Rs. in millions
    
    in millions2010
    
    
    13,171
    
    
    
    258.92011
    
    
    2,557
    
    
    
    50.32012
    
    
    5,040
    
    
    
    99.12013
    
    
    
    
    
    
    2014
    
    
    2,091
    
    
    
    41.1Thereafter
    
    
    4,696
    
    
    
    92.3Total
    
    
    27,555
    
    
    
    541.7
 16. Business Combinations and Divestures
 a. Call option  HZL
  F-24




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##### Table of Contents



b. Call option  BALCO
  17. Accumulated Other Comprehensive Income/(Loss)
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsUnrealized gain on available-for-sale securities
    
    
    58
    
    
    
    8
    
    
    
    0.2Foreign currency translation adjustment
    
    
    (72
    )
    
    
    (399
    )
    
    
    (7.9
    )Unrealized loss on cash flow hedges
    
    
    (304
    )
    
    
    (432
    )
    
    
    (8.5
    )Accumulated other comprehensive loss
    
    
    (318
    )
    
    
    (823
    )
    
    
    (16.2
    )
 F-25




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##### Table of Contents



18. Shareholders Equity
 Issued shares
    General reserves
  Debenture redemption reserve
  Preference share redemption reserve
   F-26




---



##### Table of Contents



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 the reserves shall not exceed an amount equal to one-tenth of the sum of the
companys paid-up share capital and net reserves, and the amount so drawn shall first be
utilized to set off the losses incurred in the financial year before any dividend in respect
of preference or equity share is declared; and
    
    the balance of reserves after such withdrawal shall not fall below 15.0% of the companys
paid-up share capital.
 19. Financial Instruments
 (a) Derivatives and hedges
     F-27




---



##### Table of Contents



Foreign exchange risk
  Interest rate risk
  Counterparty and concentration of credit risk
  Commodity price risk
  Aluminum
  Copper
  Zinc
  F-28




---



##### Table of Contents



Embedded derivatives
   2008
    
    2009
    
    2009As of March 31,
    
    Asset
    
    Liability
    
    Asset
    
    Liability
    
    Asset
    
    LiabilityRs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollars
    
    US dollarsin millions
    
    in millionsCash flow hedges:Commodity contracts
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward foreign currency contracts
    
    
    18
    
    
    
    307
    
    
    
    1,189
    
    
    
    501
    
    
    
    23.4
    
    
    
    9.8Fair value hedges:Commodity contracts
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    0.2Forward foreign currency contracts
    
    
    183
    
    
    
    283
    
    
    
    323
    
    
    
    
    
    
    
    6.3
    
    
    
    Non-qualifying hedges:Commodity contracts
    
    
    1,426
    
    
    
    
    
    
    
    26
    
    
    
    2,128
    
    
    
    0.5
    
    
    
    41.9Fair value
    
    
    1,627
    
    
    
    639
    
    
    
    1,538
    
    
    
    2,639
    
    
    
    30.2
    
    
    
    51.9
   Cash flow hedges
   Fair value hedge
   F-29




---



##### Table of Contents



Non-qualifying/economic hedge
   Accumulated other
    
    Share ofcomprehensive
    
    minoritylosses
    
    interests
    
    Total
    
    TotalRs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsUnrealized derivative loss as of April 1, 2007
    
    
    522
    
    
    
    54
    
    
    
    576Amount recognized in other comprehensive
income, net of tax of Rs. 37 million ($0.9
million)
    
    
    (123
    )
    
    
    52
    
    
    
    (71
    )Amount reclassified to income statement, net
of tax Rs. 127 million ($3.2 million)
    
    
    (95
    )
    
    
    (105
    )
    
    
    (200
    )Unrealized derivative loss as of March 31,
2008, net of tax Rs. 2 million ($0.1 million)
    
    
    304
    
    
    
    1
    
    
    
    305Unrealized derivative loss as of April 1, 2008
    
    
    304
    
    
    
    1
    
    
    
    305
    
    
    
    6.0Amount recognized in other comprehensive
income, net of tax of Rs. 170 million ($ 3.3
million)
    
    
    273
    (1)
    
    
    (71
    )
    
    
    202
    
    
    
    4.0Amount reclassified to income statement, net
of tax Rs. 1 million ($ nil million)
    
    
    (145
    )
    
    
    142
    
    
    
    (3
    )
    
    
    (0.1
    )Unrealized derivative loss as of March 31,
2009, net of tax Rs. 170 million ($ 3.3
million)
    
    
    432
    
    
    
    72
    
    
    
    504
    
    
    
    9.9
 
 (1)
    
    Includes share in associate Rs. 831 million.  (b) Other financial instruments
    2008
    
    2009
    
    2009Carrying
    
    Estimated
    
    Carrying
    
    Estimated
    
    Carrying
    
    EstimatedAs of March 31,
    
    value
    
    fair value
    
    value
    
    fair value
    
    value
    
    fair valueRs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollars
    
    US dollarsin millions
    
    in millionsAssets:Long-term investments
    
    
    1,123
    
    
    
    1,123
    
    
    
    1,044
    
    
    
    1,044
    
    
    
    20.5
    
    
    
    20.5Other non-current assets
    
    
    1,621
    
    
    
    1,621
    
    
    
    2,102
    
    
    
    2,102
    
    
    
    41.3
    
    
    
    41.3Liabilities:Long-term debt, net of current portion
    
    
    9,949
    
    
    
    9,873
    
    
    
    14,384
    
    
    
    14,510
    
    
    
    282.8
    
    
    
    285.2Other non-current liabilities
    
    
    974
    
    
    
    974
    
    
    
    4,908
    
    
    
    4,777
    
    
    
    96.5
    
    
    
    93.9
 F-30




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##### Table of Contents



20. Commitments, Contingencies and Guarantees
 (a) Commitments and contingencies
 (i) Commitments
  
    
    Capital commitments
  
    
    Export obligations
  (ii) Contingencies
    (b) Guarantees
    F-31




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##### Table of Contents



21. Income Taxes
 Overview of the Indian direct tax regime
       
    
    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.
 F-32




---



##### Table of Contents




    
    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 2010.
    2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsIndian
Income
    
    
    88,951
    
    
    
    79,133
    
    
    
    49,884
    
    
    
    980.6Foreign
Income
    
    
    4,583
    
    
    
    3,693
    
    
    
    4,471
    
    
    
    87.993,534
    
    
    
    82,826
    
    
    
    54,355
    
    
    
    1,068.5
  2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsCurrent tax:Indian income tax
    
    
    21,849
    
    
    
    17,620
    
    
    
    7,098
    
    
    
    139.6Foreign income tax
    
    
    1,343
    
    
    
    790
    
    
    
    943
    
    
    
    18.5Total current tax
    
    
    23,192
    
    
    
    18,410
    
    
    
    8,041
    
    
    
    158.1Deferred tax:Indian income tax
    
    
    1,904
    
    
    
    3,046
    
    
    
    (1,986
    )
    
    
    (39.1
    )Foreign income tax
    
    
    63
    
    
    
    168
    
    
    
    391
    
    
    
    7.7Total deferred tax
    
    
    1,967
    
    
    
    3,214
    
    
    
    (1,595
    )
    
    
    (31.4
    )Income taxes for the year
    
    
    25,159
    
    
    
    21,624
    
    
    
    6,446
    
    
    
    126.7Effective income tax rate
    
    
    26.9
    %
    
    
    26.1
    %
    
    
    11.9
    %
    
    
    11.9
    %
  2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsDeferred tax
on equity in net loss of associate
    
    
    
    
    
    
    
    
    
    
    (2,040
    )
    
    
    (40.1
    )Others
    
    
    1,967
    
    
    
    3,214
    
    
    
    445
    
    
    
    8.71,967
    
    
    
    3,214
    
    
    
    (1,595
    )
    
    
    (31.4
    )
  2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsIncome before income taxes, minority interests and equity in
net gain/(loss) of associate
    
    
    93,534
    
    
    
    82,826
    
    
    
    54,355
    
    
    
    1,068.5Indian statutory income tax rate
    
    
    33.7
    %
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34
    %Expected income tax (benefit) expense at statutory tax rate
    
    
    31,483
    
    
    
    28,153
    
    
    
    18,475
    
    
    
    363.2Disallowable expenses
    
    
    325
    
    
    
    550
    
    
    
    23
    
    
    
    0.5Non-taxable income
    
    
    (1,016
    )
    
    
    (3,145
    )
    
    
    (3,535
    )
    
    
    (69.5
    )Impact of tax rate differences
    
    
    (159
    )
    
    
    (78
    )
    
    
    (177
    )
    
    
    (3.5
    )Tax holiday and similar exemptions
    
    
    (5,192
    )
    
    
    (5,855
    )
    
    
    (6,274
    )
    
    
    (123.3
    )Deferred tax
on equity in net loss of associate
    
    
    
    
    
    
    
    
    
    
    (2,040
    )
    
    
    (40.1
    )Minimum alternative tax/wealth tax
    
    
    
    
    
    
    1,227
    
    
    
    648
    
    
    
    12.7Other permanent differences
    
    
    40
    
    
    
    25
    
    
    
    1
    
    
    
    0.0Valuation allowance (reversal)/provision
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    Adjustments to income tax provisions based on tax assessments
    
    
    (308
    )
    
    
    747
    
    
    
    (675
    )
    
    
    (13.3
    )Income taxes recognized in the statement of operations
    
    
    25,159
    
    
    
    21,624
    
    
    
    6,446
    
    
    
    126.7
   F-33




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##### Table of Contents



Accounting for Income
Taxes
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsUnrecognized tax benefit, beginning of the year
    
    
    1,219
    
    
    
    1,184
    
    
    
    23.3Addition/(reduction) of tax positions of prior years
    
    
    58
    
    
    
    (498
    )
    
    
    (9.8
    )Settlements
    
    
    (93
    )
    
    
    (262
    )
    
    
    (5.2
    )Unrecognized tax benefit, end of the year
    
    
    1,184
    
    
    
    424
    
    
    
    8.3
     2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsDeferred tax asset:Fair valuation of assets and liabilities
    
    
    
    
    
    
    382
    
    
    
    7.5Voluntary retirement scheme
    
    
    32
    
    
    
    13
    
    
    
    0.2Accounts receivable, net
    
    
    175
    
    
    
    44
    
    
    
    0.9Employee benefits
    
    
    187
    
    
    
    258
    
    
    
    5.1Minimum alternate tax credit
    
    
    1,157
    
    
    
    1,701
    
    
    
    33.4Deferred tax
on equity in net loss of associate
    
    
    
    
    
    
    2,040
    
    
    
    40.1Others
    
    
    401
    
    
    
    391
    
    
    
    7.7Gross deferred tax asset
    
    
    1,952
    
    
    
    4,829
    
    
    
    94.9Less: Valuation allowance
    
    
    (1,157
    )
    
    
    (1,701
    )
    
    
    (33.4
    )Net deferred tax asset
    
    
    795
    
    
    
    3,128
    
    
    
    61.5Deferred tax liabilities:Fair valuation of assets and liabilities
    
    
    (1,059
    )
    
    
    (831
    )
    
    
    (16.3
    )Property, plant and equipment
    
    
    (15,849
    )
    
    
    (16,186
    )
    
    
    (318.2
    )Others
    
    
    (226
    )
    
    
    (482
    )
    
    
    (9.5
    )Total deferred tax liabilities
    
    
    (17,134
    )
    
    
    (17,499
    )
    
    
    (344.0
    )Net deferred tax liabilities
    
    
    (16,339
    )
    
    
    (14,371
    )
    
    
    (282.5
    )
  2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsDeferred tax assetsCurrent
    
    
    421
    
    
    
    625
    
    
    
    12.3Non-current
    
    
    374
    
    
    
    2,503
    
    
    
    49.2Total
    
    
    795
    
    
    
    3,128
    
    
    
    61.5Deferred tax liabilitiesCurrent
    
    
    765
    
    
    
    208
    
    
    
    4.1Non-current
    
    
    16,369
    
    
    
    17,291
    
    
    
    339.9Total
    
    
    17,134
    
    
    
    17,499
    
    
    
    344.0
 F-34




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##### Table of Contents



22. Employee Benefits
    Defined contribution plans
  Central provident fund
  Superannuation
  Australian pension scheme
   F-35




---



##### Table of Contents



Defined benefit plans
 Gratuity plan
   F-36




---



##### Table of Contents



2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsChange in projected benefit obligation:Projected benefit obligation, beginning of year
    
    
    1,200
    
    
    
    1,359
    
    
    
    1,484
    
    
    
    29.2Service cost
    
    
    65
    
    
    
    75
    
    
    
    81
    
    
    
    1.6Interest cost
    
    
    89
    
    
    
    104
    
    
    
    112
    
    
    
    2.2Actuarial (gain) loss
    
    
    56
    
    
    
    1
    
    
    
    56
    
    
    
    1.1Benefits paid
    
    
    (51
    )
    
    
    (55
    )
    
    
    (84
    )
    
    
    (1.7
    )Projected benefit obligation, end of the year
    
    
    1,359
    
    
    
    1,484
    
    
    
    1,649
    
    
    
    32.4Change in plan assets:Fair value of plan assets, beginning of year
    
    
    720
    
    
    
    783
    
    
    
    870
    
    
    
    17.1Actual return on plan assets
    
    
    54
    
    
    
    71
    
    
    
    79
    
    
    
    1.6Company contributions
    
    
    60
    
    
    
    71
    
    
    
    113
    
    
    
    2.2Translation loss
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    0.1Benefits paid
    
    
    (51
    )
    
    
    (55
    )
    
    
    (84
    )
    
    
    (1.7
    )Fair value of plan assets, end of the year
    
    
    783
    
    
    
    870
    
    
    
    981
    
    
    
    19.3Shortfall of plan assets, over benefit obligation
    
    
    (576
    )
    
    
    (614
    )
    
    
    (668
    )
    
    
    (13.1
    )Accrued pension cost
    
    
    (576
    )
    
    
    (614
    )
    
    
    (668
    )
    
    
    (13.1
    )Accumulated benefit obligation
    
    
    1,256
    
    
    
    1,132
    
    
    
    1,202
    
    
    
    2.4
    2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsService cost
    
    
    65
    
    
    
    75
    
    
    
    81
    
    
    
    1.6Interest cost
    
    
    89
    
    
    
    104
    
    
    
    112
    
    
    
    2.2Expected return on plan assets
    
    
    (56
    )
    
    
    (69
    )
    
    
    (81
    )
    
    
    (1.6
    )Recognized net actuarial (gain) loss
    
    
    57
    
    
    
    
    
    
    
    56
    
    
    
    1.1Net periodic benefit cost
    
    
    155
    
    
    
    110
    
    
    
    168
    
    
    
    3.3
  2007
    
    2008
    
    2009Discount rate
    
    
    7.5%-8
    %
    
    
    7.5%-7.8
    %
    
    
    7.5
    %Rate of increase in compensation level of covered employees
    
    
    5.0
    %
    
    
    5.0
    %
    
    
    5.0
    %Expected return on assets
    
    
    8.0
    %
    
    
    7.5%-9.1
    %
    
    
    7.5%-9.45
    %
  Year Ended March 31,
    
    Rs. in millions
    
    US dollars in millions2010
    
    
    84
    
    
    
    1.72011
    
    
    134
    
    
    
    2.62012
    
    
    159
    
    
    
    3.12013
    
    
    196
    
    
    
    3.92014
    
    
    216
    
    
    
    4.2Thereafter for five years
    
    
    1,221
    
    
    
    24.0
 F-37




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##### Table of Contents



23. Share-Based Compensation Plans
  The Vedanta Resources Long-Term Incentive Plan (the LTIP)
    24(i). Other Income/Expenses
     24(ii). Interest and Dividend Income
 For the year ended March 31
    
    2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsDividend Income
    
    
    631
    
    
    
    5,444
    
    
    
    9,030
    
    
    
    177.5Interest Income
    
    
    1,441
    
    
    
    1,104
    
    
    
    7,698
    
    
    
    151.3Total
    
    
    2,072
    
    
    
    6,548
    
    
    
    16,728
    
    
    
    328.8
 24(iii).
Foreign Currency Gain(loss)
  25. Earnings per Share
  2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsNet income from continuing operations
    
    
    47,346
    
    
    
    42,600
    
    
    
    29,562
    
    
    
    581.1Net income from discontinued operations
    
    
    86
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    47,432
    
    
    
    42,600
    
    
    
    29,562
    
    
    
    581.1
 F-38




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##### Table of Contents



2007
    
    2008
    
    2009
    
    2009Rs.
    
    Rs.
    
    Rs.
    
    US dollarsWeighted average number of ordinary shares for
earnings per share
    
    
    558,494,411
    
    
    
    674,478,018
    
    
    
    708,494,411
    
    
    
    708,494,411Earnings per share:Income from continuing operations
    
    
    84.78
    
    
    
    63.16
    
    
    
    41.7
    
    
    
    0.8Income from discontinued operations
    
    
    0.15
    
    
    
    
    
    
    
    
    
    
    
    Earnings per share
    
    
    84.93
    
    
    
    63.16
    
    
    
    41.7
    
    
    
    0.8
  26. Related Party Transactions
  Enterprises where principal shareholders have control or significant influence
 
    
    Vedanta Resources plc (Vedanta)
    
    Twin Star Holdings Limited (Twin Star)
    
    The Madras Aluminium Company Limited (MALCO)
    
    Sterlite Technologies Limited (STL)
    
    Sterlite Gold Limited/Ararat Gold Recovery LLC (SGL)/ (AGRC) *
    
    Konkola Copper Mines plc (KCM)
    
    Monte Cello Corporation NV (MCNV)
    
    Sterlite Foundation
    
    Anil Agarwal Foundation
    
    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)
 Associate
  Associate of Vedanta Resources Plc
  
 *
    
    With the disposal of holding in SGL in September 2007, these are no more the related party of
the Company**
    
    With the hive off of IFL in November 2008, this is no more the related party of the Company.
 F-39




---



##### Table of Contents



For the Year Ended March 31,
    
    2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsSalesSTL
    
    
    2,320
    
    
    
    3,268
    
    
    
    4,467
    
    
    
    87.8IFL
    
    
    1,988
    
    
    
    1,417
    
    
    
    549
    
    
    
    10.8MALCO
    
    
    13
    
    
    
    7
    
    
    
    3
    
    
    
    0.1Vedanta Aluminium
    
    
    202
    
    
    
    
    
    
    
    1,613
    
    
    
    31.7PurchasesSTL
    
    
    50
    
    
    
    11
    
    
    
    4
    
    
    
    0.1MALCO
    
    
    349
    
    
    
    
    
    
    
    31
    
    
    
    0.6Sesa Industries
    
    
    
    
    
    
    2
    
    
    
    30
    
    
    
    0.6Sesa Goa
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    0.0Vedanta Aluminium
    
    
    
    
    
    
    
    
    
    
    4,354
    
    
    
    85.6KCM
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    2.2Interest and dividend
income/(expense)Vedanta
    
    
    (212
    )
    
    
    
    
    
    
    (10
    )
    
    
    (0.2
    )MALCO
    
    
    (13
    )
    
    
    
    
    
    
    (102
    )
    
    
    (2.0
    )Vedanta Aluminium
    
    
    
    
    
    
    40
    
    
    
    528
    
    
    
    10.4IFL
    
    
    11
    
    
    
    
    
    
    
    
    
    
    
    Twin Star Holdings Ltd
    
    
    
    
    
    
    
    
    
    
    (1,615
    )
    
    
    (31.7
    )MCNV
    
    
    
    
    
    
    
    
    
    
    (653
    )
    
    
    12.8Other (payments)/receiptsVedanta
    
    
    (272
    )
    
    
    (201
    )
    
    
    (229
    )
    
    
    (4.5
    )Sterlite Foundation and Anil Agarwal Foundation
    
    
    (30
    )
    
    
    (24
    )
    
    
    (45
    )
    
    
    (0.9
    )MALCO
    
    
    117
    
    
    
    
    
    
    
    (41
    )
    
    
    (0.8
    )KCM
    
    
    64
    
    
    
    
    
    
    
    3
    
    
    
    0.1AGRC
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    STL
    
    
    2
    
    
    
    1
    
    
    
    4
    
    
    
    0.1Vedanta Aluminium
    
    
    (313
    )
    
    
    (1,797
    )
    
    
    205
    
    
    
    4.0Sesa Goa
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    0.6Investment during the yearVedanta Aluminium
    
    
    1,315
    
    
    
    16,000
    
    
    
    
    
    
    
    IFL(Refer note 24(i))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loans during the yearVedanta Aluminium
    
    
    
    
    
    
    3,890
    
    
    
    11,450
    
    
    
    225.1KCM
    
    
    
    
    
    
    
    
    
    
    3,931
    
    
    
    77.3Sale of businessSTL
    
    
    1,485
    
    
    
    
    
    
    
    
    
    
    
    Sale of assetsVedanta Aluminium
    
    
    
    
    
    
    
    
    
    
    (81
    )
    
    
    (1.6
    )Guarantees outstanding*Vedanta Aluminium
    
    
    6,144
    
    
    
    18,733
    
    
    
    35,838
    
    
    
    704.5IFL
    
    
    1,820
    
    
    
    1,820
    
    
    
    
    
    
    
    
 
 *
    
    Maximum guarantee amount and does not represent actual liability. F-40




---



##### Table of Contents



2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsReceivable from/(payable to)IFL
    
    
    369
    
    
    
    
    
    
    
    STL
    
    
    827
    
    
    
    274
    
    
    
    5.4MCNV
    
    
    (3,607
    )
    
    
    (570
    )
    
    
    (11.2
    )Vedanta
    
    
    (996
    )
    
    
    (1,735
    )
    
    
    (34.1
    )KCM
    
    
    131
    
    
    
    5,625
    (1)
    
    
    110.6Twinstar Infrastructure Limited
    
    
    (281
    )
    
    
    (281
    )
    
    
    (5.5
    )Sesa Goa
    
    
    3
    
    
    
    16
    
    
    
    0.3Vedanta Aluminium
    
    
    4,872
    
    
    

16,087
    (1)
    
    
    316.2Twin Star Holding Limited
    
    
    
    
    
    
    1
    
    
    
    0.0
 
 (1)
    
    Includes loan receivable of Rs. 5,364 million and Rs. 15,340 million
from KCM and Vedanta Aluminium, respectively. Of these interest bearing loans Rs. 5,364 million and Rs. 6,850 million from KCM
and Vedanta Aluminium respectively are payable by March 31, 2010. The balance of Rs. 8,490 million is
repayable in quarterly instalments of Rs. 250 million commencing June 30, 2010. 27. Segment Information
  Copper
  Zinc
  Aluminum
  Power
  F-41




---



##### Table of Contents



Corporate and others
  (a) Business segments
   Corporate(1)For the Year Ended March 31, 2007
    
    Copper
    
    Zinc
    
    Aluminum
    
    and others
    
    Elimination
    
    TotalRs. in millionsNet sales to external customers
    
    
    115,192
    
    
    
    85,963
    
    
    
    40,091
    
    
    
    
    
    
    
    
    
    
    
    241,246Inter-segment sales
    
    
    
    
    
    
    
    
    
    
    911
    
    
    
    
    
    
    
    (911
    )
    
    
    Segment sales
    
    
    115,192
    
    
    
    85,963
    
    
    
    41,002
    
    
    
    
    
    
    
    (911
    )
    
    
    241,246Segment profit
    
    
    17,689
    
    
    
    65,129
    
    
    
    15,765
    
    
    
    (2
    )
    
    
    
    
    
    
    98,581Depreciation, depletion and amortization
    
    
    (1,440
    )
    
    
    (2,124
    )
    
    
    (2,394
    )
    
    
    (1
    )
    
    
    
    
    
    
    (5,959
    )Voluntary retirement scheme expenses
    
    
    
    
    
    
    (97
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )Gain on sale of real estate
    
    
    986
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    986Operating income (loss)
    
    
    17,235
    
    
    
    62,908
    
    
    
    13,371
    
    
    
    (3
    )
    
    
    
    
    
    
    93,511Interest and dividend income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,072Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,329
    )Net realized and unrealized investment gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,280Income before income taxes, minority interests and equity in net income of associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,534Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,159
    )Income after income taxes, before minority interests and equity in net income of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,375Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,053
    )Equity in net income of associate, net of taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    24Net income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,346Income from divested business, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,432AssetsSegment assets
    
    
    66,653
    
    
    
    95,508
    
    
    
    54,043
    
    
    
    6,644
    
    
    
    
    
    
    
    222,848Investment in associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,033
    
    
    
    
    
    
    
    3,033Total assets
    
    
    66,653
    
    
    
    95,508
    
    
    
    54,043
    
    
    
    9,677
    
    
    
    
    
    
    
    225,881Additions to property, plant and equipment
    
    
    2,023
    
    
    
    11,125
    
    
    
    1,388
    
    
    
    6,153
    
    
    
    
    
    
    
    20,689
 
 (1)
    
    Includes power segment assets of Rs. 6,156 million.
 F-42




---



##### Table of Contents



Corporate(1)For the Year Ended March 31, 2008
    
    Copper
    
    Zinc
    
    Aluminum
    
    and others
    
    Elimination
    
    TotalRs. in millionsNet sales to external customers
    
    
    126,276
    
    
    
    78,222
    
    
    
    41,596
    
    
    
    320
    
    
    
    
    
    
    
    246,414Inter-segment sales
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    (99
    )
    
    
    Segment sales
    
    
    126,276
    
    
    
    78,222
    
    
    
    41,695
    
    
    
    320
    
    
    
    (99
    )
    
    
    246,414Segment profit
    
    
    12,650
    
    
    
    55,563
    
    
    
    14,244
    
    
    
    384
    
    
    
    
    
    
    
    82,841Depreciation, depletion and amortization
    
    
    (1,613
    )
    
    
    (2,371
    )
    
    
    (2,663
    )
    
    
    (413
    )
    
    
    
    
    
    
    (7,060
    )Guarantees, impairment of investment and
loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (628
    )
    
    
    
    
    
    
    (628
    )Operating income (loss)
    
    
    11,037
    
    
    
    53,192
    
    
    
    11,581
    
    
    
    (657
    )
    
    
    
    
    
    
    75,153Interest and dividend income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,548Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,386
    )Net realized and unrealized investment gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,511Income before income taxes, minority
interests and equity in net income of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,826Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,624
    )Income after income taxes, before minority
interests and equity in net income of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,202Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,093
    )Equity in net income of associate, net of
taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    491
    
    
    
    
    
    
    
    491Net income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,600Income from divested business, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    42,600AssetsSegment assets
    
    
    144,694
    
    
    
    133,233
    
    
    
    57,146
    
    
    
    21,582
    
    
    
    
    
    
    
    356,655Investment in associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,524
    
    
    
    
    
    
    
    19,524Total assets
    
    
    144,694
    
    
    
    133,233
    
    
    
    57,146
    
    
    
    41,106
    
    
    
    
    
    
    
    376,179Additions to property, plant and equipment
    
    
    1,120
    
    
    
    12,499
    
    
    
    3,923
    
    
    
    11,604
    
    
    
    
    
    
    
    29,146
 
 (1)
    
    Includes power segment sales of Rs. 320 million,
operating loss of Rs. 28 million and segment asset of
Rs. 21,200 million.
 F-43




---



##### Table of Contents



CorporateFor the Year Ended March 31, 2009
    
    Copper
    
    Zinc
    
    Aluminum
    
    Power
    
    and others
    
    Elimination
    
    Total
    
    TotalRs. in millions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    US dollarsin millionsNet sales to external customers
    
    
    116,525
    
    
    
    55,724
    
    
    
    39,170
    
    
    
    773
    
    
    
    
    
    
    
    
    
    
    
    212,192
    
    
    
    4,171.3Inter-segment sales
    
    
    145
    
    
    
    
    
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    (311
    )
    
    
    
    
    
    
    Segment sales
    
    
    116,670
    
    
    
    55,724
    
    
    
    39,336
    
    
    
    773
    
    
    
    
    
    
    
    (311
    )
    
    
    212,192
    
    
    
    4,171.3Segment profit
    
    
    12,574
    
    
    
    27,777
    
    
    
    8,954
    
    
    
    792
    
    
    
    132
    
    
    
    
    
    
    
    50,229
    
    
    
    987.4Depreciation, depletion and amortization
    
    
    (2,017
    )
    
    
    (2,629
    )
    
    
    (2,590
    )
    
    
    (608
    )
    
    
    (1
    )
    
    
    
    
    
    
    (7,845
    )
    
    
    (154.2
    )Guarantees, impairment of investment and
loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    (137
    )
    
    
    (2.7
    )Operating income (loss)
    
    
    10,557
    
    
    
    25,148
    
    
    
    6,364
    
    
    
    184
    
    
    
    (6
    )
    
    
    
    
    
    
    42,247
    
    
    
    830.5Interest and dividend income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,728
    
    
    
    328.8Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,874
    )
    
    
    (135.1
    )Net realized and unrealized investment gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,254
    
    
    
    44.3Income before income taxes, minority
interests and equity in net income of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,355
    
    
    
    1,068.5Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,446
    )
    
    
    (126.7
    )Income after income taxes, before minority
interests and equity in net income of
associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,909
    
    
    
    941.8Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,346
    )
    
    
    (242.7
    )Equity in net loss of associate,
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,001
    )
    
    
    
    
    
    
    (6,001
    )
    
    
    (118.0
    )Net income from continuing operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,562
    
    
    
    581.1Income from divested business, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,562
    
    
    
    581.1AssetsSegment assets
    
    
    148,017
    
    
    
    159,903
    
    
    
    68,511
    
    
    
    51,585
    
    
    
    2,378
    
    
    
    
    
    
    
    430,394
    
    
    
    8,460.7Investment in associate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,692
    
    
    
    
    
    
    
    12,692
    
    
    
    249.5Total assets
    
    
    148,017
    
    
    
    159,903
    
    
    
    68,511
    
    
    
    51,585
    
    
    
    15,070
    
    
    
    
    
    
    
    443,086
    
    
    
    8,710.2Additions to property, plant and equipment
    
    
    1,449
    
    
    
    12,816
    
    
    
    10,330
    
    
    
    25,968
    
    
    
    
    
    
    
    
    
    
    
    50,563
    
    
    
    994.0
  (b) Geographical segmental analysis
  2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsIndia
    
    
    114,222
    
    
    
    140,503
    
    
    
    140,330
    
    
    
    2,758.6Far East(1)
    
    
    69,624
    
    
    
    62,303
    
    
    
    27,803
    
    
    
    546.6Other(2)
    
    
    57,400
    
    
    
    43,608
    
    
    
    44,059
    
    
    
    866.1Net sales
    
    
    241,246
    
    
    
    246,414
    
    
    
    212,192
    
    
    
    4,171.3
 
 (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,
the United Arab Emirates, 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. F-44




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##### Table of Contents



2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsIndia
    
    
    120,754
    
    
    
    163,301
    
    
    
    3,210.2Australia
    
    
    789
    
    
    
    580
    
    
    
    11.4UAE
    
    
    39
    
    
    
    362
    
    
    
    7.1Long-lived assets
    
    
    121,582
    
    
    
    164,243
    
    
    
    3,228.7
 28. Fair Value Measurements
  Quoted price
    
    
    
    
    
    
    
    
    
    
    
    
    
    Quoted pricein active
    
    Significant
    
    
    
    
    
    
    
    
    
    in active
    
    Significantmarket for
    
    other
    
    Significant
    
    
    
    
    
    market for
    
    other
    
    Significantidentical
    
    observable
    
    unobservable
    
    
    
    
    
    identical
    
    observable
    
    unobservableassets
    
    inputs
    
    inputs
    
    
    
    
    
    assets
    
    inputs
    
    inputs(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Total
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)
    
    Total(Rs. in millions)
    
    
    
    
    
    
    
    
    
    (US dollars in millions)Financials AssetTrading Securities(1)
    
    
    137,741
    
    
    
    
    
    
    
    
    
    
    
    137,741
    
    
    
    2,707.7
    
    
    
    
    
    
    
    
    
    
    
    2,707.7Available for sale
securities(2)
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    1.2Derivative(3)
    
    
    26
    
    
    
    1,512
    
    
    
    
    
    
    
    1,538
    
    
    
    0.5
    
    
    
    29.7
    
    
    
    
    
    
    
    30.2Total
    
    
    137,827
    
    
    
    1,512
    
    
    
    
    
    
    
    139,339
    
    
    
    2,709.4
    
    
    
    29.7
    
    
    
    
    
    
    
    2,739.1Financials LiabilityDerivative(4)
    
    
    2,138
    
    
    
    501
    
    
    
    
    
    
    
    2,639
    
    
    
    42.0
    
    
    
    9.9
    
    
    
    
    
    
    
    51.9Total
    
    
    2,138
    
    
    
    501
    
    
    
    
    
    
    
    2,639
    
    
    
    42.0
    
    
    
    9.9
    
    
    
    
    
    
    
    51.9
 
 Notes:(1)
    
    Included in the short-term investments and deposits and restricted  cash, deposits and investments in the consolidated balance sheet.(2)
    
    Included in the long term investments in the consolidated balance sheet.(3)
    
    Included in the other current assets in the consolidated balance sheet.(4)
    
    Included in the other current liabilities in the consolidated balance sheet. 29. Summarized Financial Information of the associate (Vedanta Aluminium Ltd)
   2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsCurrent assets
    
    
    7,157
    
    
    
    15,843
    
    
    
    311.4Non-current assets
    
    
    83,741
    
    
    
    139,470
    
    
    
    2,741.7Current liabilities
    
    
    15,572
    
    
    
    80,107
    
    
    
    1,574.7Non-current
liabilities
    
    
    63,381
    
    
    
    77,409
    
    
    
    1,521.7
 2007
    
    2008
    
    2009
    
    2009Rs. in millions
    
    Rs. in millions
    
    Rs. in millions
    
    US dollarsin millionsNet sales
    
    
    
    
    
    
    
    
    
    
    2,069
    
    
    
    40.7Operating income / (Loss)
    
    
    
    
    
    
    (94
    )
    
    
    (1,003
    )
    
    
    (19.7
    )Income from continuing
operations before taxes
and minority interest
    
    
    671
    
    
    
    3,018
    
    
    
    (21,515
    )
    
    
    (422.9
    )Net income / (loss)
    
    
    83
    
    
    
    1,665
    
    
    
    (20,341
    )
    
    
    (399.9
    )
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30. Asarco Acquisition
       F-46




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##### Table of Contents



Charged toBalance at
    
    Revenue,
    
    
    
    
    
    
    
    
    
    Balance atbeginning of
    
    Costs or
    
    Other
    
    
    
    
    
    end ofperiod
    
    Expenses
    
    Additions
    
    Deductions
    
    PeriodAs of
March 31, 2008 (in Rs. in millions):Valuation Allowance
    
    
    
    
    
    
    1,157
    
    
    
    
    
    
    
    
    
    
    
    1,157Allowances
for doubtful accounts receivables and advances
    
    
    15
    
    
    
    160
    
    
    
    
    
    
    
    (3
    )
    
    
    172As of March 31, 2009 (in Rs. in millions):Valuation Allowance
    
    
    1,157
    
    
    
    544
    
    
    
    
    
    
    
    
    
    
    
    1,701Allowances for doubtful accounts receivables and advances
    
    
    172
    
    
    
    8
    
    
    
    
    
    
    
    (2
    )
    
    
    178As of March 31, 2009 (in US dollars in millions):Valuation Allowance
    
    
    22.7
    
    
    
    10.7
    
    
    
    
    
    
    
    
    
    
    
    33.4Allowances for doubtful accounts receivables and advances
    
    
    3.4
    
    
    
    0.2
    
    
    
    
    
    
    
    0
    
    
    
    3.6
 Note:
  F-47