Document:

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                                                                   EXHIBIT 10.17

                          RUPEE TERM FACILITY AGREEMENT

                               Rs.1000, 00,00,000

                               FACILITY AGREEMENT

                       Dated 16th day of September, 2003

                                       For

                        BHARAT ALUMINIUM COMPANY LIMITED

                                   Arranged by

                   ABN AMRO SECURITIES (INDIA) PRIVATE LIMITED

                                MANDATED ARRANGER

                                       AND

                           IL&FS Trust Company Limited

                        As the Agent and Security Trustee

                                       AND

                      THE BANKS AND FINANCIAL INSTITUTIONS

                         (AS SET OUT IN THE SCHEDULE 1)

                               As Original Lenders

================================================================================

                               DAVE & GIRISH & CO.

================================================================================

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                                    CONTENTS

<Table>
<Caption>

CLAUSE                                                                      PAGE
<S>                                                                         <C>
SECTION 1......................................................................1
INTERPRETATION.................................................................1
SECTION 2......................................................................9
THE FACILITY...................................................................9
SECTION 3.....................................................................11
DRAWDOWN..................................................................... 11
SECTION 4.....................................................................12
REPAYMENT, PREPAYMENT AND CANCELLATION........................................12
SECTION 5.....................................................................13
INTEREST, INTEREST PERIODS....................................................13
SECTION 6.....................................................................15
ADDITIONAL PAYMENT OBLIGATIONS................................................15
SECTION 7.....................................................................18
SECURITY INTEREST AND SECURITY DOCUMENTS .....................................18
SECTION 8.....................................................................19
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT...........................19
SECTION 9.....................................................................28
EVENTS OF DEFAULT ............................................................28
SECTION 10....................................................................31
CHANGES TO PARTIES............................................................31
SECTION 11....................................................................35
THE FINANCE PARTIES...........................................................35
SECTION 12....................................................................42
ADMINISTRATION................................................................42
SCHEDULE - 1 THE ORIGINAL PARTIES COMMITMENTS.................................47
SCHEDULE - 2 CONDITIONS PRECEDENT TO DRAWDOWN.................................48
SCHEDULE - 3 REQUESTS.........................................................50
SCHEDULE - 4 FORM OF TRANSFER CERTIFICATE. ...................................51
SCHEDULE - 5 FORM OF COMPLIANCE CERTIFICATE ..................................53
SCHEDULE - 6 BRIEF DESCRIPTION OF ASSETS .....................................54
</Table>

                                     - i -

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THIS AGREEMENT is dated this 16th day of September, 2003 and made in Mumbai
between:

(1)  BHARAT ALUMINIUM COMPANY LIMITED, a public company within the meaning of
     the Companies Act, 1956 and having its registered office at Aluminium
     Sadan, Core-6, Scope office Complex, 7, Lodhi road, New
     Delhi-110003(hereinafter referred to as the "BORROWER", "BALCO", or the
     "COMPANY");

(2)  ABN AMRO SECURITIES (INDIA) PRIVATE LIMITED (the "ARRANGER");

(3)  THE BANKS AND FINANCIAL INSTITUTIONS listed in Part II of Schedule 1 as
     lenders (the "ORIGINAL LENDERS"); and

(4)  IL&FS TRUST COMPANY LIMITED as agent and security trustee of the Finance
     Parties (other than itself) (the "AGENT AND SECURITY TRUSTEE").

WHEREAS the Lenders have at the request of the Borrower agreed to make available
to the Borrower, a rupee facility on, and subject to the terms and conditions of
this Agreement.

IT IS AGREED as follows:

                                    SECTION 1
                                 INTERPRETATION

1.   DEFINITIONS AND INTERPRETATION

1.1  DEFINITIONS

In this Agreement:

"AFFILIATE" means with respect to Sterlite or the Borrower as the case may be,
any person which is a holding company or subsidiary of Sterlite or the Borrower
or any person which, directly or indirectly, (a) controls Sterlite or the
Borrower, (b) is controlled by Sterlite or the Borrower or (c) is controlled by
the same person who, directly or indirectly, controls Sterlite or the Borrower.
For the purposes of this Agreement, the terms "holding company" and "subsidiary"
shall have the meaning ascribed to them under Section 4 of the Companies Act,
1956 and the term "control" shall mean.

a.   control over the composition of board of directors of Sterlite, the
     Borrower or any Affiliate of either of them;

b.   Control of at least 51% of the issued equity share capital of a company,
     which is an Affiliate of either of the Borrower or Sterlite.

"ASSETS" means Immovable Properties and Other Properties.

"AUTHORISATION" means:

(a)  An authorisation, consent, approval, resolution, licence, exemption,
     filing, notarisation, lodgement or registration; or

(a)  In relation to anything which will be fully or partly prohibited or
     restricted by law if a Government Agency intervenes or acts in any way
     within a

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     specified period after lodgement, filing, registration or notification, the
     expiry of that period without intervention or action.

"AVAILABLE COMMITMENT A" means a Lender's commitment minus:

(a)  The amount of its participation in any outstanding Loan under that
     Commitment; and

(b)  In relation to any proposed Drawdown under Available Commitment A, the
     amount of that Lender's participation in any Loan that is due to be made on
     or before the proposed Drawdown for that Loan.

"AVAILABLE COMMITMENT B" means a Lender's commitment minus:

(a)  The amount of its participation in any outstanding Loan under that
     Commitment; and

(b)  In relation to any proposed drawdown under Available Commitment B, the
     amount of that Lender's participation in any Loan that is due to be made on
     or before the proposed Drawdown for that Loan.

"AVAILABLE COMMITMENT" means Available Commitment A or Available Commitment B
referred to singly as the context may require;

"AVAILABLE FACILITY A" means the aggregate amount for the time being of each
Lender's Available Commitment a not exceeding Rs 650 crores in aggregate of all
the Lenders.

"AVAILABLE FACILITY B" means the aggregate amount for the time being of each
Lender's Available Commitment B not exceeding Rs 350 crores in the aggregate of
all the Lenders.

"AVAILABLE FACILITY" means Available Facility A or Available Facility B referred
to singly as the context may require.

"AVAILABILITY PERIOD A" means the period ending on the 45th day from and
including the date of this Agreement.

"AVAILABILITY PERIOD B" means the period ending on 28th February 2004 commencing
after the last day of the Availability Period A.

"AVAILABILITY PERIOD" means Availability Period A or Availability Period B
referred to singly as the context may require.

"BUSINESS DAY" means a day (other than a Saturday or Sunday) on which banks are
open for general business in Mumbai.

"COMMITMENT A" means:

(a)  In relation to an Original Lender, the amount set opposite its name under
     the heading "Commitment A" in Part IIA of Schedule 1 (The Original Parties
     Commitments and Repayment Instalments) and the amount of any other
     Commitment transferred to it under this Agreement; and

(b)  In relation to any other Lender, the amount of any Commitment A transferred
     to it under this Agreement,

     To the extent not cancelled, reduced or transferred by it under this
     Agreement.

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"COMMITMENT B" means:

(a)  In relation to an Original Lender, the amount set opposite its name under
     the heading "Commitment B" in Part IIB of Schedule 1 (The Original Parties
     Commitments and Repayment Instalments) and the amount of any other
     Commitment transferred to it under this Agreement; and

(b)  In relation to any other Lender, the amount of any Commitment B transferred
     to it under this Agreement,

     To the extent not cancelled, reduced or transferred by it under this
     Agreement.

"COMMITMENT" means Commitment A or Commitment B referred to singly as the
context may require;

"CURRENT ASSETS" means raw materials, semi-finished goods, finished goods
including aluminium ore extracted from mines or purchased, packing materials,
consumable stores, book debts and other assets described as current assets in
financial statements of the Borrower in the form given in Schedule VI Part 1 of
the Companies Act, 1956.

"COMPLIANCE CERTIFICATE" means a certificate delivered pursuant to Clause 8.2.2
(Compliance Certificates) and signed by one director of the Borrower in form and
substance given in Schedule 5].

"DEFAULT" means an Event of Default or any event or circumstance specified in
Clause 9 (Events of Default) which would (with the expiry of a grace period, the
giving of notice, the making of any determination under the Finance Documents or
any combination of any of the foregoing) be an Event of Default.

"DRAWDOWN" means a drawdown of a Facility.

"DRAWDOWN DATE" means the date of a Drawdown.

"DRAWDOWN REQUEST" means a notice substantially in the form set out in Schedule
3 (Requests).

"EVENT OF DEFAULT" means any event or circumstance specified as such in Clause 9
(Events of Default).

"EXISTING INDEBTEDNESS" means the existing Financial Indebtedness of Borrower;

"FACILITY A" means a rupee term loan facility upto an aggregate amount of
Rs. 650 crores to be made available under this Agreement as described in
Clause 2.1.1 ("Facility A").

"FACILITY B" means a rupee term loan facility upto an aggregate amount of
Rs. 350 crores to be made available under this Agreement as described in
Clause 2.1.2 ("Facility B")

"FACILITY" means Facility A or Facility B as the context may require;

"FACILITY OFFICE" means the office or offices notified by a Lender to the Agent
and Security Trustee in writing on or before the date it becomes a Lender (or,
following that date, by not less than five Business Days' written notice) as the
office or offices through which it will perform its obligations under this
Agreement.

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"FEE LETTER" means any letter or letters dated on or about the date of this
Agreement between the Arranger and the Borrower (or the Agent and Security
Trustee and the Borrower) setting out any of the fees.

"FINANCE DOCUMENT" means this Agreement, a Security Document, any Fee Letter,
Transfer Certificate, any Accession Letter, any resignation letter and any other
document designated as such by the Agent and Security Trustee, a Lender and the
Borrower.

"FINANCE PARTY" means the Agent and Security Trustee, the Arranger or a Lender,
as the context may require.

"FINANCIAL INDEBTEDNESS" means any indebtedness of the Borrower for or in
respect of:

(a)  Moneys borrowed;

(b)  Any amount raised by acceptance under any acceptance credit facility;

(c)  Any amount raised pursuant to any note purchase facility or the issue of
     bonds, notes, debentures, loan stock or any similar instrument;

(d)  The amount of any liability in respect of any lease or hire purchase
     contract which would, in accordance with GAAP, be treated as a finance or
     capital lease;

(e)  Receivables sold or discounted (other than any receivables to the extent
     they are sold on a non-recourse basis);

(f)  Any amount raised under any other transaction (including any forward sale
     or purchase agreement) having the commercial effect of a borrowing;

(g)  Any derivative transaction entered into in connection with protection
     against or benefit from fluctuation in any rate or price (and when
     calculating the value of any derivative transaction, only the marked to
     market value shall be taken into account);

(h)  Any counter-indemnity obligation in respect of a guarantee, indemnity,
     bond, standby or documentary letter of credit or any other instrument
     issued by a bank or financial institution; and

(i)  The amount of any liability in respect of any guarantee or indemnity for
     any of the items referred to in paragraphs (a) to (h) above.

"FUTURE INDEBTEDNESS" means Indebtedness agreed to be incurred by the Borrower
from any other creditor.

"GAAP" means generally accepted accounting principles in India.

"GOVERNMENTAL AGENCY" means any government or any governmental agency,
semi-governmental or judicial entity or authority (including, without
limitation, any stock exchange or any self-regulatory organisation established
under statute).

"HOLDING COMPANY" means, in relation to a company or corporation, any other
company or corporation in respect of which that company or corporation is a
Subsidiary.

"IMMOVABLE PROPERTIES" means the immovable properties briefly described in
Part I Schedule 6.

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"INDIRECT TAX" means any goods and services tax, consumption tax, value added
tax or any tax of a similar nature.

"INDEBTEDNESS" means the Existing Indebtedness and the Loan Amounts outstanding
at the time of computation, or the future Indebtedness agreed to be incurred by
the Borrower as the context may require.

"INTEREST PERIOD" means, in relation to a Loan each period determined in
accordance with Clause 5.2 (Interest Periods) and, in relation to an Unpaid Sum,
each period determined in accordance with Clause 5.1.3 (Default interest).

"LENDER" means:

(a)  Any Original Lender; and

(b)  Any bank, financial institution, trust, fund or other entity which has
     become a Party in accordance with Clause 10 (Changes to Parties)

     Which in each case has not ceased to be a Party in accordance with the
     terms of this Agreement.

"LOAN" means a loan made or to be made under a Facility or the principal amount
outstanding for the time being of that Loan.

"LOAN AMOUNT" means a Repayment Instalment of a Loan, interest, costs, charges,
expenses and any other amount payable by the Borrower including fees and/or
remuneration payable to a Finance Party.

"MAJORITY LENDERS" means:

(a)  If the Loan is not then outstanding, a Lender or Lenders whose Commitments
     aggregate more than 66 2/3 % of the Total Commitments (or, if the Total
     Commitments have been reduced to zero, aggregated more than 66 2/3 % of the
     Total Commitments immediately prior to the reduction); or

(b)  At any other time, a Lender or Lenders whose participation in the aggregate
     amount of the Loan then outstanding is more than 66 2/3 % of all the Loan
     then outstanding.

"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business,
operations, property, condition (financial or otherwise) of the Borrower or any
of the Borrower's Subsidiaries, Sterlite; (b) the ability of any of the
Borrowers to perform its obligations under the Finance Documents; or (c) the
validity or enforceability of this Agreement or the rights or remedies of any
Finance Party under the Finance Documents.

"MONTH" means a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month, except that:

(a)  [(Subject to paragraph (c) below)] if the numerically corresponding day is
     not a Business Day, that period shall end on the next Business Day in that
     calendar month in which that period is to end if there is one, or if there
     is not, on the immediately preceding Business Day;

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(b)  If there is no numerically corresponding day in the calendar month in
     which that period is to end, that period shall end on the last Business Day
     in that calendar month; and

(c)  [If an Interest Period begins on the last Business Day of a calendar month,
     that Interest Period shall end on the last Business Day in the calendar
     month in which that Interest Period is to end.]

The above rules will only apply to the last Month of any period.

"ORIGINAL FINANCIAL STATEMENTS" means:

(a)  The audited consolidated financial statements of the Sterlite and its
     subsidiaries for the financial year ended 31st March 2003; and

(b)  The Borrower's audited financial statements for its financial year ended
     31st March 2003.

"OTHER PROPERTIES" means the movable properties and assets of the Borrower other
than Current Assets, general particulars whereof are given in Part II of
Schedule 6.

"PARTY" means a party to this Agreement.

"PROJECT" means the project of expansion and modernisation of the existing
facilities undertaken by the Borrower at Korba in the State of Chhattisgarh.

"PROMOTER" means the promoter of a company as defined Regulation 2(1)(h) of the
Take over Code.

"REPAYMENT DATE" means the last day of each quarter in the period commencing
from the 39th month after the drawdown of the first Loan under Facility A and
ending on the 72nd month from the drawdown of that Loan.

"REPAYMENT INSTALMENT" means each instalment for repayment of the Loan specified
in clause 4.1.1 (Repayment of the Loans) read with Part III of Schedule 1.

"REPEATING REPRESENTATIONS," means each of the representations set out in
Clauses 8.1.

"SECURED LOANS" means any Loans repaid after one year and secured on the Assets
of the Company.

"SECURITY DOCUMENT" means an instrument in writing and whether registered or not
and includes any memorandum or record whether in writing or recorded manually or
electronically and whether or not signed by a party or parties thereto creating
and/or evidencing the creation of a Security Interest.

"SECURITY INTEREST" means a mortgage, charge, pledge, lien or other security
interest securing any obligation of any person on any property or assets or any
other agreement or arrangement having a similar effect.

"STERLITE" means Sterlite Industries India Limited.

"STERLITE GROUP" means Sterlite and its Affiliates.

"SUBSIDIARY" means a subsidiary within the meaning of section 4 of the Companies
Act 1956 (1 of 1956).

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"TAKEOVER CODE" means the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 1997.

"TAX" means any tax, levy, cess, impost, duty or other charge or withholding of
a similar nature (including any penalty or interest payable in connection with
any failure to pay or any delay in paying any of the same).

"TERMINATION DATE A" means the last date of Availability Period A;

"TERMINATION DATE B" means the last date of Availability Period B

"TERMINATION DATE" means Termination Date A or Termination Date B referred to
singly as the context may require;

"TOTAL COMMITMENT A" means aggregate amount of the Commitment A mentioned in
Part II A of Schedule 1.

"TOTAL COMMITMENT B" means the aggregate amount of the Commitment B mentioned in
Part II B in Schedule 1.

"TOTAL COMMITMENTS" means Total Commitment A or Total Commitment B referred to
singly as the context may require;

"TOTAL INDEBTEDNESS" means the aggregate amount of the Existing Indebtedness,
the Loan Amounts outstanding at the time of computation, and the Future
Indebtedness.

"TRANSFER CERTIFICATE" means a certificate substantially in the form set out in
Schedule 4 (Form of Transfer Certificate) or any other form agreed between the
Agent and Security Trustee and the Borrower.

"TRANSFER DATE" means, in relation to a transfer, the later of:

(a)  The proposed Transfer Date specified in the Transfer Certificate; and

(b)  The date on which the Agent and Security Trustee executes the Transfer
     Certificate.

"UNPAID SUM" means any sum due and payable but unpaid by the Borrower under the
Finance Documents.

"UNSECURED INDEBTEDNESS" means indebtedness both present and future of the
Borrower not secured on any Assets.

"VALUE OF SECURED ASSETS" means the aggregate Written Down Value of the Assets
on which Security Interests shall have been created to secure any Indebtedness
of the Borrower.

"WRITTEN DOWN VALUE OF AN ASSET," means the cost of acquisition of that Asset as
reduced by the depreciation provided upto the date on which the written down
value is to be arrived at as provided under Schedule XIV to the Companies Act,
1956.

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1.2  CONSTRUCTION

(a)  Unless a contrary indication appears, any reference in this Agreement to:

     (i)    The "AGENT AND SECURITY TRUSTEE", the "ARRANGER", any "FINANCE
            PARTY", any "LENDER", any "BORROWER" or any "PARTY" shall be
            construed so as to include its successors in title, permitted
            assigns and permitted transferees;

     (ii)   "ASSETS" includes present and future properties, revenues and rights
            of every description;

     (iii)  A "FINANCE DOCUMENT" or any other agreement or instrument is a
            reference to that Finance Document or other agreement or instrument
            as amended or novated;

     (iv)   "INDEBTEDNESS" includes any obligation (whether incurred as
            principal or as surety) for the payment or repayment of money,
            whether present or future, actual or contingent;

     (v)    A "PERSON" includes any person, firm, company, corporation,
            government, state or agency of a state or any association, trust or
            partnership (whether or not having separate legal personality) or
            two or more of the foregoing;

     (vi)   A "REGULATION" includes any regulation, rule, official directive,
            request or guideline (whether or not having the force of law) of any
            governmental, intergovernmental or supranational body, agency,
            department or regulatory, self-regulatory or other authority or
            organisation as amended or renacted;

     (vii)  A provision of law is a reference to that provision as amended or
            re-enacted; and

     (viii) A time of day is a reference to Mumbai time.

     (ix)   Singular includes plural and vice-versa and reference to any gender
            includes other gender/s.

(b)  Section, Clause and Schedule headings are for ease of reference only.

(c)  Unless a contrary indication appears, a term used in any other Finance
     Document or in any notice given under or in connection with any Finance
     Document has the same meaning in that Finance Document or notice as in this
     Agreement.

(d)  A Default (other than an Event of Default) is "CONTINUING" if it has not
     been remedied or waived and an Event of Default is "CONTINUING" if it has
     not been [remedied or waived]

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                                   SECTION 2
2.1   FACILITIES

2.1.1 FACILITY A

Subject to the terms of this Agreement, the Lenders shall make available to the
Borrower Facility A in an aggregate amount equal to the Total Commitment A as
specified for each Lender in Part II A of Schedule 1 to this Agreement and the
Borrower agrees to borrow from the Lenders a sum of money equal to the Total
Commitment A.

2.1.2 FACILITY B

Subject to the terms of this Agreement, the Lenders shall make available to the
Borrower Facility B in an aggregate amount equal to the Total Commitment B as
specified for each Lender in Part II B of Schedule 1 to this Agreement and the
Borrower agrees to borrow from the Lenders a sum of money equal to the Total
Commitment B.

2.2   FINANCE PARTIES' RIGHTS AND OBLIGATIONS

(a)  The obligations of each Finance Party under the Finance Documents are
     several. Failure by a Finance Party to perform its obligations under the
     Finance Documents does not affect the obligations of any other Party under
     that Finance Document. No Finance Party is responsible for the obligations
     of any other Finance Party under the Finance Documents.

(b)  The rights of each Finance Party under or in connection with the Finance
     Documents are separate and independent rights and any debt arising under
     the Finance Documents to a Finance Party from the Borrower shall be a
     separate and independent debt.

(c)  A Finance Party may, except as otherwise stated in the Finance Documents,
     separately enforce its rights under the Finance Documents.

2.3   PURPOSE

The Borrower shall apply all amounts borrowed by it under the Facilities towards
financing implementation of the Project.

2.4   CONDITIONS OF DRAWDOWN

2.4.1 INITIAL CONDITIONS PRECEDENT

The Borrower agrees not to deliver a Drawdown Request unless the Agent and
Security Trustee has received all of the documents and other evidence listed in
and appearing to comply with the requirements of Schedule 2 (Conditions
precedent). The Agent and Security Trustee shall notify the Borrower and the
Lenders promptly upon receiving such documents and other evidence.

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2.4.2 FURTHER CONDITIONS PRECEDENT

The Lenders will only be obliged to comply with Clause 3.2 (Lenders'
participation) if on the date of a Drawdown Request for a Loan and on the
proposed Drawdown Date for that Loan:

     (i)   No Default is continuing or would result from the proposed drawdown
           of that Loan; and

     (ii)  The Repeating Representations to be made by the Borrower are true in
           all material respects.

     (iii) No notification from the Agent and Security Trustee is received as
           per Clause 4.2.

2.5   FACILITY DRAWDOWN

(a)   The Borrower shall not deliver more than four Drawdown Requests for each
Commitment and each Drawdown Request for that Commitment shall be in the amount
of not less than Rs. 50 Crores or in multiple of Rs. 50 Crores.

(b)   Only four Drawdown Requests aggregating Rs. 650 Crores shall be drawn
under Facility A and only four Drawdown Requests aggregating Rs 350 crores shall
be drawn under Facility B.

(c)   The Borrower shall deliver the Drawdown Request for the first Loan from
Facility A within 15 days of the date of the Agreement and the Drawdown Requests
for the last of the Loans from Facility A shall be given before Termination Date
A.

(d)   The Borrower shall deliver the Drawdown Request for the first Loan from
Facility B only after the Borrower shall have drawdown the full amount of
Facility A. The Drawdown Request for the last of the Loans in Facility B shall
be given before Termination Date B.

(e)   Notwithstanding anything contained in this Agreement, no Lender shall be
obliged to make available any of its Available Commitment B:

      (i)  If the Borrower shall not have drawndown the entire amount of
           Commitment A within the Availability Period A.

      (ii) Unless the Borrower shall have paid Commitment Fee calculated @ 0.25%
           p.a. for the undrawn amount of Commitment B as provided hereinafter
           before making any Drawdown Request for a Loan from Commitment B.

2.6   OTHER CONDITIONS FOR DRAWDOWN

Such part of the undrawn amount of a Facility, which has not been drawn within
the Availability Period of that Facility, shall be cancelled and no Lender shall
be obliged to provide its part of Available Commitment in that Facility after
the end of the Availability Period for that Facility.

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                                    SECTION 3
                                    DRAWDOWN

3.1  DRAWDOWN

3.1.1 DELIVERY OF DRAWDOWN REQUEST

(a)  The Borrower shall Drawdown a Facility by delivery to the Agent and
Security Trustee of a duly completed request for the amount of Loan in that
Facility, which shall not be drawndown later than the Termination Date A for
Facility A and Termination Date B for Facility B as the case may be.

(b)  A Drawdown Request is irrevocable and will not be regarded as having been
fully completed unless the proposed Drawdown is a Business Day within the
Availability Period.

3.1.2 DRAWDOWN REQUEST IRRECOVABLE

(a)  A Drawdown Request is irrevocable and will not be regarded as having been
     duly completed unless:

     (i)  The proposed Drawdown Date is a Business Day within the Availability
          Period of the Facility for which the Drawdown Request is made;

     (ii) The amount of that Drawdown complies with Clause 3.2.

(b)  Only one Loan may be requested in each Drawdown Request.

3.2  LENDERS' PARTICIPATION

(a)  If the conditions set out in this Agreement have been met, each Lender
     shall make its participation in each Loan available by the Drawdown Date
     for that Loan in the relevant Facility through its Facility Office.

(b)  The amount of each Lender's participation in each Loan will be equal to the
     proportion borne by its relevant Available Commitment in the relevant
     Facility immediately prior to the making of that Loan.

(c)  The Agent and Security Trustee shall notify each Lender of the amount of
     each Loan and the amount of its participation in that Loan, on or before
     the Drawdown for that Loan.

3.3  DISBURSEMENT OF LOAN

The Lenders shall disburse a Loan on the Drawdown Date of that Loan.

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                                    SECTION 4
                     REPAYMENT, PREPAYMENT AND CANCELLATION

4.1   REPAYMENT

4.1.1 REPAYMENT OF LOANS

The Borrower shall repay each Loan outstanding on the Termination Date in
[twelve ] Repayment Instalments on the respective Repayment Dates as provided in
Part III of Schedule 1 hereto commencing from the 39th month from first Drawdown
under Facility A

4.1.2 REBORROWING

The Borrower may not reborrow any part of a Facility which is repaid.

4.2   CHANGE OF CONTROL

If the Sterlite Group ceases to control the Borrower:

     (i)  the Borrower shall promptly notify the Agent and Security Trustee upon
          becoming aware of that event; and

     (ii) if the Majority Lenders so require, the Agent and Security Trustee
          shall, by not less than 7 (Seven) days notice to the Borrower, cancel
          the Facility and if the Facility is drawndown, declare the Loan,
          together with accrued interest, and all other amounts accrued under
          the Finance Documents immediately due and payable, whereupon all such
          outstanding amounts will become immediately due and payable.

4.3   VOLUNTARY CANCELLATION

The Borrower shall have no right to cancel or reduce the amount of the Facility
agreed to be provided to it.

4.4   VOLUNTARY PREPAYMENT OF THE LOANS

The Borrower has no right to prepay all or any part of a Loan. The Borrower may,
however prepay all or any part of a Loan to one or more than one Lender upon the
terms and conditions as may be agreed between the Borrower and such Lender(s).

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                                    SECTION 5

                           INTEREST, INTEREST PERIODS

5.1   INTEREST

5.1.1 CALCULATION OF INTEREST

The rate of interest on each Loan for each Interest Period is 8.5% (eight point
five percentage) rate per annum.

5.1.2 PAYMENT OF INTEREST

The Borrower to which a Loan has been made available shall pay accrued interest
on that Loan on the last day of each Interest Period. The Interest payments
shall be made at par in Mumbai to the Lenders.

5.1.3 DEFAULT INTEREST

(a)  If the Borrower fails to pay any amount payable by it under a Finance
     Document on its due date, interest shall accrue on the overdue amount from
     the due date up to the date of actual payment (both before and after
     judgment) at a rate which, subject to paragraph (b) below, is 2 (two) per
     cent higher than the rate which would have been payable if the overdue
     amount had, during the period of non-payment, constituted a Loan in the
     overdue amount on a daily rest basis. Any interest accruing under this
     clause 5.1.3 shall be immediately payable by the Borrower forthwith on
     demand of the Agent and Security Trustee.

(b)  If any overdue amount consists of all or part of the Loan which became due
     on a day which was not the last day of an Interest Period:

     (i)  the first Interest Period for that overdue amount shall have a
          duration equal to the unexpired portion of the current Interest
          Period; and

     (ii) the rate of interest applying to the overdue amount during that first
          Interest Period shall be 2 per cent higher than the rate which would
          have applied if the overdue amount had not become due.

(c)  Default interest (if unpaid) arising on an overdue amount will be paid on a
     daily rest basis and shall be paid with the overdue amount at the end of
     each Interest Period applicable to that overdue amount but will remain
     immediately due and payable.

5.2   INTEREST PERIODS

5.2.1 FIRST INTEREST PERIOD

The first Interest Period in respect of a Loan shall commence from its Drawdown
Date and end on the last day of the calendar month in which that Loan shall have
been drawndown. Each Interest Period, other than the first Interest Period, in
respect of a Loan shall commence from the end of the preceding Interest Period,
and end on the last day of the next succeeding calendar month.

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5.2.2 NON-BUSINESS DAYS

If an Interest Period would otherwise end on a day which is not a Business Day,
that Interest Period will instead end on the next Business Day in that calendar
month (if there is one) or the preceding Business Day (if there is not).

5.2.3 ADDITIONAL INTEREST

If the Borrower fails to execute and register (wherever required) the relevant
Security Documents each in form and substances satisfactory to the Lenders (i)
within three months from the first Drawdown Date to create, register and perfect
the Security Interest by way of hypothecation on the Other Properties or (ii)
within one year from the first Drawdown Date, to create and perfect the Security
Interest by way of mortgage on the Immovable Properties, the Borrower shall pay
to the Finance Parties, additional interest @ 0.5% per month on the Loan Amounts
commencing from the expiration of three months or one year, as the case may be,
until such time as the relevant Security Interest shall have been created,
registered and perfected to the satisfaction of the Agent and Security Trustee ,
in addition to the interest payable as provided in Clause 5.1.1 set out
hereinbefore.

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                                    SECTION 6
                         ADDITIONAL PAYMENT OBLIGATIONS

6.1   STAMP DUTY AND OTHER TAXES

The Borrower shall (a) pay and, (b) within Seven Business Days of demand,
indemnify each Finance Party against any cost, loss or liability that Finance
Party incurs in relation to all stamp duty, registration and other similar Taxes
payable in respect of any Finance Document.

6.2   INDIRECT TAX

(a)   All consideration expressed to be payable under a Finance Document by any
Party to a Finance Party shall be deemed to be exclusive of any Indirect Tax. If
any Indirect Tax is chargeable on any supply made or services rendered by any
Finance Party to any Party in connection with a Finance Document, that Party
shall pay to the Finance Party (in addition to and at the same time as paying
the consideration) an amount equal to the amount of the Indirect Tax.

(b)   Where a Finance Document requires any Party to reimburse a Finance Party
for any costs or expenses, that Party shall also at the same time pay and
indemnify the Finance Party against all Indirect Tax incurred by that Finance
Party in respect of the costs or expenses to the extent the Finance Party
reasonably determines that it is not entitled to credit or repayment in respect
of the Indirect Tax.

6.3   OTHER INDEMNITIES

6.3.1 Indemnity to Finance Parties

The Borrower shall within (7) Seven Business Days of demand, indemnify each
Finance Party against any cost, loss or liability incurred by that Finance Party
as a result of:

(a)   the occurrence of any Event of Default;

(b)   any information produced or approved by the Borrower being misleading
      and/or deceptive in any respect;

(c)   any enquiry, investigation, subpoena (or similar order) or litigation with
      respect to the Borrower or with respect to the transactions contemplated
      or financed under this Agreement;

(d)   a failure by the Borrower to pay any amount due under a Finance Document
      on its due date, including without limitation, any cost, loss or liability
      arising as a result of Clause 11.3 (Sharing among the Finance Parties);

(e)   funding, or making arrangements to fund, its participation in a Loan
      requested by the Borrower in a Drawdown Request but not drawn down (other
      than by reason of default or negligence by that Finance Party alone); or

(f)   The Loan (or part of the Loan) not being prepaid in accordance with a
      notice of prepayment given by the Borrower.

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6.3.2 INDEMNITY TO THE AGENT AND SECURITY TRUSTEE

The Borrower shall promptly indemnify the Agent and Security Trustee against any
cost, loss or liability incurred by the Agent and Security Trustee (acting
reasonably) under intimation to the Borrower as a result of:

(a)   investigating any event which it reasonably believes is a Default; or

(b)   acting or relying on any notice, request or instruction which it
      reasonably believes to be genuine, correct and appropriately authorised.

6.4   MITIGATION BY THE LENDERS

(a)   Each Finance Party shall, in consultation with the Borrower, take all
      reasonable steps to mitigate any circumstances which arise and which would
      result in any amount becoming payable under or pursuant to, or cancelled
      pursuant to, any of Clause 6.1 (Stamp Taxes) Clause 6.2 (Indirect Taxes)
      including (but not limited to) transferring its rights and obligations
      under the Finance Documents to another Affiliate or Facility Office.

(b)   Paragraph (a) above does not in any way limit the obligations of the
      Borrower under the Finance Documents.

6.5   LIMITATION OF LIABILITY

(a)   The Borrower shall indemnify each Finance Party for all costs and expenses
      reasonably incurred by that Finance Party as a result of steps taken by it
      under Clause 6.4 (Mitigation).

(b)   A Finance Party is not obliged to take any steps under Clause 6.4
      (Mitigation) if, in the opinion of that Finance Party (acting reasonably),
      to do so might be prejudicial to it.

6.6   COSTS, EXPENSES AND FEES

6.6.1 TRANSACTION EXPENSES

The Borrower shall, within Seven Business Days of demand, pay the Agent and
Security Trustee and the Arranger the amount of all costs and expenses
(including legal fees) reasonably incurred by any of them in connection with the
negotiation, preparation, printing, execution and syndication of:

(a)   this Agreement and any other documents referred to in this Agreement; and

(b)   any other Finance Documents executed after the date of this Agreement.

6.6.2 AMENDMENT COSTS

If the Borrower requests an amendment, waiver or consent, the Borrower shall,
within Seven Business Days of demand, reimburse the Agent and Security Trustee
for the amount of all costs and expenses (including legal fees) reasonably
incurred by the Agent and Security Trustee in responding to, evaluating,
negotiating or complying with that request or requirement.

6.6.3 ENFORCEMENT COSTS

The Borrower shall, within (7) Seven Business Days of demand, pay to each
Finance Party the amount of all costs, charges and expenses (including legal
fees) incurred or to

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be incurred by that Finance Party in connection with the enforcement of, or the
preservation of any rights under, each Finance Document.

6.6.4 COMMITMENT FEES

The Borrower shall pay Commitment Fees calculated @ 0.25% p.a. on the undrawn
amount of Facility B commencing from the end of the Availability Period A until
the end of Availability Period B and shall be paid at the time of giving the
Drawdown Request or on the last Business Day of the Availability Period B.

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                                    SECTION 7
                    SECURITY INTEREST AND SECURITY DOCUMENTS

7.1  The Borrower hereby unconditionally and irrevocably undertakes to create
     and perfect Security Interest in favour of the Agent and Security Trustee
     in trust for and for the benefit of the Finance Parties:

(a)  a first exclusive charge of hypothecation of all the Other Properties by
     executing and registering within a period of three months from the first
     Drawdown Date, a deed of hypothecation in favour of the Agent and Security
     Trustee in form and substance satisfactory to the Agent and Security
     Trustee creating thereunder a first exclusive charge by way of
     hypothecation on all the Other Properties;

(b)  a first exclusive mortgage of all the Immovable Properties either mortgage
     by deposit of title deeds or registered English mortgage creating exclusive
     mortgage in favour of the Agent and Security Trustee within a period of one
     year from the first Drawdown Date,

so as to secure repayment and payment of all the Loan Amounts by the Borrower to
the Finance Parties.

Provided that, the Borrower shall be at liberty to create any further or other
Security Interests to secure repayment and payment its Future Indebtedness, on
the condition that aggregate value of the Secured Assets shall not be less than
1.33 times of the aggregate amount of the Total Indebtedness.

Provided further that, the Loan is not sought to be secured by way of mortgage
by or under this Agreement and this Agreement is not an agreement to mortgage
any Immovable Property.

7.2  The Agent and Security Trustee may, without being bound to do so, extend
the period within which the mortgage as aforesaid is to be created by the
Borrower.

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                                    SECTION 8
         REPRESENTATIONS, UNDERTAKINGS, COVENANTS AND EVENTS OF DEFAULT

8.1   REPRESENTATIONS

The Borrower makes the representations and warranties set out in this Clause 8
to each Finance Party on the date of this Agreement.

8.1.1 STATUS

(a)   It is a company, duly incorporated and validly existing under the laws of
      India.

(b)   It and each of its Subsidiaries has the power to own its assets and carry
      on its business as it is being conducted.

8.1.2 BINDING OBLIGATIONS

(a)   The Borrower declares and confirms that the Facility agreed to be granted
      to the Borrower shall be governed by the terms and conditions as herein
      contained, as well as those embodied in the relative Finance Documents.

(b)   The obligations expressed to be assumed by it in each Finance Document
      are, subject to any general principles of law limiting its obligations
      which are specifically referred to in any legal opinion delivered in
      accordance with Clause 2.4 read with Schedule 2 (Conditions Precedent of
      Drawdown) legal, valid, binding and enforceable obligations.

8.1.3 NON-CONFLICT WITH OTHER OBLIGATIONS

The entry into and performance by the Borrower of, and the transactions
contemplated by, the Finance Documents do not and will not conflict with:

(a)   any law or regulation applicable to it;

(b)   constitutional documents of the Borrower, or any company which is the
      Subsidiary of the Borrower;

(c)   any agreement or instrument binding upon it or any company which is a
      member of Sterlite Group; or

(d)   does not cause any limitation on any of the powers whatsoever of the
      Borrower however imposed, or on the right or ability of the directors of
      the Borrower where the Borrower is a company to exercise such powers to be
      exceeded.

8.1.4 POWER AND AUTHORITY

(a)   It has the power to enter into, perform and deliver, and has taken all
      necessary action to authorise its entry into, performance and delivery of,
      the Finance Documents to which it is a party and the transactions
      contemplated by those Finance Documents;

(b)   the copies, certified by the Borrower's Company Secretary, of the
      Certificate of Incorporation and the Memorandum and Articles of
      Association of the Borrower

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      are true and effective and the Borrower shall not during the currency of
      this Agreement cause any alterations to be made in any of them which would
      adversely affect the financial condition of the Borrower to service a
      Loan, without prior notification to and written consent of the Agent and
      Security Trustee; and

(c)   the resolutions are proposed to be passed by the Borrower in its first
      general meeting to be held hereafter, consenting to the Board of Directors
      borrowing moneys in excess of the aggregate of the paid up capital of the
      Borrower and its free reserves, a certified copy of the minutes of which
      has been delivered by the Borrower to the Agent and Security Trustee, is
      and, during the currency of this Agreement, shall remain adequate and
      effective to enable the Lenders to grant and the Borrower to receive the
      credit facilities aforesaid and mortgaging and charging the Properties as
      security for payment of the payment of the Loan Amounts.

8.1.5 NO MATERIAL ADVERSE CHANGE

The audited profit and loss account of the Borrower for the year ended 31st
March, 2003 and the audited balance sheet of the Borrower as of that date give a
true and fair view of the results of the operations of the Borrower for that
period and the financial position of the Borrower as of that date and that there
has been no material change adverse to the business, assets, conditions or
operations of the Borrower since that date.

8.1.6 MORTGAGE CHARGES

Other than the Existing Security Interests created in favour of the Borrower's
banks on current assets, there exists no mortgage, charge, hypothecation,
pledge, lien, encumbrance or other security interest whatsoever over the whole
or any part of the undertaking or assets, present or future, including uncalled
capital of the Borrower.

8.1.7 VALIDITY AND ADMISSIBILITY IN EVIDENCE

All Authorisations required or desirable:

(a)   to enable it lawfully to enter into, exercise its rights and comply with
      its obligations in the Finance Documents to which it is a party;

(b)   to make the Finance Documents to which it is a party admissible in
      evidence in its jurisdiction of incorporation;

(c)   for it and its Subsidiaries to carry on their business, and which are
      material; and

      have been obtained or effected and are in full force and effect.

8.1.8 NO DEFAULT

(a)   No Event of Default is continuing or might reasonably be expected to
      result from the making of a Loan.

(b)   No other event or circumstance is outstanding which constitutes a default
      under any other agreement or instrument which is binding on the Borrower
      or any of its Subsidiaries or to which its (or its Subsidiaries') assets
      are subject which might have a Material Adverse Effect.

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8.1.9 NO MISLEADING INFORMATION

(a)  Any factual information provided by the Borrower or any of its Subsidiaries
     was true and accurate in all material respects as at the date it was
     provided or as at the date (if any) at which it is stated.

(b)  Any financial information provided to the Lenders has been prepared on the
     basis of recent historical information and on the basis of reasonable
     assumptions.

8.1.10 FINANCIAL STATEMENTS

(a)  Its Original Financial Statements were prepared in accordance with GAAP
     consistently applied save to the extent expressly disclosed in such
     Original Financial Statements.

(b)  Its Original Financial Statements give a true and fair view and represent
     its financial condition and operations (consolidated in the case of the
     Borrower) during the relevant financial year save to the extent expressly
     disclosed in such Original Financial Statements.

8.1.11 PARI PASSU RANKING

     Its payment obligations under the Finance Documents rank at least pari
     passu with the claims of all its other unsecured and unsubordinated
     creditors, except for obligations mandatorily preferred by law applying to
     companies generally.

8.1.12 NO PROCEEDINGS PENDING OR THREATENED

No litigation, arbitration or administrative proceedings of or before any court,
arbitral body or agency which, if adversely determined, might reasonably be
expected to have a Material Adverse Effect have (to the best of its knowledge
and belief) been started or threatened against it or any of its Subsidiaries.

8.1.13 AUTHORISED SIGNATURES

Any person specified as its authorised signatory under Schedule 2 (Conditions
precedent to Drawdown) or Clause 8.2.4 (d) is authorised to sign Drawdown
Requests and other notices on its behalf.

8.1.14 AUTHORISATIONS

The Borrower has obtained and will obtain all authorizations from the relevant
Governmental Agencies required for the business or activities of the Borrower
including-

(a)  All necessary environment and other clearances for the expansion and
     modernization.

(b)  The necessary licenses/agreement/contracts and the regulatory approvals
     required for expansion and Modernization Project to be financed under this
     Facility.

8.1.15 WINDING UP

No action for the voluntary or compulsory winding up of the Borrower has been
initiated by the Borrower or any Creditors or Shareholders.

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8.1.16 REPETITION

The Repeating Representations are deemed to be made by the Borrower by reference
to the facts and circumstances then existing on the date of each Drawdown
Request and the first day of each Interest Period.

8.1.17 SECURITY

Each Security Document to which the Borrower is a party validly creates or will,
upon execution thereof by the Borrower, create each of the encumbrances which is
expressed to be created by that Security Document and evidences each of the
encumbrance it is expressed to evidence.

8.1.18 GOOD TITLE TO ASSETS

The Borrower has good, valid and marketable title to, or valid leases or
licences of, and all appropriate Authorisations to use, the Assets necessary to
carry on its business as presently conducted.

8.1.19 LEGAL AND BENEFICIAL OWNER

The Borrower is the absolute legal owner and beneficial owner of all the Assets
excluding mining leases, which it is entitled, in accordance with the terms of
the respective leases and the Assets other than Current Assets are free from
encumbrances.

8.1.20 INSURANCE

The Borrower has taken insurance of all its assets on the replacement value
basis and shall modify the same on such terms and conditions as may be
stipulated by the Agent and Security Trustee in consultation with the Lenders.

8.2    OTHER FINANCIAL STATEMENTS AND COMPLIANCE CERTIFICATES

8.2.1  OTHER FINANCIAL STATEMENTS

The Borrower shall supply to the Agent and Security Trustee in sufficient copies
for all the Lenders:

(a)    as soon as the same become available, but in any event within 90 (ninety)
       days after the end of each of its financial years its audited
       consolidated financial statements for that financial year;

(b)    as soon as the same become available, but in any event within 60 (sixty)
       days after the end of each half of each of its financial years its
       consolidated financial statements for that financial half year.

8.2.2  COMPLIANCE CERTIFICATES

(a)    The Borrower shall supply to the Agent and Security Trustee, with each
       set of financial statements delivered pursuant to paragraph (a) or (b) of
       Clause 8.1.10 (Financial statements), a Compliance Certificate setting
       out (in reasonable detail)

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      computations as to compliance with Clause 8.3 (Financial covenants) as at
      the date as at which those financial statements were drawn up.

(b)   Each Compliance Certificate delivered pursuant to paragraph (a) of Clause
      8.1.10 (Financial statements) shall in addition be reported on by the
      Borrower's auditors in the form agreed by the Borrower and all the Lenders
      before the date of this Agreement.

8.2.3 REQUIREMENTS AS TO FINANCIAL STATEMENTS

(a)   Each set of financial statements delivered by the Borrower pursuant to
      Clause 8.1.10 (Financial statements) shall be certified by a director of
      the Borrower as fairly representing its financial condition as at the date
      as at which those financial statements were drawn up.

(b)   The Borrower shall provide that each set of financial statements delivered
      pursuant to Clause 8.1.10 (Financial statements) is prepared using GAAP.

(c)   The Borrower shall provide that each set of financial statements is
      delivered pursuant to Clause 8.1.10 (Financial statements) and prepared
      using GAAP, accounting practices and financial reference periods is
      consistent with those applied in the preparation of the Original Financial
      Statements for the Borrower unless, in relation to any set of financial
      statements, it notifies the Agent and Security Trustee that there has been
      a change in GAAP, the accounting practices or reference periods and its
      auditors deliver to the Agent and Security Trustee:

      (i)  a description of any change necessary for those financial statements
           to reflect the GAAP, accounting practices and reference periods upon
           which that Borrower's Original Financial Statements were prepared;
           and

      (ii) sufficient information, in form and substance as may be reasonably
           required by the Agent and Security Trustee, to enable the Lenders to
           determine whether Clause 8.3 (Financial covenants) has been complied
           with and make an accurate comparison between the financial position
           indicated in those financial statements and that Borrower's Original
           Financial Statements.

       Any reference in this Agreement to those financial statements shall be
       construed as a reference to those financial statements as adjusted to
       reflect the basis upon which the Original Financial Statements were
       prepared.]

8.2.4  INFORMATION: MISCELLANEOUS

The Borrower shall supply to the Agent and Security Trustee (in sufficient
copies for all the Lenders, if the Agent and Security Trustee so requests):

(a)    all documents dispatched by the Borrower to its shareholders (or any
       class of them) or its creditors generally at the same time as they are
       despatched;

(b)    promptly upon becoming aware of them, the details of any litigation,
       arbitration or administrative proceedings which are current, threatened
       or pending against, the Borrower or any of its subsidiaries and which
       might, if adversely determined, have a Material Adverse Effect;

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(c)   promptly, such further information regarding the financial condition,
      business and operations of any Member of Sterlite Group as any Finance
      Party (through the Agent and Security Trustee) may reasonably request;
      and

(d)   promptly, notice of any change in authorised signatories of the Borrower
      signed by a director or company secretary of the Borrower accompanied by
      specimen signatures of any new authorised signatories.

8.2.5 NOTIFICATION OF DEFAULT

(a)   The Borrower shall notify the Agent and Security Trustee of any Default
      (and the steps, if any, being taken to remedy it) promptly upon becoming
      aware of its occurrence.

(b)   Promptly upon a request by the Agent and Security Trustee, the Borrower
      shall supply to the Agent and Security Trustee a certificate signed by one
      of its directors or senior officers on its behalf certifying that no
      Default is continuing (or if a Default is continuing, specifying the
      Default and the steps, if any, being taken to remedy it).

8.2.6 INFORMATION UNDERTAKINGS

The undertakings in this Clause 8 shall remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance Documents
or any Commitment is in force.

8.3   FINANCIAL COVENANTS

8.3.1 FINANCIAL CONDITIONS

The Borrower shall ensure that:

(a)   The Total Debt over the Tangible Net Worth, which includes deferred
      taxation will not at any time be greater than 1.5X.

(b)   Interest Cover Ratio is greater than or equal to 2X. (EBITDA/ Gross
      interest);

(c)   The minimum Asset Cover is 1.33X.

(d)   DSCR is greater than or equivalent to 1.25X (PBDIT-Tax) / (Interest +
      Current maturities of long term debt)

(e)   Minimum Networth shall be Rs. 1000 crores by 31st March 2006 onwards and
      Rs. 600 crores prior to 31st March, 2006.

For the purpose of this Clause 8.3.1

"ASSET COVER" means aggregate of the assets consisting of net block,
investments, as increased by the capital works in progress divided by the loans
secured by such assets.

"DEBT SERVICE COVER RATIO" "DSCR" means EBITDA minus tax divided by interest and
current maturity of long term debts.

"EBITDA" means, in relation to any Relevant Period, the total operating profit
of the Borrower for that Relevant Period before taking into account:

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(a)   Interest Expense;

(b)   Tax;

(c)   Any share of the profit of any associated company or undertaking, except
      for dividends received in cash by the Borrower; and

(d)   Extraordinary and exceptional items,

after adding back all amounts provided for depreciation and amortisation for
that Relevant Period, as determined (except as needed to reflect the terms of
this Clause 8.3) from the financial statements of the Borrower and Compliance
Certificates delivered under Clause 8.2 (Other Financial statements) and Clause
8.2.2 (Compliance Certificates).

"INTEREST COVER" means EBITDA divided by Gross Interest.

"GROSS INTEREST" means interest expenses shown in the profit and loss account
schedule and excludes any interest income.

"TOTAL DEBT" means all secured and unsecured liabilities such as loans, excess
of current liabilities over current assets as disclosed in the financial
statements of the Borrower prepared from time to time.

"TANGIBLE NET WORTH" means net worth of the Borrower excluding deferred revenue
expenditure and goodwill but including deferred taxation.

8.4   OTHER COVENANTS

8.4.1 AFFIRMATIVE COVENANTS

The Borrower covenants that -

(a)   The majority stake of not less than 51% of the paid up equity share
      capital or voting share capital whichever is higher shall remain with the
      Sterlite Group.

(b)   Any loans by the Borrower to any member of Sterlite Group shall be
      undertaken with the prior consent of the Lenders.

(c)   Independent certified engineer appointed by the Lenders shall certify the
      Project completion activities for the entire expansion and monitor and
      report progress on a six monthly basis. Project milestones as well as
      project completion date as certified by the independent certified engineer
      from time to time will be adhered to.

(d)   All subsequent financing shall be pari-passu or subordinated with the
      terms and conditions and repayment schedule under this agreement. Such
      covenant shall not have any cure period and shall be considered an
      accelerated Event of Default.

(e)   Assignment of the performance/completion guarantees for the project
      components other than the captive power plant, shall be made in favour of
      the Agent and Security Trustee in the event of the occurrence of any Event
      of Default under this Agreement.

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(f)   No dividend shall be paid by the Borrower where any of the terms of
      lending or conditions defined in this Agreement is in default. Such events
      shall include cross default, payment default, other breaches of facility
      agreement, misrepresentation, insolvency (and insolvency proceedings),
      cessation or material change of business, attachment or execution, changes
      in the constitution of the Borrower and Material and Adverse Effect in the
      Financial condition or operation of the Borrower.

8.4.2 AUTHORISATIONS

The Borrower shall promptly:

(a)   obtain, comply with and do all that is necessary to maintain in full force
      and effect; and

(b)   supply certified copies to the Agent and Security Trustee of, any
      Authorisation required to enable it to perform its obligations under the
      Finance Documents and to ensure the legality, validity, enforceability or
      admissibility in evidence in its jurisdiction of incorporation of any
      Finance Document.

8.4.3 COMPLIANCE WITH LAWS

The Borrower shall comply in all respects with all laws to which it may be
subject, if failure so to comply would materially impair its ability to perform
its obligations under the Finance Documents.

8.4.4 INSURANCE

(a)   The Borrower shall obtain and maintain insurances on all its Assets on
      replacement value basis or on such other basis and against fire,
      earthquake, riots, civil commotion and such other risks as may be
      reasonably prescribed by the Agent and Security Trustee from time to time
      in consultation with the Lenders. The insurance policies in this regard
      shall be either assigned to the Agent and Security Trustee in trust for
      and for the benefit of the Finance Parties or the Agent and Security
      Trustee and the Finance Parties may be notified therein as loss payees
      with a suitable mortgage and hypothecation clause as may be required by
      the Agent and Security Trustee.

(b)   The insurance policies shall, if so required by the Agent and Security
      Trustee be deposited with the Agent and Security Trustee and may be made
      available by the Agent and Security Trustee for inspection by the Borrower
      or for lodgement of any claim by the Borrower.

(c)   The Borrower may however, take within a period of 6 months from the date
      hereof insurance against such risk and on such of the assets as may not
      have been taken out by the Borrower on the date hereof.

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8.5   NEGATIVE COVENANTS

8.5.1 MAINTENANCE OF SECURITY COVER

The Borrower shall not borrow and / or create or permit to subsist any Security
Interest over any of the Secured Assets if as a result of such borrowing or
creation of Security Interest, the Borrower is not in a position to continue the
security cover of 1.33 times of the aggregate value of the Secured Assets over
the Total Indebtedness including the Future Indebtedness proposed to be incurred
by the Borrower.

8.5.2 DISPOSALS

(a)   The Borrower shall not and shall ensure that none of its Subsidiaries
      shall enter into any transaction or a series of transaction (whether
      related or not) and whether voluntary or involuntary to sell, lease,
      transfer or otherwise dispose off any of the assets of the value of which
      exceeds Rs. 10 crores (Rupees ten crores) in a single transaction.

(b)   Paragraph (a) above does not apply to any sale, lease, transfer or other
      disposal:

      (i)   made in the ordinary course of trading of the disposing entity;

      (ii)  of assets in exchange for other assets comparable or superior as to
            type, value and quality and for a similar purpose; or

      (iii) where the higher of the market value or consideration receivable
            (when aggregated with the higher of the market value or
            consideration receivable for any other sale, lease, transfer or
            other disposal, other than any permitted under paragraphs (i) to
            (ii) above) does not exceed Rs.10 crores (Rupees ten crores) (or its
            equivalent in another currency or currencies) in any financial year.

8.5.3 MERGER

Without the approval of the Agent and Security Trustee the Borrower shall not
and shall also ensure that no Subsidiary of the Borrower, enters into any
amalgamation, demerger, merger or corporate reconstruction.

8.5.4 CHANGE OF BUSINESS

The Borrower shall procure that no substantial change is made to the general
nature of the business of the Borrower or the Sterlite Group from that carried
on at the date of this Agreement without prior written approval of all the
Lenders.

8.6   GENERAL UNDERTAKINGS

The covenants and undertakings in this Clause 8 shall remain in force from the
date of this Agreement for so long as any amount is outstanding under the
Finance Documents or any Commitment is in force.

8.7   COVENANT TESTING

All covenants and terms and conditions unless otherwise specified, will be
tested annually on audited statement of accounts.

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                                   SECTION 9
                                EVENTS OF DEFAULT

Each of the events or circumstances set out in Clause 9 below is an Event of
Default.

9.1  NON-PAYMENT

The Borrower does not pay on the due date any amount payable pursuant to a
Finance Document at the place at and in the currency in which it is expressed to
be payable unless:

(a)  its failure to pay is caused by administrative or technical error; and

(b)  payment is made within 3 (three) Business Days of its due date.

9.2  BREACH OF COVENANTS/UNDERTAKINGS

     (i)   Any of the requirements set out in Clause 8.2 (Financial Statements
           and Compliance certificates) is not complied with or the Borrower
           fails to carry out its obligations, as provided therein;

     (ii)  The Borrower fails to satisfy and/or comply with any of the Financial
           Covenants set out in Clause 8.3 (Financial Covenants) is not
           satisfied;

     (iii) Any of the covenants set out in Clause 8.4 (Other Covenants) is not
           satisfied, carried out or complied with as provided therein; or

     (iv)  There is a breach of any of the Negative Covenants set out in
           Clause 8.5 (Negative Covenants).

     (v)   If the Borrower fails to create a first exclusive charge of
           hypothecation of all the Other Properties as provided in Clause 7.1
           (a) or fails to create a first exclusive mortgage of all the
           Immovable Properties as provided in Clause 7.1 within the time
           therein specified notwithstanding the Borrower's liability to pay
           Additional Interest as provided in Clause 5.2.3.

     (vi)  The Borrower fails to take or maintain insurance of its Properties as
           provided in Clause 8.4.4 set out hereinbefore.

9.3  OTHER OBLIGATIONS

The Borrower does not comply with any provision of the Finance Documents (other
than those referred to in Clause 9.1 (Non-payment) [and Clause 8.3 (Financial
covenants)]).

Provided that no Event of Default under paragraph (a) above in relation to
Clause 9 will occur if the failure to comply is capable of remedy and is
remedied within:

     (i)  in relation to Clause 9.1 (Non-payment) 7 Business Days; or

     (ii) in relation to any other Event of Default three months,

     of the Agent and Security Trustee giving notice to the Borrower or the
     Borrower becoming aware of the failure to comply.

9.4  MISREPRESENTATION

Any representation or statement made or deemed to be made by the Borrower in
Clause 8.1 or in any other Finance Document or any other document delivered by
or on behalf of

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the Borrower under or in connection with any Finance Document is or proves to
have been incorrect or misleading in any material respect when made or deemed to
be made.

9.5  CROSS DEFAULT

(a)  Any Financial Indebtedness of the Borrower or any of its Subsidiaries is
     not paid when due nor within any originally applicable grace period.

(b)  Any Financial Indebtedness of the Borrower or any of its subsidiaries is
     declared to be or otherwise becomes due and payable prior to its specified
     maturity as a result of an event of default (however described).

(c)  Any commitment for any Financial Indebtedness of the Borrower or any of its
     Subsidiaries is cancelled or suspended by a creditor of as a result of an
     event of default (however described).

(d)  Any creditor of the Borrower or any of its Subsidiaries becomes entitled to
     declare any Financial Indebtedness of the Borrower or any of its
     Subsidiaries due and payable prior to its specified maturity as a result of
     an Event of Default (however described).

(e)  No Event of Default will occur under this Clause 9 if the aggregate amount
     of Financial Indebtedness or commitment for Financial Indebtedness falling
     within paragraphs (a) to (d) above is less than Rs.50 Crores (or its
     equivalent in any other currency or currencies).

9.6  INSOLVENCY

(a)  The Borrower or its Subsidiaries is or is presumed or deemed to be unable
     or admits inability to pay its debts as they fall due, suspends making
     payments on any of its debts or, by reason of actual or anticipated
     financial difficulties, commences negotiations with one or more of its
     creditors with a view to rescheduling any of its indebtedness.

(b)  The value of the assets of the Borrower or its Subsidiaries is less than
     its liabilities (taking into account contingent and prospective
     liabilities).

(c)  A moratorium is declared in respect of any indebtedness of the Borrower or
     its Subsidiaries.

9.7  INSOLVENCY PROCEEDINGS

Any corporate action, legal proceedings or other procedure or step is taken in
relation to:

(a)  the suspension of payments, a moratorium of any indebtedness, winding-up,
     dissolution, administration, provisional supervision or reorganisation (by
     way of voluntary arrangement, scheme of arrangement or otherwise) of the
     Borrower or its Subsidiaries other than a solvent liquidation or
     reorganisation of the Borrower or its Subsidiaries which is not the
     Borrower;

(b)  a composition, assignment or arrangement with any creditor of the Borrower
     or its Subsidiaries;

(c)  the appointment of a liquidator (other than in respect of a solvent
     liquidation of the Borrower or its Subsidiaries, receiver, administrator,

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      administrative receiver, compulsory manager, provisional supervisor or
      other similar officer in respect of any the Borrower or its Subsidiaries
      or any of its assets; or

(d)   enforcement of any Security Interest over any assets of the Borrower or
      its Subsidiaries,

      or any analogous procedure or step is taken in any jurisdiction.

9.8   CREDITORS' PROCESS

Any expropriation, attachment, sequestration, distress or execution affects any
asset or assets of the Borrower or its Subsidiaries having an aggregate value of
Rupees one crore and is not discharged within 30 (thirty) days.

9.9   OWNERSHIP OF THE BORROWER

The Borrower is not or ceases to be an Affiliate of the Sterlite Group.

9.10  UNLAWFULNESS

It is or becomes unlawful for the Borrower to perform any of its obligations
under the Finance Documents.

9.11  REPUDIATION

The Borrower repudiates a Finance Document or evidences an intention to
repudiate a Finance Document.

9.12. MATERIAL ADVERSE CHANGE

Any event or circumstance occurs which in the opinion of the Majority Lenders
might have a Material Adverse Effect.

9.13  ACCELERATION

On and at any time after the occurrence of an Event of Default [which is
continuing] the Agent and Security Trustee shall if so directed by the Majority
Lenders, by notice to the Borrower:

(a)   cancel the Total Commitments whereupon they shall immediately be
      cancelled;

(b)   declare that all or part of the Loan, together with accrued interest, and
      all other amounts accrued or outstanding under the Finance Documents be
      immediately due and payable, whereupon they shall become immediately due
      and payable; and/or

(c)   declare that all or part of the Loan be payable on demand, whereupon they
      shall immediately become payable on demand by the Agent and Security
      Trustee on the instructions of the Majority Lenders.

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                                   SECTION 10
                               CHANGES TO PARTIES

10.  CHANGES TO THE LENDERS

10.1 ASSIGNMENTS AND TRANSFERS BY THE LENDERS

     Subject to this Clause 10, a Lender (the "EXISTING LENDER") may:

(a)  assign any of its rights; or

(b)  transfer by novation any of its rights and obligations,

     to another bank or financial institution or to a trust, fund or other
     entity which is regularly engaged in or established for the purpose of
     making, purchasing or investing in loans, securities or other financial
     assets (the "NEW LENDER").

10.1.1 CONDITIONS OF ASSIGNMENT OR TRANSFER

(a)  The consent of the Borrower is required for a transfer by a Lender of any
     of its obligations under the Finance Documents in respect of its Commitment
     unless the transfer is to another Lender or an Affiliate of a Lender.

(b)  The consent of the Borrower to a transfer must not be unreasonably withheld
     or delayed. The Borrower will be deemed to have given its consent seven
     Business Days after the Lender has requested it unless consent is expressly
     refused by the Borrower within that time.

(c)  Transfer will only be effective on receipt by the Agent and Security
     Trustee of written confirmation from the New Lender (in form and substance
     satisfactory to the Agent and Security Trustee) that the New Lender will
     assume the same obligations to the other Finance Parties as it would have
     been under if it was an Original Lender.

(d)  A transfer will only be effective if the procedure set out in Clause 10.1.3
     (Procedure for transfer) is complied with.

(e)  If:

     (i)  A Lender assigns or transfers any of its rights or obligations under
          the Finance Documents or changes its Facility Office; and

     (ii) as a result of circumstances existing at the date the assignment,
          transfer or change occurs, the Borrower would be obliged to make a
          payment to the New Lender or Lender acting through its new Facility
          Office

     then the New Lender or Lender acting through its new Facility Office is
     only entitled to receive payment under those Clauses to the same extent as
     the Existing Lender or Lender acting through its previous Facility Office
     would have been if the assignment, transfer or change had not occurred.

10.1.2 LIMITATION OF RESPONSIBILITY OF EXISTING LENDERS

(a)  Unless expressly agreed to the contrary, an Existing Lender makes no
     representation or warranty and assumes no responsibility to a New Lender
     for:

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     (i)   the legality, validity, effectiveness, adequacy or enforceability of
           the Finance Documents or any other documents;

     (ii)  the financial condition of the Borrower;

     (iii) the performance and observance by the Borrower of its obligations
           under the Finance Documents or any other documents; or

     (iv)  the accuracy of any statements (whether written or oral) made in or
           in connection with any Finance Document or any other document,

     and any representations or warranties implied by law are excluded.

(b)  Each New Lender confirms to the Existing Lender and the other Finance
     Parties that it:

     (i)   has made (and shall continue to make) its own independent
           investigation and assessment of the financial condition and affairs
           of the Borrower and its related entities in connection with its
           participation in this Agreement and has not relied exclusively on any
           information provided to it by the Existing Lender in connection with
           any Finance Document; and

     (ii)  will continue to make its own independent appraisal of the
           creditworthiness of the Borrower and its related entities whilst any
           amount is or may be outstanding under the Finance Documents or any
           Commitment is in force.

(c)  Nothing in any Finance Document obliges an Existing Lender to:

     (i)   accept a re-transfer from a New Lender of any of the rights and
           obligations assigned or transferred under this Clause 10.1.2; or

     (ii)  support any losses directly or indirectly incurred by the New Lender
           by reason of the non-performance by the Borrower of its obligations
           under the Finance Documents or otherwise.

10.1.3 PROCEDURE FOR TRANSFER

(a)  Subject to the conditions set out in Clause 10.1.1 (Conditions of
     assignment or transfer) a transfer is effected in accordance with paragraph
     (b) below when the Agent and Security Trustee executes an otherwise duly
     completed Transfer Certificate delivered to it by the Existing Lender and
     the New Lender. The Agent and Security Trustee shall, as soon as reasonably
     practicable after receipt by it of a duly completed Transfer Certificate
     appearing on its face to comply with the terms of this Agreement and
     delivered in accordance with the terms of this Agreement, execute that
     Transfer Certificate.

(b)  On the Transfer Date:

     (i)    to the extent that in the Transfer Certificate the Existing Lender
            seeks to transfer by novation its rights and obligations under the
            Finance Documents the Borrower and the Existing Lender shall be
            released from further obligations towards one another under the
            Finance Documents and their respective rights against one another
            shall be cancelled (being the "DISCHARGED RIGHTS AND OBLIGATIONS");

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     (ii)  the Borrower and the New Lender shall assume obligations towards one
           another and/or acquire rights against one another which differ from
           the Discharged Rights and Obligations only insofar as the Borrower
           and the New Lender have assumed and/or acquired the same in place of
           the Borrower and the Existing Lender;

     (iii) the Agent and Security Trustee, the Arranger, the New Lender and
           other Lenders shall acquire the same rights and assume the same
           obligations between themselves as they would have acquired and
           assumed had the New Lender been an Original Lender with the rights
           and/or obligations acquired or assumed by it as a result of the
           transfer and to that extent the Agent and Security Trustee, the
           Arranger and the Existing Lender shall each be released from further
           obligations to each other under this Agreement; and

     (iv)  the New Lender shall become a Party as a "Lender".

10.1.4 DISCLOSURE OF INFORMATION

Any Lender may disclose to any of its Affiliates and any other person:

(a)  to (or through) whom that Lender assigns or transfers (or may potentially
     assign or transfer) all or any of its rights and obligations under this
     Agreement;

(b)  with (or through) whom that Lender enters into (or may potentially enter
     into) any sub-participation in relation to, or any other transaction under
     which payments are to be made by reference to, this Agreement or the
     Borrower; or

(c)  to whom, and to the extent that, information is required to be disclosed
     by any applicable law or regulation,

     any information about the Borrower, the Sterlite Group and the Finance
     Documents as that Lender shall consider appropriate [if, in relation to
     paragraphs (a) and (b) above, the person to whom the information is to be
     given has entered into a confidentiality undertaking.]

10.1.5 DISCLOSURE OF DEFAULT

Provided that, the Borrower hereby unconditionally and irrevocably gives its
consent to and authorises and acknowledges that each of the Finance Parties has
unqualified right to disclose all or any data relating to the Borrower, the
Facility, obligations assumed/to be assumed by the Borrower in relation thereto
and default if any committed by the Borrower in discharge thereof, as a Finance
Party deems appropriate and necessary to disclose and furnish to the Reserve
Bank of India ("RBI"), Credit Information Bureau (India) Limited ("CIBIL"), any
other bank, financial institution or non-banking finance company, and to any
other agency so authorised in this behalf by the RBI, and to publish the name of
the Borrower and its directors in a newspaper or other media or in private
correspondence as may be considered appropriate by the Finance Party and that
the RBI, CIBIL, banks, financial institutions, CIBIL or any other agency as
aforesaid may use, process such information and data disclosed by the Finance
Parties in the manner as deemed fit by any of them and any of them may furnish
for consideration, the processed

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information and data or products thereof prepared by them, to any banks or
financial institutions and other credit grantors or registered users.

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                                   SECTION 11
                               THE FINANCE PARTIES

11.     ROLE OF THE AGENT AND SECURITY TRUSTEE AND THE ARRANGER

11.1.1  APPOINTMENT OF THE AGENT AND SECURITY TRUSTEE

(a)     Each of the other Finance Parties appoints the Agent and Security
        Trustee to act as its agent under and in connection with the Finance
        Documents.

(b)     Each of the other Finance Parties authorises the Agent and Security
        Trustee to exercise the rights, powers, authorities and discretions
        specifically given to the Agent and Security Trustee under or in
        connection with the Finance Documents together with any other incidental
        rights, powers, authorities and discretions.

11.1.2  DUTIES OF THE AGENT AND SECURITY TRUSTEE

(a)     The Agent and Security Trustee shall promptly forward to a Party the
        original or a copy of any document, which is delivered to the Agent and
        Security Trustee for that Party by any other Party.

(b)     Except where a Finance Document specifically provides otherwise, the
        Agent and Security Trustee is not obliged to review or check the
        adequacy, accuracy or completeness of any document it forwards to
        another Party.

(c)     If the Agent and Security Trustee receives notice from a Party referring
        to this Agreement, describing a Default and stating that the
        circumstance described is a Default, it shall promptly notify the
        Finance Parties.

(d)     If the Agent and Security Trustee is aware of the non-payment of any
        principal, interest, commitment fee or other fee payable to a Finance
        Party (other than the Agent and Security Trustee or the Arranger) under
        this Agreement it shall promptly notify the other Finance Parties.

(e)     The Agent and Security Trustee's duties under the Finance Documents are
        solely mechanical and administrative in nature. The Agent and Security
        Trustee shall have no other duties save as expressly provided for in the
        Finance Documents.

11.1.3  ROLE OF THE ARRANGER

        Except as specifically provided in the Finance Documents, the Arranger
        has no obligations of any kind to any other Party under or in connection
        with any Finance Document.

11.1.4  NO FIDUCIARY DUTIES

(a)     Nothing in this Agreement constitutes the Agent and Security Trustee or
        the Arranger as a trustee or fiduciary of any other person.

(b)     Neither the Agent and Security Trustee nor the Arranger shall be bound
        to account to any Lender for any sum or the profit element of any sum
        received by it for its own account.

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11.1.5  BUSINESS WITH THE STERLITE GROUP

        The Agent and Security Trustee and the Arranger may accept deposits
        from, lend money to and generally engage in any kind of banking or other
        business with any Member of Sterlite Group.

11.1.6  RIGHTS AND DISCRETIONS OF THE AGENT AND SECURITY TRUSTEE

(a)     The Agent and Security Trustee may rely on:

        (i)     any representation, notice or document believed by it to be
                genuine, correct and appropriately authorised and shall have no
                duty to verify any signature on any document; and

        (ii)    any statement purportedly made by a director, authorised person
                or employee of the Borrower regarding any matters which may
                reasonably be assumed to be within his knowledge or within his
                power to verify.

(b)     The Agent and Security Trustee may assume (unless it has received notice
        to the contrary in its capacity as agent for the Lenders) that:

        (i)     no Default has occurred (unless it has actual knowledge of a
                Default arising) under Clause 9.1 (Non-payment));

        (ii)    any right, power, authority or discretion vested in any Party or
                the Majority Lenders has not been exercised; and

        (iii)   any notice or request made (other than a Drawdown Request) is
                made on behalf of and with the consent and knowledge of the
                Borrower.

(c)     The Agent and Security Trustee may engage, pay for and rely on the
        advice or services of any lawyers, accountants, surveyors or other
        experts under intimation to the Borrower.

(d)     The Agent and Security Trustee may act in relation to the Finance
        Documents through its personnel and agents.

(e)     The Agent and Security Trustee may disclose to any other Party any
        information it reasonably believes it has received as agent under this
        Agreement.

(f)     Notwithstanding any other provision of any Finance Document to the
        contrary, neither the Agent and Security Trustee nor the Arranger is
        obliged to do or omit to do anything if it would or might in its
        reasonable opinion constitute a breach of any law or a breach of a
        fiduciary duty or duty of confidentiality.

11.1.7  MAJORITY LENDERS' INSTRUCTIONS

(a)     Unless a contrary indication appears in a Finance Document, the Agent
        and Security Trustee shall (i) exercise any right, power, authority or
        discretion vested in it as Agent and Security Trustee in accordance with
        any instructions given to it by the Majority Lenders (or, if so
        instructed by the Majority Lenders, refrain from exercising any right,
        power, authority or discretion vested in it as Agent and Security
        Trustee) and (ii) not be liable for any act (or omission) if it acts (or
        refrains from taking any action) in accordance with an instruction of
        the Majority Lenders.

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(b)     Unless a contrary indication appears in a Finance Document, any
        instructions given by the Majority Lenders will be binding on all the
        Finance Parties.

(c)     The Agent and Security Trustee may refrain from acting in accordance
        with the instructions of the Majority Lenders (or, if appropriate, the
        Lenders) or under paragraph (d) below until it has received such
        security as it may require for any cost, loss or liability (together
        with any associated Indirect Tax) which it may incur in complying with
        the instructions.

(d)     In the absence of instructions from the Majority Lenders, (or, if
        appropriate, the Lenders) the Agent and Security Trustee may act (or
        refrain from taking action) as it considers to be in the best interest
        of the Lenders.

(e)     The Agent and Security Trustee is not authorised to act on behalf of a
        Lender (without first obtaining that Lender's consent) in any legal or
        arbitration proceedings relating to any Finance Document.

11.1.8  RESPONSIBILITY FOR DOCUMENTATION

Neither the Agent and Security Trustee nor the Arranger:

(a)     is responsible for the adequacy, accuracy and/or completeness of any
        information (whether oral or written) supplied by the Agent and Security
        Trustee, the Arranger, the Borrower or any other person given in or in
        connection with any Finance Document; or

(b)     is responsible for the legality, validity, effectiveness, adequacy or
        enforceability of any Finance Document or any other agreement,
        arrangement or document entered into, made or executed in anticipation
        of or in connection with any Finance Document.

(c)     is responsible for the validity, effectiveness, adequacy and
        completeness of the representations and warranties made by the Borrower
        and Sterlite.

11.1.9  EXCLUSION OF LIABILITY

(a)     Without limiting paragraph (b) below, the Agent and Security Trustee
        will not be liable for any action taken by it or omitting to take action
        under or in connection with any Finance Document, unless directly caused
        by its gross negligence or wilful misconduct.

(b)     No Party (other than the Agent and Security Trustee) may take any
        proceedings against any officer, employee or agent of the Agent and
        Security Trustee in respect of any claim it might have against the Agent
        and Security Trustee or in respect of any act or omission of any kind by
        that officer, employee or agent in relation to any Finance Document and
        any officer, employee or agent of the Agent and Security Trustee may
        rely on this Clause.

(c)     The Agent and Security Trustee will not be liable for any delay (or any
        related consequences) in crediting an account with an amount required
        under the Finance Documents to be paid by the Agent and Security Trustee
        if the Agent and Security Trustee has taken all necessary steps as soon
        as reasonably practicable to comply with the regulations or operating
        procedures of any recognised clearing or settlement system used by the
        Agent and Security Trustee for that purpose.

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11.1.10 LENDERS' INDEMNITY TO THE AGENT AND SECURITY TRUSTEE

Each Lender shall (in proportion to its share of the Total Commitments or, if
the Total Commitments are then zero, to its share of the Total Commitments
immediately prior to their reduction to zero) indemnify the Agent and Security
Trustee, within three Business Days of demand, against any cost, loss or
liability incurred by the Agent and Security Trustee (otherwise than by reason
of the Agent and Security Trustee's gross negligence or wilful misconduct) in
acting as Agent and Security Trustee under the Finance Documents (unless the
Agent and Security Trustee has been reimbursed by the Borrower pursuant to a
Finance Document).

11.1.11 RESIGNATION OF THE AGENT AND SECURITY TRUSTEE

(a)     The Agent and Security Trustee may resign and appoint one of its
        Affiliates acting through an office in Mumbai as successor by giving
        notice to the other Finance Parties and the Borrower.

(b)     Alternatively the Agent and Security Trustee may resign by giving notice
        to the other Finance Parties and the Borrower, in which case the
        Majority Lenders (after consultation with the Borrower) may appoint a
        successor Agent and Security Trustee.

(c)     If the Majority Lenders have not appointed a successor Agent and
        Security Trustee in accordance with paragraph (b) above within 30 days
        after notice of resignation was given, the Agent and Security Trustee
        (after consultation with the Borrower) may appoint a successor Agent and
        Security Trustee [(acting through an office in Mumbai.

(d)     The retiring Agent and Security Trustee shall make available to the
        successor Agent and Security Trustee such documents and records and
        provide such assistance as the successor Agent and Security Trustee may
        reasonably request for the purposes of performing its functions as Agent
        and Security Trustee under the Finance Documents.

(e)     The Agent and Security Trustee's resignation notice shall only take
        effect upon the appointment of a successor.

(f)     Upon the appointment of a successor, the retiring Agent and Security
        Trustee shall be discharged from any further obligation in respect of
        the Finance Documents but shall remain entitled to the benefit of this
        Clause 11.1.11. Its successor and each of the other Parties shall have
        the same rights and obligations amongst themselves as they would have
        had if such successor had been an original Party.

(g)     After consultation with the Borrower, the Majority Lenders may, by
        notice to the Agent and Security Trustee, require it to resign in
        accordance with paragraph (b) above. In this event, the Agent and
        Security Trustee shall resign in accordance with paragraph (b) above.

11.1.12 CONFIDENTIALITY

(a)     In acting as agent for the Finance Parties, the Agent and Security
        Trustee shall be regarded as acting through its agency division which
        shall be treated as a separate entity from any other of its divisions or
        departments.

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(b)     If information is received by another division or department of the
        Agent and Security Trustee, it may be treated as confidential to that
        division or department and the Agent and Security Trustee shall not be
        deemed to have notice of it.

11.1.13 RELATIONSHIP WITH THE LENDERS

The Agent and Security Trustee may treat each Lender as a Lender, entitled to
payments under this Agreement and acting through its Facility Office unless it
has received not less than five Business Days prior notice from that Lender to
the contrary in accordance with the terms of this Agreement.

11.1.14 CREDIT APPRAISAL BY THE LENDERS

Without affecting the responsibility of the Borrower for information supplied by
it or on its behalf in connection with any Finance Document, each Lender
confirms to the Agent and Security Trustee and the Arranger that it has been,
and will continue to be, solely responsible for making its own independent
appraisal and investigation of all risks arising under or in connection with any
Finance Document including but not limited to:

(a)     the financial condition, status and nature of each Member of Sterlite
        Group;

(b)     the legality, validity, effectiveness, adequacy or enforceability of any
        Finance Document and any other agreement, arrangement or document
        entered into, made or executed in anticipation of, under or in
        connection with any Finance Document;

(c)     whether that Lender has recourse, and the nature and extent of that
        recourse, against any Party or any of its respective assets under or in
        connection with any Finance Document, the transactions contemplated by
        the Finance Documents or any other agreement, arrangement or document
        entered into, made or executed in anticipation of, under or in
        connection with any Finance Document; and

(d)     the adequacy, accuracy and/or completeness of the information provided
        by the Agent and Security Trustee, any Party or by any other person
        under or in connection with any Finance Document, the transactions
        contemplated by the Finance Documents or any other agreement,
        arrangement or document entered into, made or executed in anticipation
        of, under or in connection with any Finance Document.

11.1.15 DEDUCTION FROM AMOUNTS PAYABLE BY THE AGENT AND SECURITY TRUSTEE

If any Party owes an amount to the Agent and Security Trustee under the Finance
Documents the Agent and Security Trustee may, after giving notice to that Party,
deduct an amount not exceeding that amount from any payment to that Party which
the Agent and Security Trustee would otherwise be obliged to make under the
Finance Documents and apply the amount deducted in or towards satisfaction of
the amount owed. For the purposes of the Finance Documents that Party shall be
regarded as having received any amount so deducted.

11.1.16 AGENT'S MANAGEMENT TIME

Any amount payable to the Agent and Security Trustee under Clause 6.6 (Costs and
expenses) and Clause 11.1.10 (Lenders' indemnity to the Agent and Security
Trustee)

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                                       39

<PAGE>
shall include the cost of utilising the Agent and Security Trustee's management
time or other resources and will be calculated on the basis of such reasonable
daily or hourly rates as the Agent and Security Trustee may notify to the
Borrower and the Lenders.

11.2    CONDUCT OF BUSINESS BY THE FINANCE PARTIES

No provision of this Agreement will:

(a)     interfere with the right of any Finance Party to arrange its
        affairs (tax or otherwise) in whatever manner it thinks fit;

(b)     oblige any Finance Party to investigate or claim any credit,
        relief, remission or repayment available to it or the extent,
        order and manner of any claim; or

(c)     oblige any Finance Party to disclose any information relating to
        its affairs (tax or otherwise) or any computations in respect of
        Tax.

11.3    SHARING AMONG THE FINANCE PARTIES

11.3.1  PAYMENTS TO FINANCE PARTIES

If a Finance Party (a "RECOVERING FINANCE PARTY") receives or recovers any
amount from the Borrower other than in accordance with Clause 12.1 (Payment
Mechanics) and applies that amount to a payment due under the Finance Documents
then:

(a)     the Recovering Finance Party shall, within three Business Days,
        notify details of the receipt or recovery, to the Agent and
        Security Trustee;

(b)     the Agent and Security Trustee shall determine whether the
        receipt or recovery is in excess of the amount the Recovering
        Finance Party would have been paid had the receipt or recovery
        been received or made by the Agent and Security Trustee and
        distributed in accordance with Clause 12.1 (Payment mechanics),
        without taking account of any Tax which would be imposed on the
        Agent and Security Trustee in relation to the receipt, recovery
        or distribution; and

(c)     the Recovering Finance Party shall, within three Business Days
        of demand by the Agent and Security Trustee, pay to the Agent
        and Security Trustee an amount (the "SHARING PAYMENT") equal to
        such receipt or recovery less any amount which the Agent and
        Security Trustee determines may be retained by the Recovering
        Finance Party as its share of any payment to be made, in
        accordance with Clause 12.1.5 (Partial payments).

11.3.2  REDISTRIBUTION OF PAYMENTS

The Agent and Security Trustee shall treat the Sharing Payment as if it had been
paid by the Borrower and distribute it between the Finance Parties (other than
the Recovering Finance Party) in accordance with Clause 12.1.5 (Partial
payments).

11.3.3  RECOVERING FINANCE PARTY'S RIGHTS

(a)     On a distribution by the Agent and Security Trustee under Clause 11.3.2
        (Redistribution of payments), the Recovering Finance Party will be
        subrogated to the rights of the Finance Parties which have shared in the
        redistribution.

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                                       40
<PAGE>
(b)     If and to the extent that the Recovering Finance Party is not able to
        rely on its rights under paragraph (a) above, the Borrower shall be
        liable to the Recovering Finance Party for a debt equal to the Sharing
        Payment which is immediately due and payable

11.3.4  REVERSAL OF REDISTRIBUTION

If any part of the Sharing Payment received or recovered by a Recovering Finance
Party becomes repayable and is repaid by that Recovering Finance Party, then:

(a)     each Finance Party which has received a share of the relevant Sharing
        Payment pursuant to Clause 11.3.2 (Redistribution of payments) shall,
        upon request of the Agent and Security Trustee, pay to the Agent and
        Security Trustee for account of that Recovering Finance Party an amount
        equal to the appropriate part of its share of the Sharing Payment
        (together with an amount as is necessary to reimburse that Recovering
        Finance Party for its proportion of any interest on the Sharing Payment
        which that Recovering Finance Party is required to pay); and

(b      that Recovering Finance Party's rights of subrogation in respect of any
        reimbursement shall be cancelled and the Borrower will be liable to the
        reimbursing Finance Party for the amount so reimbursed

11.3.5  EXCEPTIONS

(a)     This Clause 11.3.5 shall not apply to the extent that the Recovering
        Finance Party would not, after making any payment pursuant to this
        Clause, have a valid and enforceable claim against the Borrower

(b)     A Recovering Finance Party is not obliged to share with any other
        Finance Party any amount which the Recovering Finance Party has received
        or recovered as a result of taking legal or arbitration proceedings, if:

        (i)     it notified that other Finance Party of the legal or arbitration
                proceedings; and

        (ii)    that other Finance Party had an opportunity to participate in
                those legal or arbitration proceedings but did not do so as soon
                as reasonably practicable having received notice and did not
                take separate legal or arbitration proceedings.

11.3.6  CHANGE OF FACILITY OFFICE

A Finance Party shall be entitled to change its Lending Office or any other
office, through which it will be carrying out the purpose of this Agreement and
shall upon such change of office advise the Borrower and other parties about the
change of the office.

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                                       41
<PAGE>
                                   SECTION 12
                                 ADMINISTRATION

12.1    PAYMENT MECHANICS

12.1.1  PAYMENTS TO THE AGENT AND SECURITY TRUSTEE

(a)     On each date on which the Borrower or a Lender is required to make a
        payment under a Finance Document, the Borrower or Lender shall make the
        same available to the Agent and Security Trustee (unless a contrary
        indication appears in a Finance Document) for value on the due date at
        the time and in such funds specified by the Agent and Security Trustee
        as being customary at the time for settlement of transactions in the
        relevant currency in the place of payment.

(b)     Payment shall be made to such account in the City of Mumbai with
        such bank as the Agent and Security Trustee specifies.

12.1.2  DISTRIBUTIONS BY THE AGENT AND SECURITY TRUSTEE

Each payment received by the Agent and Security Trustee under the Finance
Documents for another Party shall, subject to Clause 12.1.3 (Distributions to
the Borrower) and Clause 12.1.4 (Clawback) be made available by the Agent and
Security Trustee as soon as practicable after receipt to the Party entitled to
receive payment in accordance with this Agreement (in the case of a Lender, for
the account of its Facility Office), to such account as that Party may notify to
the Agent and Security Trustee by not less than five Business Days' notice with
a bank in the city of Mumbai.

12.1.3  DISTRIBUTIONS TO THE BORROWER

The Agent and Security Trustee may (with the consent of the Borrower or in
accordance with Clause 12.2 (Set-off)) apply any amount received by it for the
Borrower in or towards payment (on the date and in the currency and funds of
receipt) of any amount due from the Borrower under the Finance Documents or in
or towards purchase of any amount of any currency to be so applied.

12.1.4  CLAWBACK

(a)     Where a sum is to be paid to the Agent and Security Trustee under the
        Finance Documents for another Party, the Agent and Security Trustee is
        not obliged to pay that sum to that other Party (or to enter into or
        perform any related exchange contract) until it has been able to
        establish to its satisfaction that it has actually received that sum.

(b)     If the Agent and Security Trustee pays an amount to another Party and it
        proves to be the case that the Agent and Security Trustee had not
        actually received that amount, then the Party to whom that amount (or
        the proceeds of any related exchange contract) was paid by the Agent and
        Security Trustee shall on demand refund the same to the Agent and
        Security Trustee together with interest on that amount from the date of
        payment to the date of receipt by the Agent and Security Trustee,
        calculated by the Agent and Security Trustee to reflect its cost of
        funds.

12.1.5  PARTIAL PAYMENTS

(a)     If the Agent and Security Trustee receives a payment that is
        insufficient to discharge all the amounts then due and payable by the
        Borrower under the Finance

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                                       42
<PAGE>
        Documents, the Agent and Security Trustee shall apply that payment
        towards the obligations of the Borrower under the Finance Documents in
        the following order:

        (i)     FIRST, in or towards payment pro rata of any unpaid fees of the
                Agent and Security Trustee under the Finance Documents;

        (ii)    SECONDLY, in or towards payment pro rata of any accrued
                interest, fee (other than as provided in (i) above) or
                commission due but unpaid under this Agreement;

        (iii)   THIRDLY, in or towards payment pro rata of any principal due but
                unpaid under this Agreement; and

        (iv)    FOURTHLY, in or towards payment pro rata of any other sum due
                but unpaid under the Finance Documents.

(b)     The Agent and Security Trustee shall, if so directed by the Majority
        Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.

(c)     Paragraphs (a) and (b) above will override any appropriation made by the
        Borrower.

12.1.6  NO SET-OFF BY THE BORROWER

All payments to be made by the Borrower under the Finance Documents shall be
calculated and be made without (and free and clear of any deduction for) set-off
or counter claim.

12.1.7  BUSINESS DAYS

(a)     Any payment which is due to be made on a day that is not a Business Day
        shall be made on the next Business Day in the same calendar month (if
        there is one) or the preceding Business Day (if there is none).

(b)     During any extension of the due date for payment of any principal or
        Unpaid Sum under this Agreement interest is payable on the principal or
        Unpaid Sum at the rate payable on the original due date.

12.2    SET-OFF

A Finance Party may under notification to the Agent and Security Trustee set off
any matured obligation due from the Borrower under the Finance Documents (to the
extent beneficially owned by that Finance Party) against any matured obligation
owed by that Finance Party to the Borrower, regardless of the place of payment,
booking.

12.3    NOTICES

12.3.1  COMMUNICATIONS IN WRITING

Any communication to be made under or in connection with the Finance Documents
shall be made in writing and, unless otherwise stated, may be made by fax,
letter or telex.

12.3.2  ADDRESSES

The address, fax number and telex number (and the department or officer, if any,
for whose attention the communication is to be made) of each Party for any
communication

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                                       43
<PAGE>
or document to be made or delivered under or in connection with the Finance
Documents is:

(a)     in the case of the Borrower, that identified with its name below;

(b)     in the case of each Lender, that notified in writing to the Agent and
        Security Trustee on or prior to the date on which it becomes a Party;
        and

(c)     in the case of the Agent and Security Trustee, that identified with its
        name below,

        or any substitute address, fax number, telex number or department or
        officer as the Party may notify to the Agent and Security Trustee (or
        the Agent and Security Trustee may notify to the other Parties, if a
        change is made by the Agent and Security Trustee) by not less than five
        Business Days' notice.

12.3.3  DELIVERY

(a)     Any communication or document made or delivered by one person to another
        under or in connection with the Finance Documents will only be
        effective:

        (i)     if by way of fax, when received in legible form; or

        (ii)    if by way of letter, when it has been left at the relevant
                address or [five] Business Days after being deposited in the
                post, postage prepaid in an envelope addressed to it at that
                address; or

        (iii)   if by way of telex, when despatched, but only if, at the time of
                transmission, the correct answerback appears at the start and at
                the end of the sender's copy of the notice;

        and, if a particular department or officer is specified as part of its
        address details provided under Clause 12.3.2 (Addresses), if addressed
        to that department or officer.

(b)     Any communication or document to be made or delivered to the Agent and
        Security Trustee will be effective only when actually received by the
        Agent and Security Trustee and then only if it is expressly marked for
        the attention of the department or officer identified with the Agent and
        Security Trustee's signature below (or any substitute department or
        officer as the Agent and Security Trustee shall specify for this
        purpose).

(c)     All notices from or to the Borrower shall be sent through the Agent and
        Security Trustee.

(d)     Any communication or document made or delivered to the Borrower in
        accordance with this Clause will be deemed to have been made or
        delivered to the Borrower

(e)     Electronic communication

(f)     Any communication to be made between the Agent and Security Trustee and
        a Lender under or in connection with the Finance Documents may be made
        by electronic mail or other electronic means, if the Agent and Security
        Trustee and the relevant Lender:

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                                       44
<PAGE>
        (i)     agree that, unless and until notified to the contrary, this is
                to be an accepted form of communication;

        (ii)    notify each other in writing of their electronic mail address
                and/or any other information required to enable the sending and
                receipt of information by that means; and

        (iii)   notify each other of any change to their address or any other
                such information supplied by them.

(g)     Any electronic communication made between the Agent and Security Trustee
        and a Lender will be effective only when actually received in readable
        form and in the case of any electronic communication made by a Lender to
        the Agent and Security Trustee only if it is addressed in such a manner
        as the Agent and Security Trustee shall specify for this purpose.

12.3.4  ENGLISH LANGUAGE

(a)     Any notice given under or in connection with any Finance Document must
        be in English.

(b)     All other documents provided under or in connection with any Finance
        Document must be:

        (i)     in English; or

        (ii)    if not in English, and if so required by the Agent and Security
                Trustee, accompanied by a certified English translation and, in
                this case, the English translation will prevail unless the
                document is a constitutional, statutory or other official
                document.

12.4    CALCULATIONS AND CERTIFICATES

12.4.1  ACCOUNTS

In any litigation or arbitration proceedings arising out of or in connection
with a Finance Document, the entries made in the accounts maintained by a
Finance Party are prima facie evidence of the matters to which they relate.

12.4.2  CERTIFICATES AND DETERMINATIONS

Any certification or determination by a Finance Party of a rate or amount under
any Finance Document is, in the absence of manifest error, conclusive evidence
of the matters to which it relates.

12.4.3  DAY COUNT CONVENTION

Any interest, commission or fee accruing under a Finance Document will accrue
from day to day and is calculated on the basis of the actual number of days
elapsed and a year of 365 days or, in any case where the practice in the
Relevant Interbank Market differs, in accordance with that market practice.

12.4.4  PARTIAL INVALIDITY

If, at any time, any provision of the Finance Documents is or becomes illegal,
invalid or unenforceable in any respect under any law of any jurisdiction,
neither the legality, validity or enforceability of the remaining provisions nor
the legality, validity or enforceability of such provision under the law of any
other jurisdiction will in any way be affected or impaired.

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                                       45
<PAGE>
12.4.5  REMEDIES AND WAIVERS

No failure to exercise, nor any delay in exercising, on the part of any Finance
Party, any right or remedy under the Finance Documents shall operate as a
waiver, nor shall any single or partial exercise of any right or remedy prevent
any further or other exercise or the exercise of any other right or remedy. The
rights and remedies provided in this Agreement are cumulative and not exclusive
of any rights or remedies provided by law.

12.5    AMENDMENTS AND WAIVERS

12.5.1  REQUIRED CONSENTS

(a)     Subject to Clause 12.5.2 (Exceptions) any term of the Finance Documents
        may be amended or waived only with the written consent of the Majority
        Lenders and the Borrower and any such amendment or waiver will be
        binding on all Parties.

(b)     The Agent and Security Trustee may effect, on behalf of any Finance
        Party, any amendment or waiver permitted by this Clause.

12.5.2  EXCEPTIONS

(a)     An amendment or waiver that has the effect of changing or which relates
        to:

        (i)    the definition of "Majority Lenders" in Clause 1.1 (Definitions);

        (ii)   an extension to the date of payment of any amount under the
               Finance Documents;

        (iii)  an increase in or an extension of any Commitment;

        (iv)   any provision which expressly requires the consent of all the
               Lenders; or

        (v)    Clause 2.2 (Finance Parties rights and obligations), Clause 10
               (Changes to the Lenders) or this Clause 12.5.2

        shall not be made without the prior written consent of all the Lenders.

(b)     An amendment or waiver which relates to the rights or obligations of the
        Agent and Security Trustee or the Arranger may not be effected without
        the consent of the Agent and Security Trustee or the Arranger.

12.6    COUNTERPARTS

Each Finance Document may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a single
copy of the Finance Document.

12.7    JURISDICTION

This Agreement shall be governed by and construed in accordance with the laws of
India. This Agreement has been signed by all the parties in Mumbai and the
Facility is to be disbursed in Mumbai and payment of all amounts for repayment
of the Loan, payment of interest, fees, costs, charged and expenses and all
other amounts are also to be made in Mumbai. The Debt Recovery Tribunal in
Mumbai shall therefore have exclusive jurisdiction for any claim of the Lenders
on the Borrower.

                                                             DAVE & GIRISH & CO.
                                       46
<PAGE>
                                  SCHEDULE - 1

                        THE ORIGINAL PARTIES COMMITMENTS

                            AND REPAYMENT INSTALMENTS

                                     PART I
                                  THE BORROWER

NAME OF THE BORROWER

BHARAT ALUMINIUM COMPANY LIMITED

                                    PART II A
                                  COMMITMENT A

<TABLE>
<CAPTION>
                                                           COMMITMENT
                                                           AMOUNT (RS. IN
SR.NO.   NAME OF ORIGINAL LENDER                           CRORES)
------   -----------------------------------------------   --------------
<S>      <C>                                               <C>
  1)     ABN AMRO Bank N.V.                                         22.75
  2)     Corporation Bank                                           32.50
  3)     Housing Development Finance Corporation Limited            32.50
  4)     Oriental Bank of Commerce                                  65.00
  5)     State Bank of Bikaner & Jaipur                             32.50
  6)     State Bank of Hyderabad                                    32.50
  7)     State Bank of Indore                                       32.50
  8)     State Bank of Mysore                                       32.50
  9)     State Bank of Patiala                                      32.50
 10)     State Bank of Saurashtra                                   32.50
 11)     Syndicate Bank                                             65.00
 12)     The Federal Bank Limited                                   32.50
 13)     The Jammu & Kashmir Bank Limited                           65.00
 14)     The Karnataka Bank Limited                                 32.50
 15)     The Karur Vysya Bank Limited                               32.50
 16)     The Laxmi Vilas Bank Limited                                9.75
 17)     UCO Bank                                                   32.50
 18)     Vijaya Bank                                                32.50
                                                           --------------
              TOTAL COMMITMENTS A                             650.00
</TABLE>

                                    PART II B

                                  COMMITMENT B

<TABLE>
<CAPTION>
                                                           COMMITMENT
                                                           AMOUNT (RS. IN
SR.NO    NAME OF ORIGINAL LENDER                           CRORES)
------   -----------------------------------------------   --------------
<S>      <C>                                               <C>
  1)     ABN AMRO Bank N.V.                                         12.25
  2)     Corporation Bank                                           17.50
  3)     Housing Development Finance Corporation Limited            17.50
  4)     Oriental Bank of Commerce                                  35.00
  5)     State Bank of Bikaner & Jaipur                             17.50
  6)     State Bank of Hyderabad                                    17.50
  7)     State Bank of Indore                                       17.50
  8)     State Bank of Mysore                                       17.50
  9)     State Bank of Patiala                                      17.50
 10)     State Bank of Saurashtra                                   17.50
 11)     Syndicate Bank                                             35.00
 12)     The Federal Bank Limited                                   17.50
 13)     The Jammu & Kashmir Bank Limited                           35.00
 14)     The Karnataka Bank Limited                                 17.50
 15)     The Karur Vysya Bank Limited                               17.50
 16)     The Laxmi Vilas Bank Limited                                5.25
 17)     UCO Bank                                                   17.50
 18)     Vijaya Bank                                                17.50
                                                           --------------
              TOTAL COMMITMENTS B                             350.00
</TABLE>

                                    PART III
                                    REPAYMENT

<TABLE>
<CAPTION>
SR.NO.   REPAYMENT INSTALLMENTS
         PAYABLE ON A REPAYMENT
         DATE BEING THE %
         MENTIONED BELOW OF
         LOAN OUTSTANDING ON
         TERMINATION DATE                       REPAYMENT DATE
------   ----------------------    ----------------------------------------
<S>      <C>                       <C>
 1.              8.33              39th month from the date of lst Drawdown
 2.              8.33              42nd month from the date of 1st Drawdown
 3.              8.33              45th month from the date of 1st Drawdown
 4.              8.33              48th month from the date of 1st Drawdown
 5.              8.33              51st month from the date of 1st Drawdown
 6.              8.33              54th month from the date of 1st Drawdown
 7.              8.33              57th month from the date of 1st Drawdown
 8.              8.33              60th month from the date of 1st Drawdown
 9.              8.34              63rd month from the date of 1st Drawdown
 10.             8.34              66th month from the date of 1st Drawdown
 11.             8.34              69th month from the date of 1st Drawdown
 12.             8.34              72nd month from the date of 1st Drawdown
</TABLE>

                                                             DAVE & GIRISH & CO.
                                       47
<PAGE>

                                  SCHEDULE - 2

                        CONDITIONS PRECEDENT TO DRAWDOWN

1.      THE BORROWER

(a)     A copy of the constitutional documents of the Borrower.

(b)     A copy of a resolution of the board of directors of the Borrower:

        (i)     approving the terms of, and the transactions contemplated by,
                the Finance Documents to which it is a party and resolving that
                it execute the Finance Documents to which it is a party;

        (ii)    authorising a specified person or persons to execute the Finance
                Documents to which it is a party on its behalf; and

        (iii)   authorising a specified person or persons, on its behalf, to
                sign and/or despatch all documents and notices (including, if
                relevant, any Drawdown Request) to be signed and/or despatched
                by it under or in connection with the Finance Documents to which
                it is a party.

(c)     A specimen of the signature of each person authorised by the resolution
        referred to in paragraph (b) above.

(d)     A certificate of the Borrower (signed by a director) confirming that
        borrowing of the Total Commitments would not cause any borrowing, limit
        binding on the Borrower to be exceeded.

(e)     A certificate of an authorised signatory of the Borrower certifying that
        each copy document relating to it specified in this Schedule 2 is
        correct, complete and in full force and effect as at a date no earlier
        than the date of this Agreement.

(f)     Resolutions passed in the general meeting(s) of the Borrower authorising
        the directors of the Borrower to borrow in excess of the paid up capital
        and free reserves of the Company upto the limit specified therein and to
        mortgage and charge the Properties of the Borrower as security for the
        payment of the Loan Amounts.

2.      LEGAL OPINIONS

(a)     A legal opinion from legal advisors to the Arranger and the Agent, and
        Security Trustee substantially in the form distributed to the Original
        Lenders regarding the validity and enforceability of the Facility
        Agreement under the laws of India.

(b)     A legal opinion from the legal advisors to the Borrower in the form
        provided to the Borrower.

3.      OTHER DOCUMENTS AND EVIDENCE

(a)     A copy of any other Authorisation or other document, opinion or
        assurance which the Agent and Security Trustee considers to be necessary
        or desirable (if it has notified the Borrower accordingly) in connection
        with the entry into and performance of the transactions contemplated by
        any Finance Document or for the validity and enforceability of any
        Finance Document.

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                                       48
<PAGE>
(b)     The Original Financial Statements of the Borrower.

(c)     Evidence that the fees, costs and expenses then due from the Borrower
        pursuant to Clause 6.6 (Costs and expenses) have been paid or will be
        paid by the first Drawdown Date.

(d)     the Borrower shall provide the Lenders a detailed project feasibility
        report on the viability of the project.

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                                       49
<PAGE>

                             SCHEDULE - 3 REQUESTS

                                DRAWDOWN REQUEST

From:   [Borrower]
        ----------

To:     [Agent and Security Trustee]
        ----------------------------

Dated:

Dear Sirs

                      [BORROWER] - [     ] FACILITY AGREEMENT
                      ----------   -------

                      DATED [    ] (THE "FACILITY AGREEMENT")
                            ------

1.      We refer to the Facility Agreement. This is a Drawdown Request. Terms
        defined in the Facility Agreement shall have the same meaning in this
        Drawdown Request.

2.      We wish to avail of a Facility on the following terms:

<Table>
<S>                              <C>
        Proposed Drawdown Date:  [     ] (or, if that is not a Business Day, the
                                 -------
                                 next Business Day)
        Amount:
                                 [     ] or, if less, the Available Facility
                                 -------
</Table>

3.      We confirm that each condition specified in Clause 2.4.2 (Further
        conditions precedent) is satisfied on the date of this Drawdown Request.

4.      The proceeds of this Facility should be credited to account.

5.      This Drawdown Request is irrevocable.

                                Yours faithfully

                     .......................................
                            authorised signatory for
                               [name of Borrower]

                                                             DAVE & GIRISH & CO.
                                       50
<PAGE>
                                   SCHEDULE 4

                          FORM OF TRANSFER CERTIFICATE

To:     [     ] as Agent and Security Trustee
        -------

From:   [The Existing Lender] (the "EXISTING LENDER") and [The New Lender]
        ---------------------                             ----------------
        (the "NEW LENDER")

Dated:

                      [BORROWER] - [     ] FACILITY AGREEMENT
                                    -------
                      DATED [     ] (THE "FACILITY AGREEMENT")
                            -------

1.      We refer to the Facility Agreement. This is a Transfer Certificate.
        Terms used in the Facility Agreement shall have the same meaning in this
        Transfer Certificate.

2.      We refer to Clause 10.1.3(ii) (Procedure for transfer):

        (a)     The Existing Lender and the New Lender agree to the Existing
                Lender transferring to the New Lender by novation all or part of
                the Existing Lender's Commitment, rights and obligations
                referred to in the Schedule in accordance with Clause 10.1.3(ii)
                (Procedure for transfer).

        (b)     The proposed Transfer Date is [     ].
                                              -------

        (c)     The Facility Office and address, fax number and attention
                details for notices of the New Lender for the purposes of Clause
                12.3.2 (Addresses) are set out in the Schedule.

3.      The New Lender expressly acknowledges the limitations on the Existing
        Lender's obligations set out in paragraph (c) of Clause 10.1.2
        (Limitation of responsibility of Existing Lenders).

4.      This Transfer Certificate may be executed in any number of counterparts
        and this has the same effect as if the signatures on the counterparts
        were on a single copy of this Transfer Certificate.

                                                             DAVE & GIRISH & CO.
                                       51
<PAGE>
                              SCHEDULE 4 (CONTD.)

               COMMITMENT/RIGHTS AND OBLIGATIONS TO BE TRANSFERRED

TRANSFER DETAILS:

Nature: [insert description of facility(ies) transferred]
Final Maturity:                                [        ]
PARTICIPATION TRANSFERRED
Commitment Transferred
         Drawn Amount:              [       ]
         Undrawn Amount:            [       ]

ADMINISTRATION DETAILS:

New Lender's Receiving Account:     [       ]
Process Agent:                                 [       ]
Address:                            [       ]
Telephone:                          [       ]
Facsimile:                          [       ]
Telex:                              [       ]
Attn/Ref:                           [       ]

<Table>
<S>                                                          <C>
[Existing Lender]                                            [New Lender]
 ---------------                                              ----------

By:                                                          By:
</Table>

This Transfer Certificate is accepted by the Agent and Security Trustee and the
Transfer Date is confirmed as [           ].
                               -----------

[Agent and Security Trustee]
 --------------------------

By:

                                                             DAVE & GIRISH & CO.
                                       52
<PAGE>
                                   SCHEDULE 5
                         Form of Compliance Certificate

To:     [      ] as Agent and Security Trustee
        --------

From:   [Borrower]

Dated:

Dear Sirs

                     [BORROWER] - [     ] FACILITY AGREEMENT
                     ----------   -------
                      DATED [    ] (THE "FACILITY AGREEMENT")
                            ------

1.      We refer to the Facility Agreement. This is a Compliance Certificate.
        Terms used in the Facility Agreement shall have the same meaning in this
        Compliance Certificate.

2.      We confirm that: [Insert details of covenants to be certified including
                         ------------------------------------------------------
        calculations
        ------------

3.      [We confirm that no Default is continuing.]*
        -------------------------------------------

<Table>
<S>             <C>                          <C>
Signed:         ...............              ...............
                Director                     Director
                Of                           Of
                [Borrower]                   [Borrower]
</Table>

[insert applicable certification language]**
------------------------------------------

......................
for and on behalf of
[name of auditors of the Borrower]***
----------------------------------

--------------------------------------------------------------------------------
*       If this statement cannot be made, the certificate should identify any
        Default that is continuing and the steps, if any, being taken to remedy
        it.

**      To be agreed with the Borrower's auditors and the Lenders prior to
        signing the Agreement.

***     Only applicable if the Compliance Certificate accompanies the audited
        financial statements and is to be signed by the auditors. To be agreed
        with the Borrower's auditors prior to signing the Agreement.

                                                             DAVE & GIRISH & CO.
                                       53
<PAGE>
                                   SCHEDULE 6

                           BRIEF DESCRIPTION OF ASSETS

                                    PART - I

                  BRIEF DESCRIPTION OF THE IMMOVABLE PROPERTIES

(A)     All pieces and parcels of lands as mentioned hereinbelow:

Brief description of Free Hold Lands as mentioned hereinbelow

<Table>
<Caption>

-------------------------------------------------------------------------------------------
Sr. No.      Date of acquisition      Survey No/PC NO.     Village          Area (Acres)
-------------------------------------------------------------------------------------------
<S>          <C>                      <C>                  <C>              <C>

1            11.06.74                 24                   Chotipani        3.07
-------------------------------------------------------------------------------------------
2.           21.06.74                 21                   Rumgara          3.62
-------------------------------------------------------------------------------------------
3.           12.10.74                 20                   Tanakhar         15.04
-------------------------------------------------------------------------------------------
4.           12.04.74                 21                   Risda            253.02
-------------------------------------------------------------------------------------------
5.           05.12.73                 20                   Rogbahari        88.67
-------------------------------------------------------------------------------------------
6.           November 1973            21                   Rumgara          16.87
-------------------------------------------------------------------------------------------
7.           05.12.73                 20                   Padhimar         184.74
-------------------------------------------------------------------------------------------
8.           November 1973            21                   Risda            145.37
-------------------------------------------------------------------------------------------
9.           12.10.1973               21                   Kohadia          176.42
-------------------------------------------------------------------------------------------
10.          16.11.76                 4A21                 Rogbahari        33.28
-------------------------------------------------------------------------------------------
11           16.11.76                 5A 21                Rogbahari        3.55
-------------------------------------------------------------------------------------------
12           24.09.90                                      Rogbahari        20.7
-------------------------------------------------------------------------------------------
                                                                            944.65
-------------------------------------------------------------------------------------------
</Table>

(B)     Description of Lease Hold Lands

<Table>
<S>                <C>                       <C>                  <C>
-------------------------------------------------------------------------------------------
Sr. No.            Date of grant             Place                Areas (Acres)
-------------------------------------------------------------------------------------------
1.                 29.03.72                  Korba                1136
-------------------------------------------------------------------------------------------
</Table>

                                                             DAVE & GIRISH & CO.
                                       54
<PAGE>
(C)     Brief Description of Mining Leases

<Table>
<CAPTION>

-------------------------------------------------------------------------------------------
Sr. NO.            Date of mining lease      Area in hectares     Village
-------------------------------------------------------------------------------------------
<S>                <C>                       <C>                  <C>

1                  21.3.1997                 626.117              Rajandgaon (Kaverdha)
-------------------------------------------------------------------------------------------
2.                 9.07.92                   639.169              Surguja (Maispat)
-------------------------------------------------------------------------------------------
</Table>

with existing buildings, factories and other structures standing thereon,
godowns, water tanks together with fixed plant, machinery, fixtures and
fittings, air-conditioning and cooling equipment, civil constructions, hoists,
lifts on the lands described in (A), (B) and (C) and any thing permanently
attached to the earth, or permanently fastened or embedded in anything attached
to the earth.

(D)     Brief Description of Flats and Offices

<Table>
<CAPTION>

-------------------------------------------------------------------------------------------
SR. NO.         FLAT NO./ADDRESS                                           LOCATION (PLACE)
-------------------------------------------------------------------------------------------
<S>             <C>                                                        <C>

      1         66, Jolly Maker Chambers II, Plot No. 225, Backbay              Mumbai
                Reclamation, Nariman Point, Mumbai 400 020
-------------------------------------------------------------------------------------------
      2.        67, Jolly Maker Chambers II, Plot No. 225, Backbay              Mumbai
                Reclamation, Nariman Point, Mumbai 400
-------------------------------------------------------------------------------------------
      3.        103/203, 1st and 2nd Floor, Nugget Apt. New                     Mumbai
                Prabhadevi Road, City Lower Parel
-------------------------------------------------------------------------------------------
      4.        Garage No. G-1, Nugget Apt. New Prabhadevi Road,                Mumbai
                Lower Parel
-------------------------------------------------------------------------------------------
      5.        No. 502 & 503, 5th floor, Sheel Jeet Apt Plot No. CTS           Mumbai
                240, Mogra Village, Andheri
-------------------------------------------------------------------------------------------
      6.        A 4 to A 8, No 33 A Chowringhee Road                           Kolkata
-------------------------------------------------------------------------------------------
      7         A 294, New Friends Colony                                      New Delhi
-------------------------------------------------------------------------------------------
      8.        Crescent Court No. 963, Poonamallee High Court, Kilpauk         Madras
-------------------------------------------------------------------------------------------

</Table>

                                                             DAVE & GIRISH & CO.
                                       55
<PAGE>
                                    PART II

                     BRIEF DESCRIPTION OF MOVABLE PROPERTY

All the movable properties, both present and future, tangible or intangible
excluding, however, Current Assets but including such as but not limited to
plant and machinery equipment, tools, accessories, uncalled capital, goodwill,
trade mark, software, patents copy rights including any other intellectual
property such as confidential information, control systems, office furniture,
type writers, computers, computer systems including computer software, drilling
machines, dyes, ropes and whether installed or not, and lying loose or in cases
or being in or upon or about the Borrower's premises and godowns or wherever
else the same may be or be held by any party anywhere to the order or
disposition of the Borrower or in the course of transit or delivery howsoever or
wheresoever and whether in actual possession of the Borrower or in possession of
any other person for and on behalf of the company and all other assets (not
being current assets) investments, including either by way of substitution,
addition or replacement thereof.

                                                             DAVE & GIRISH & CO.
                                       56
<PAGE>

IN WITNESS WHEREOF the Parties have caused this Agreement to be executed on
their behalf respectively on the Day and Year first hereinabove mentioned and in
the manner hereinafter provided:

--------------------------------------------------------------------------------
BORROWER
--------------------------------------------------------------------------------
The Common Seal of BHARAT ALUMINIUM
COMPANY LIMITED has been hereunto
affixed by Mr. TARUN JAIN
withinnamed, who have been duly
authorised for the purpose pursuant to a
resolution passed at a meeting of its committee
of directors held on the 16TH day of                        /s/ TARUN JAIN
SEPTEMBER 2003 and who have
accordingly signed these presents in token
of the common seal having been affixed

--------------------------------------------------------------------------------
ARRANGER
--------------------------------------------------------------------------------
Signed and delivered for and on behalf of
the Arranger, withinnamed, namely

ABN AMRO SECURITIES (INDIA)
PRIVATE LIMITED by the hands of

Mr. ANIL BHATIA
                                                         /s/ ANIL BHATIA

And

Mr. SANJAY VINAYAK
                                                        /s/ SANJAY VINAYAK

its Authorised Signatories

--------------------------------------------------------------------------------
AGENT AND SECURITY TRUSTEE
--------------------------------------------------------------------------------
Signed and delivered for and on behalf of
the Agent and Security Trustee,
withinnamed, namely

IL&FS TRUST COMPANY LIMITED
by the hand of

Mr. SIVARAMAKRISHNAN
                                                        /s/ MR. SIVARAMAKRISHNAN

its Authorised Signatory

                                                             DAVE & GIRISH & CO.
                                       57

<PAGE>

--------------------------------------------------------------------------------
LENDERS
--------------------------------------------------------------------------------
1)   Signed and delivered for and on behalf
     of the Lenders, withinnamed, namely

     ABN AMRO BANK N.V.

     by the hands of

     Mr. BRIJESH MEHRA                                  /s/ BRIJESH MEHRA

     And

     Mr. RAJESH GUPTE                                   /s/ RAJESH GUPTE

     its Authorised Signatories

--------------------------------------------------------------------------------
2)   CORPORATION BANK

     by the hand of

     Mr. S. PATTABIRAMAN                                /s/ S. PATTABIRAMAN

     its Authorised Signatory

--------------------------------------------------------------------------------
3)   HOUSING DEVELOPMENT FINANCE
     CORPORATION LIMITED

     by the hands of

     Mr. S. N. SHROFF                                   /s/ S. N. SHROFF

     And

     Mr. V. SRINIVASARANGAN                             /s/ V. SRINIVASARANGAN

     its Authorised Signatories

--------------------------------------------------------------------------------
4)   ORIENTAL BANK OF COMMERCE

     by the hand of

     Mr. ASHOK GUPTA                                    /s/ ASHOK GUPTA

     its Authorised Signatory

--------------------------------------------------------------------------------
5)   STATE BANK OF BIKANER & JAIPUR

     by the hand of

     Mr. H. R. SRIVASTAVA                               /s/ H. R. SRIVASTAVA

     its Authorised Signatory

                                                             DAVE & GIRISH & CO.
                                       58

<PAGE>

--------------------------------------------------------------------------------
6)   STATE BANK OF HYDERABAD

     by the hand of

     Mr. R. KRISHNA RAO                                 /s/ R. KRISHNA RAO

     its Authorised Signatory

--------------------------------------------------------------------------------
7)   STATE BANK OF INDORE

     by the hand of

     Mr. P. C. CHHAJEO                                  /s/ P. C. CHHAJEO

     its Authorised Signatory

--------------------------------------------------------------------------------
8)   STATE BANK OF MYSORE

     by the hand of

     Mr. P. K. ROY                                      /s/ P. K. ROY

     its Authorised Signatory

--------------------------------------------------------------------------------
9)   STATE BANK OF PATIALA

     by the hand of

     Mr. SUYASH                                         /s/ MR. SUYASH

     its Authorised Signatory

--------------------------------------------------------------------------------
10)  STATE BANK OF SAURASHTRA

     by the hand of

     Mr. RAJESH CHAWLA                                 /s/ RAJESH CHAWLA

     its Authorised Signatory

--------------------------------------------------------------------------------
11)  SYNDICATE BANK

     by the hand of

     Mr. K. U. VASANT RAO                               /s/ K. U. VASANT RAO

     its Authorised Signatory

--------------------------------------------------------------------------------
12)  THE FEDERAL BANK LIMITED

     by the hand of

     Mr. ABRAHAM M. JACOB                              /s/ ABRAHAM M. JACOB

     its Authorised Signatory

                                                             DAVE & GIRISH & CO.
                                       59

<PAGE>

--------------------------------------------------------------------------------
13)  THE JAMMU & KASHMIR BANK LIMITED

     by the hand of

     Mr. MUKHTARA AHMAD                                  /s/ MUKHTARA AHMAD

     its Authorised Signatory

--------------------------------------------------------------------------------
14)  THE KARNATAKA BANK LIMITED

     by the hand of

     Mr. RAGHURAMA                                     /s/ MR. RAGHURAMA

     its Authorised Signatory

--------------------------------------------------------------------------------
15)  THE KARUR VYSYA BANK LIMITED

     by the hand of

     Mr. V. SRINIVASAN                                 /s/ V. SRINIVASAN

     its Authorised Signatory

--------------------------------------------------------------------------------
16)  THE LAXMI VILAS BANK LIMITED

     by the hand of

     Mr. N. DURAIRAJAN                                 /s/ N. DURAIRAJAN

     its Authorised Signatory

--------------------------------------------------------------------------------
17)  UCO BANK

     by the hand of

     Mr. A. K. GUPTA                                  /s/ A. K. GUPTA

     its Authorised Signatory

--------------------------------------------------------------------------------
18)  VIJAYA BANK

     by the hand of

     Mr. K. MANJAYYA SHETTY                           /s/ K. MANJAYYA SHETTY

     its Authorised Signatory

--------------------------------------------------------------------------------

                                                             DAVE & GIRISH & CO.
                                       60<PAGE>

                                                                   EXHIBIT 10.18

                             SUBSCRIPTION AGREEMENT

THIS AGREEMENT made this 9th day of April, Two Thousand and Three between
Sterlite Industries (India) Ltd), a Company within the meaning of the Companies
Act, 1956 and having its Registered Office at B-10/4, Waluj MIDC Industrial
Area, Dist Aurangabad - Maharashtra PIN- 431133 (hereinafter referred to as "The
Company" which expression shall unless it be repugnant to the subject or context
thereof, include its successors and assigns) of THE FIRST PART.

                                       AND

LIFE INSURANCE CORPORATION OF INDIA, a Corporation established under the Life
Insurance Corporation Act, 1956 (XXXI of 1956) and having its Central Office at
"YOGAKSHEMA", Jeevan Bima Marg, Mumbai 400 021 (hereinafter referred to as "LIC"
- which expression shall, unless it be repugnant to the subject or context
thereof include its successors and assigns) of the SECOND PART.

                                   ARTICLE - I

1.1. Wherever used in this Agreement, unless the context otherwise requires the
following terms shall have the following meanings:

a)   "Act" means Companies Act, 1956 (1 of 1956) and includes any statutory
     modifications thereto or any re-enactment thereof.

b)   "Debentures" means:-

     Tranch A - 40 Secured Redeemable Non Convertible Debentures of the face
     value of Rs. One crore each aggregating Rs. 40 Crores.

     Tranch B - 60 Secured Redeemable Non Convertible Debenture of the face
     value of Rs. One crore each aggregating Rs. 60 Crores

c)   "Debenture holders" means LIC or the holders of the Debentures for the time
     being deriving their title to the Debentures.

d)   "Debenture Trustees" means acting as the Trustees for the time being for
     the holders of the Debentures.

e)   "Gsec" rate means interest rates on Government Securities for corresponding
     maturities under Public Debt Act, 1944.

                                  ARTICLE - II

2.1 COMPANY'S REQUEST FOR FINANCIAL ASSISTANCE

     The Company has approached LIC for financial assistance to augment long
term resources of the Company for General Corporate Purpose including reduction
of short term debt and LIC has agreed to advance financial assistance in the
form of subscription to Non-Convertible Privately Placed Debentures as mentioned
above hereinafter referred to as "The Debentures". In case the Company fails for
any reason to utilise the proceeds of the

                                        1

<PAGE>

Debentures for the said purpose(s), LIC will be entitled to rescind / avoid the
contract on that ground and to call back the money, if any, paid towards
subscription of the said Debentures.

2.2 DEBENTURE SHALL RANK PARI PASSU

     The Company shall ensure that the Debentures shall rank pari passu inter se
to all intents and purposes without any preference or priority of one over the
other.

2.3 TRUSTEES FOR DEBENTURE HOLDERS

     At the request of the Company, M/s Western India Trustee & Executor Co.
Ltd., having its Registered Office at 218, Pratapganj Peth, Satara- 415 001 and
having its office at 161/C, 16th Floor, Mittal Court, Nariman Point, Mumbai -
400 021 has agreed to act as the Trustees for the Debentureholders (hereinafter
referred to as "The Trustees") in respect of the Debentures agreed to be
subscribed hereunder.

                                  ARTICLE - III

                   AGREEMENT AND TERMS OF ISSUE OF DEBENTURES

3.1 AMOUNT OF DEBENTURES TO BE ISSUED

     The Company agrees to issue to LIC on private placement basis and LIC
agrees to subscribe to the Company's proposed issue of Debentures of the nominal
value of Rs. 100 Crores (Rupees One Hundred Crores only) on the terms and
conditions herein set forth and to the extent mentioned hereinbefore and
subsequently the company will make the allotment of said Debentures.

3.2 INTEREST ON DEBENTURES OUTSTANDING

     The Company shall until the Debentures are redeemed or paid off pay to the
Debenture holders interest on the said Debentures respectively or such part
thereof as shall remain unpaid for the time being at the rate of interest giving
differential yield of 190 basis points over the Gsec rate of corresponding
maturity, Gsec determined two working days before the disbursement / reset date
and shall be payable annually from the drawdown date.

     The interest / all other dues will be payable at the Registered Offices at
Mumbai of the Debenture Holders.

     PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that all interest
which shall accrue on the Debentures outstanding or any part thereof and for the
time being remaining unpaid and all other monies which have become payable under
these presents shall in case the same be not paid on the dates on which they
accrued due, carry compound interest at the same rate over and above the rates
of interest aforementioned computed from the respective dates of such interest
or monies accruing due and all such interests and further interests which have
become payable under these presents but not paid shall become payable upon the
footing of the compound interest with rests taken or made quarterly on the
respective dates provided and all such compound interest shall be a charge
secured by the Debentures.

     PROVIDED HOWEVER, in the event of any default in the redemption of
Debentures or in the payment of interest amount, the Company shall pay to the
Holders of the Debentures, further interest at the rate of 2 (two) percent per
annum as and by way of liquidated damages for the period of default on the
amount of such defaulted instalment of redemption or of interest, upon the
footing of compound interest as aforesaid and all such compound interest shall
be a charge secured by the Debentures.

                                        2

<PAGE>

     ADDITIONAL INTEREST

     The company has the provision to create security for the said debentures
within a period of 3 months from the date of allotment / disbursement. If the
Company fails to create security within this period, it shall pay additional
interest at the rate of 2% p. a. payable annually (along with the above interest
payment) on the outstanding amount of the Debentures from the expiry of three
months from the date of allotment till the creation of security to the
satisfaction of Debenture Holders.

3.3 RIGHT TO REVIEW THE RATE OF INTEREST

     The Company agrees and undertakes that the Debenture Holder(s) shall have a
right to review the rate of interest after every three years as per the terms,
i.e., 190 basis points over the annualized Gsec rate of corresponding maturity.
The Company shall pay interest on the Debentures at the rate that may be
stipulated by the Debenture Holder(s) as a result of such review. The Company
also agrees and undertakes to obtain all necessary consents from the concerned
authorities in accordance with the then prevailing rules and regulations and to
sign all deeds and documents that may be required in this regard and to endorse
the revised interest rates on the Debenture Certificate as and when communicated
by the Debenture Holder(s).

3.4 COMPUTATION OF INTEREST AND OTHER CHARGES

     In all cases in which it shall be necessary to compute the amount of
interest or any other charges which shall have accrued under this Agreement for
even periods of 3 months such computation shall be made on an annual basis. In
all other cases, such computation shall be on a daily basis using a 365 days
factor.

3.5 TERMS OF SUBSCRIPTION

     The Company agrees that on LIC making an application for Rs. 100 Crores
(Rupees One hundred crores only) face value of Debentures, their commitment to
subscribe to the proposed Debentures will be deemed to have been fully
discharged and the Company shall issue such allotment letter as may be deemed
necessary.

3.6 MODE OF SUBSCRIPTION

     The payment to be made by LIC to the Company under or in terms of this
Agreement shall be by crossed account payee cheque(s) favoring the Company drawn
on LIC's Bankers in Mumbai and such payments shall begin to accrue as and from
the date of the cheque(s).

3.7 REPAYMENT

     The Company agrees and undertakes to redeem the Debentures at the end of
seven years for Tranch A and at the end of ten years for Tranch B from the date
of allotment.

The Debenture Holders may at the request of the Company in suitable
circumstances and also in the absolute discretion of the Debenture Holders,
subject to the Statutory Guidelines as may be applicable for the purpose, revise
/ postpone the redemption of the Debentures or any part thereof outstanding for
the time being or any instalments of redemption of the said debentures or any
part thereof upon such terms and conditions as may be decided.

If for any reason the amount of the Debentures finally subscribed for by the
Debenture Holders is less than the amount of the Debentures agreed to be
subscribed, the instalment(s) of redemption will be reduced proportionately but
will however be payable on the due date as specified.

3.8 PREMATURE REPAYMENT

     The Company shall have no right to redeem the outstanding Debentures in
full or in part before the end of 3 years from the date of allotment of
Debentures. In case the Debenture Holders agree to accept premature repayment
which shall, however, be entirely at the sole discretion of the Debenture
Holders, the acceptance shall be subject to such

<PAGE>

terms and conditions including payment of premium, if any, as may be stipulated
by the Debenture Holders in this behalf. In case the Company intends to redeem
the Debentures after 3 years from the date of allotment of Debentures, prior
notice of 3 months to the Corporation shall be given subject to such terms and
conditions including payment of premium, if any, as may be stipulated by the
Debenture Holders in this behalf.

3.9 DEBENTURE CERTIFICATE

     The Company shall issue Debenture Certificate/s to the Debenture Holder/s
after making necessary compliance to the provisions of Section 113 (1) of The
Companies Act, 1956 read with the Companies (Issue of Share Certificate) Rules
1960. The Company shall arrange to issue this certificate in demat form.

3.10 APPROPRIATION OF PAYMENTS

     Unless otherwise agreed to by the Debentureholders, any payments by the
Company under the said Subscription Agreement / Trustee Agreement and / or other
documents executed for the subscription to Debentures and creation of security
therefore shall be appropriated in the following manner, viz.,

(i)  First, towards commitment fees;

(ii) Secondly, towards costs, charges and expenses and other monies and also the
     remuneration payable by the Company to the Debenture Trustees;

(iii) Thirdly, towards further interest in case of default and compound
     interest;

(iv) Fourthly, towards interest; and

(v)  Lastly, towords redemption of principal amount of the Debentures due and
     payable by the Company to Debentureholders.

                                  ARTICLE - IV

                                    SECURITY

4.1 SECURITY FOR THE DEBENTURES

     The Debentures together with interest, costs, and all other monies,
expenses, as also fees payable to the Debentures Trustees shall be secured by;

[a] (i) Equitable Mortgage by deposit / release and re-deposit of Title Deeds or
by extension to cover the immovable properties of the Company including plant
and machinery, spares, tools and accessories, both present and future, which
shall be kept adequately insured on the basis of replacement cost; and

     (ii) A first charge by way of hypothecation of all the movable properties
of the Company - both present and future - (save and except book debts) subject
to prior charges created / to be created in favour of all the Company's bankers
on its stocks of raw materials, finished and semi finished goods, consumable
stores for securing borrowings for working capital requirements.

                                       OR

[a] (i) A Legal / English Mortgage over all the immovable properties of the
Company - wherever situated - including plant and machinery, spares, tools and
accessories, both present and future, which shall be kept adequately insured on
the basis of replacement cost; and

     (ii) A floating charge on all the other movable assets of the Company
subject to prior charges, if any, created in favour of all the Company's bankers
for securing borrowings for working capital requirements.

                                        4

<PAGE>

RANKING

The above mortgage and charges shall rank pari passu with the charges created /
to be created in respect of the existing loans / term borrowings / Debentures as
per Schedule I attached.

     EXCLUSIONS:

     The mortgage / charges as mentioned above shall not include / extend to, as
a First Mortgage or Charge, to the specified assets described in Schedule - II
hereto. However, as soon as the subsisting charge(s) on the assets specified in
the said Schedule are satisfied by the Company, such of those assets shall
automatically become part and parcel of the properties charged / conveyed, by
way of a First Charge to the Debenture Holders / Agents & Trustees.

4.2 EXECUTION OF DOCUMENTS AND CREATION OF SECURITY

     The Company shall execute all relevant documents and create security for
the said Debentures as stated above within a period of 3 months from the date of
allotment / disbursement.

     In case the Company fails to create security as mentioned above, additional
interest at the rate of 2% (two per cent) p.a. payable annually (along with
coupon) shall be payable from the date of allotment of NCD till the date of
creation of security on the outstanding amount of Debentures till such creation
of security and issue of the Debentures Certificates to the satisfaction of the
Debenture Holders.

     In case the Company fails to create the security even after the expiry of
12 months from the date of allotment, the Company shall, within 21 days
thereafter, convene the meeting of the Debenture Holders to explain the reasons
for the delay in creation of the security and indicate the date by which the
security would be created.

4.3 The Company shall at all time maintain a minimum security cover of 1.25
times of its net fixed assets over all the long term loans and / or Debentures
outstanding including the Debentures issued to the Debenture Holder/s and any
other borrowings which may have a charge over the fixed assets of the Company,
besides the assets having exclusive charge, if any.

     The revaluation of assets would not be taken into account for determining
the minimum security cover as above.

4.4. If the Trustees and the Debenture Holders are of the opinion that at any
time during the subsistence of this Agreement the security provided by the
Company has become inadequate to cover the Debentures then outstanding, the
Company shall provide and furnish to the Trustees to their satisfaction such
additional security as may be acceptable to the Trustees to cover such
deficiency.

4.5 ACQUISITION OF ADDITIONAL IMMOVABLE PROPERTIES

     So long as any moneys remain due and outstanding to the Debenture Holders,
the Company undertakes to notify the Debenture Holders / Trustees in writing of
all its acquisitions of immovable properties and as soon as practicable
thereafter shall make out a marketable title to the Trustees by way of first
charge in such form and manner as may be decided by the Trustees / Debenture
Holders in case the security cover falls below the minimum stipulated ratio.

                                        5

<PAGE>

4.6 CLEARANCES

     In case any of the Company's assets are charged in favour of the financial
institution(s) / bank(s) / other lender(s), the Company shall furnish a suitable
No Objection Letter from such lender(s) agreeing to cede pari-passu charge to
secure the Debentures.

4.7 CHANGE IN SECURITY

     Any changes in the manner of creation of security or details of
documentation for the said Debentures shall be only with the prior written
approval of the Debenture Holders.

4.8 FURTHER BORROWINGS

     The Company shall be entitled to make further issue of Debentures and / or
raise loans or raise further funds from time to time from such persons / banks /
financial institutions or bodies corporate or any other agency. However, until
the Debentures are fully redeemed, the Company shall not create any mortgage or
charges on any of the aforesaid property or assets without obtaining prior
written approval of the Debenture Holders/Trustees of the debentures.

                                   ARTICLE - V

                              COMPANY'S WARRANTIES

5.1 Save and except to the extent already disclosed in writing by the Company to
LIC the Company hereby warrants and undertakes as follows:-

A)   APPLICATION FOR FINANCIAL ASSISTANCE

     The application to LIC for financial assistance for the aforesaid purposes
and the information furnished by the Company to LIC from time to time, is true
and correct and shall be deemed to form part of the representations and
warranties on the basis of which LIC has agreed to subscribe to the privately
placed debentures.

B)   CHARGES AND ENCUMBRANCES

     Except as disclosed in the application for financial assistance to LIC,
there are no mortgages, charges, lispendens or liens or other encumbrances or
any rights of way, light or water or other easements or right of support on the
whole or any part of the undertaking, property or assets.

C)   LITIGATION

     The Company is not a party to any litigation of a material character and
that the Company is not aware of any facts likely to give rise to such
litigation or to material claims against the company.

D)   DISCLOSURE OF FACTS

     The Company shall disclose all facts relating to its properties.

E)   DISCLOSURE OF DEFECTS IN PROPERTY ETC.

     The Company is not aware of any document, judgment or legal process or
other charges or any latent or patent defects affecting the title of the
property or of any material defects in the property of in its title which has
remained undisclosed and / or which may prejudicial affect the Debenture
Holders.

F)   PUBLIC SCHEMES AFFECTING COMPANY'S PROPERTIES

     None of the properties is included in or affected by any of the schemes of
Central / State Government or of the improvement trust or any other public body
or by alignment, widening of construction of road under any scheme of the
Central / State Government or of any Corporation, Municipal Committee, Gram
Panchayat, etc.

                                        6

<PAGE>

     INFRINGEMENT OF LOCAL LAWS

     No suit is pending in the Magistrate's Court or in any other court of law
in respect of the properties offered as security to the Debenture Holders nor
has the Company been served with any notice for infringing the provisions of the
Municipal Act or any Act relating to local bodies or Gram Panchayat or with any
other process under any of these Acts.

G)   DUE PAYMENT OF PUBLIC AND OTHER DEMANDS

     The Company has paid all public demands such as Income Tax, Corporation Tax
and all other taxes and revenues and any other statutory dues payable to the
Government of India or to the Government of any state or to any local or other
authority and that at present no arrears of such taxes, revenues and dues are
due and outstanding.

H)   FINANCIAL POSITION

     The Company has furnished an audited balance sheet as at March 31, 2002.
The financial position of the Company at the said date is correctly disclosed by
the said balance sheet and since that date the financial position of the Company
not been affected by losses or other material changes.

I)   ARRANGEMENTS FOR MEETING SHORTFALL

     The Company undertakes to LIC that they shall take the responsibility for
making arrangements satisfactory to LIC for meeting shortfall, if any, in the
resource of the Company for working capital. The funds brought in to meet the
shortfall in the resources of the Company for working capital shall be in such
form and manner as may be required by LIC and shall not involve any charge or
lien or other interest in the assets of the Company. In the event of such funds
being brought in by way of unsecured loans / deposits, they shall not be
withdrawn nor shall the Company repay the same without the prior written
approval of LIC. The Company shall also not pay any interest on such unsecured
loans / deposits if at the time of such payment there is a default in the
repayment of Debentures subscribed by LIC and interest due thereon and owing by
the Company to LIC under this Agreement.

J)   COMPLIANCE OF PROVISIONS OF COMPANIES ACT IN RELATION TO BORROWINGS

     The Company states and confirm that its borrowing conform to section
293(1)(d) of the Companies Act, 1956 as applicable.

K)   DELIVERY OF BOARD RESOLUTION AUTHORISING EXECUTIONMENTS

     The Company has delivered a certified copy of the resolution of its Board
of Directors authorising the execution of this Agreement and also such other
documents as the Company may be called upon by LIC to execute for the purpose of
creating the security in favour of Trustees as stipulated in Article IV hereof.

L)   CONFLICT WITH MEMORANDUM AND ARTICLES OF ASSOCIATION

     Nothing in this Deed conflicts with the Memorandum and Articles of
Association of the Company.

                                  ARTICLE - VI

        CONDITIONS PRECEDENT TO DISBURSEMENT OF THE FINANCIAL ASSISTANCE.

6.1 The obligation of the Debenture holders to subscribe to the Debentures under
these presents shall be subject to the observance of and performance by the
Company of all its obligations and undertakings to be observed and performed
under this Agreement and to the satisfaction, prior to such subscription, of the
following further condition:

                                        7

<PAGE>

A)   SECURITY IN FAVOUR OF THE TRUSTEES

     The Company shall create a security in favour of the Trustees as stipulated
in Article - IV hereof to secure the Debentures proposed to be issued to the
Debenture Holders.

B)   TITLE

     The Company shall have made out a good and marketable title free from
encumbrances to its properties to the satisfaction of the Trustees and Debenture
Holders and that there are no subsisting mortgages, charges, or encumbrances
thereon and has satisfied that necessary approvals under the Urban Land (Ceiling
and Regulation) Act, 1976 have been obtained or will be obtained to the
satisfaction of the Debenture holders and / or their advocates.

C)   COMPLIANCE OF PROVISIONS OF COMPANIES ACT IN RELATION TO CREATION OF
     SECURITY

     The Company shall have produced or undertakes to produce the requisite
resolution of its General Body in terms of Section 293 (1) (a) of the Companies
Act, 1956, where applicable, for creating the mortgage and charge referred to in
Article IV hereof.

     The Company shall, upon notice from the Debenture Holders pay or reimburse
to the Debenture Holders all legal charges, costs and expenses in any way
incurred by them in connection with or relating to this transaction including
cost of investigation of title, searches, travelling allowance, drafting,
stamping and registration of the documents.

6.2 OTHER CONDITIONS FOR DISBURSEMENT

     The obligation of LIC to subscribe to the privately placed Debenture of Rs.
100 Crore shall also be subject to the following conditions:

A)   NON-EXISTENCE OF EVENT OF DEFAULT

     The company shall satisfy the Debenture Holders that no event of default as
defined in Article IX hereof and no event which, with the lapse of time as
specified in the said Article IX would become an event of default shall have
happened and be continuing.

B)   The Company shall satisfy the Debenture Holders that all consents,
     approval, etc. as are necessary for the issue of Debentures have been
     obtained from the appropriate authorities and are effective and in force.

C)   RIGHT TO SEEK MODIFICATION

     The Company shall agree to review the terms and conditions relating to any
monetary benefits (on pro rata basis wherever applicable) available to the
existing Debenture Holders in case the Central Government announces in future
any modification / amendment / revision in the guidelines for the purpose of
issue of Debentures by Public Limited Companies.

D)   STATUTORY AND OTHER APPROVALS

     The Company shall obtain the approval of the Government of India or any
other prescribed authority in their behalf on the basis of the terms and
conditions stipulated herein before the issue of the Debentures is made by the
Company, if applicable.

E)   DEBENTURE REDEMPTION RESERVE

     The Company shall create Debenture Redemption Reserve (DRR) out of its
profits before distribution of any dividend and transfer to it suitable amounts
in accordance with Government guidelines issued from time to time and in force
during the currency of the Debentures. The Company shall submit to the Trustees
and Financial Institutions a Certificate duly certified by the Auditors
certifying that the Company has transferred a suitable sum to DRR at the end of
each financial year.

                                        8

<PAGE>

F)   RIGHT OF DISCLOSURE IN THE EVENT OF DEFAULT

     The company hereby agrees that the Life Insurance Corporation of India
shall have an unqualified right to disclose / publish the names of the Company
and its directors as defaulters, in the event of the Company committing default
in the repayment of instalment of the Debentures or payment of interest on the
due dates and to disclose the name of the Company and its directors to the
Reserve Bank of India (RBI). The disclosure shall be in such manner and through
such medium as the Life Insurance Corporation of India / RBI in their absolute
discretion may think fit.

                                  ARTICLE - VII

          COVENANTS AND TERMS OF APPLY DURING THE CURRENCY OF THIS DEED

7.1 PARTICULAR AFFIRMATIVE COVENANTS

     Unless the Debenture Holders shall otherwise agree, the Company shall:

A)   UTILISATION OF PROCEEDS OF THE ISSUE

     Use the proceeds of the issue for the purpose as sanctioned and accordingly
the Company shall furnish us a Certificate of Utilisation of the proceeds duly
signed by the Auditor. The proceeds of the Debentures shall not be utilised by
the Company for the purpose of financing / replenishing funds or acquiring
shares/securities of other Companies."

B)   INSURANCE

     (i) Subject to the rights of the Company's banks over the Banker's Goods,
insure and keep insured in the joint names of the Debenture Trustees and of the
Company or any other person or institution having an insurable interest in the
properties of the assets to be mortgaged as are of an insurable nature against
loss or damage by fire, flood, earthquake, storm, tempest lighting, explosion
and other acts of God and also by riot or other civil commotion or revolution as
also by acts of enemies during war or other risks of war or emergency or risk of
falling air crafts or such of them including marine risks or such other risks as
may be required by the Trustees / Debenture Holders from time to time on the
basis of replacement cost in an insurance office or offices and the Company
shall duly pay all premia or other sums payable for the purpose and effect
renewal of such insurance and deliver, to and leave with Trustees or every such
policy or insurance and the receipt for the last premium payable thereunder.

     ii) Agree that, in the event of failure on the part of the Company to
insure the properties or to pay the insurance premia or other sums referred to
above, the Trustees may, but shall not be obliged to, get the properties insured
or pay the insurance premia and other sums referred to above, as the case may
be, and the Company shall forthwith on receipt of a notice of demand from the
Debentures Trustees reimburse them all sums so paid by them together with
interest thereon at the same rate as specified in Section 3.2. hereof in respect
of the financial assistance with quarterly rests from the date of payment and
until such reimbursement by the Company the same shall be debited to the
Company's Loan account and shall stand secured under the security created in
terms of Article IV hereof.

C)   ADVERSE CHANGES IN PROFITS AND PRODUCTION

     Promptly inform the Debenture Holders of the happening of any labour
strikes, lock-outs, shut-downs, fires or other similar happenings etc. likely to
have an adverse effect on Company's or business and of any material changes in
the rate of production or sales of the Company with an explanation of the
reasons therefore.

                                        9

<PAGE>

D)   MAINTENANCE OF PROPERTY

     Maintain its property in good condition and will make all necessary
repairs, additions and improvements thereto.

E)   NOTICE OF WINDING UP OR OTHER LEGAL PROCESS

     Promptly inform the Debenture Holders if it has notice of any application
for winding up having been made or of any statutory notice of winding up under
the provisions of the Companies Act, 1956 or any other notice any other Acts or
otherwise of any suit or legal process intended to be filed / initiated against
the Company and affecting the title to the properties of the Company is received
by the Company or a Receiver is appointed of any of its properties or business
or undertaking.

F)   LOSS / DAMAGE BY UNCOVERED RISKS

     Promptly inform the Debenture Holders of any loss or damage which the
Company may suffer due to any force major circumstances of act of God, such as
earthquake, flood, tempest or typhoon, etc. against which he Company may not
have insured its properties.

7.2 PROPORTIONATE PRE-PAYMENT ON THE HAPPENING OF CERTAIN EVENTS

     The Company shall not prepay any Debentures / Loans availed of by it from
any other party without redeeming the debentures subscribed by Debenture
Holder/s pursuant to this agreement. If for any reason, the Company is required
to prepay any debentures / loans, it shall make proportionate prepayment of the
said debentures pursuant to this agreement as well subject to such conditions as
may be stipulated by the Debenture Holder(s).

7.3 CHARGES AND OTHER EXPENSES

     The Company shall pay all costs, including legal costs, charges and
expenses in any way incurred by any of the Debenture Holders, including
travelling and other allowances and such additional stamp duty, other duties,
taxes, charges and other penalties if any when the Company is required to pay
according to the laws for the time being in force in the State in which its
properties are situated or otherwise and in the event of the Company failing to
pay such stamp duty, other duties, taxes and penalties, as aforesaid, the
Debenture Holders will be at liberty (but shall not be obliged) to pay the same
and the Company shall reimburse the same to Debenture Holders on demand with
interest thereon at the same rate as on defaulted instalments in respect of the
Debentures specified in clause 3.2 hereof with quarterly rests from the date of
payment and until such reimbursement by the Company, the same shall stand
secured under the security created in terms of Article IV hereof.

7.4 ALTERATIONS IN MEMORANDUM AND ARTICLES OF ASSOCIATION

     The Company shall of its own accord make such alternations and additions to
its Memorandum & Articles of Association as are necessary to make them conform
to this Agreement. The Company shall in addition, also carry out whenever called
upon by the Debenture Holders to do so, such further alternations and addition
to its Memorandum and Articles of Association as may be deemed necessary in the
opinion of the Debenture Holders to safeguard its interests.

7.5 NEGATIVE COVENANTS

     Unless the Debenture holders shall otherwise agree, the Company shall not:-

     A)   DIVIDEND

          Declare and / or pay any dividend to any of its shareholders, whether
equity or preference, during any financial year unless the Company has paid to
the Debenture Holders the instalment of principal, if any, interest, commitment
charges, costs, charges and other moneys payable under this agreement up to and
during that year or has made provisions satisfactory to the Debenture Holders
for making such payment.

                                       10

<PAGE>

     B)   CHARGES

          Create or permit any charges or lien on any assets of the Company
except as provided in Article - IV hereof. For the purpose of this clause, the
term 'Lien' shall include mortgages, pledges, shares, privileges and priorities
of any kind and the term 'aspects' shall include revenues and property of any
kind.

     C)   AMENDMENT OF MEMORANDUM AND THE ARTICLES OF ASSOCIATION

          Amend its Memorandum & Articles of Association or alter its capital
structure except as specified herein.

     D)   MERGER, CONSOLIDATION ETC.

          Undertake or permit any merger, consolidation, reorganisation, scheme
of arrangements or compromise with its Creditors or shareholders or effect any
scheme of amalgamation or reconstruction.

     E)   INVESTMENT BY THE COMPANY

          Make any investment by way of deposits, loans, share capital etc. in
any manner except in the ordinary course of business.

     F)   REVALUATION OF ASSETS

          Revalue its assets.

     G)   TRADING ACTIVITY

          Carry on any general trading activity other than the sale of its own
product.

7.6  A) LOANS AND DEBENTURES

     The Company shall not except with the prior approval in writing of the
Debenture Holders raise any loan secured or unsecured, issue any debentures or
accept any deposits from public or otherwise issue any equity or preference
capital, change the capital structure, create any charge on its assets or give
any guarantee save and except the followings:-

i) Accept deposits from stockists in the normal course of business, and

ii) Accept public deposits subject to the ceiling prescribed under section 58A
of the Companies Act and the RBI Guidelines.

iii) Borrowings secured & unsecured in the normal course of business

     B)   PROVIDED HOWEVER, THE COMPANY MAY:

     i)   BANK FACILITIES

          Obtain from Bank(s) unsecured loans, overdraft, cash credit or other
facilities in the ordinary course of business.

     ii)  UNSECURED LOANS

          Obtain unsecured loans from the promoters / directors or from other
within limits to be approved by the Debenture Holders and at such rate of
interest and on such conditions as may be stipulated by the Debenture Holders.

7.7 FUTURE ARRANGEMENT

     i) If an event of default as specified in 9.1 hereof shall have happened
the Company shall appoint to the satisfaction of the Debenture Holders the
following personnel of proper qualification and experience namely full time
Managing Director / Manager as defined in the Companies Act 1956 or Financial
Controller. The appointment / reappointment of the said personnel as also the
terms and remuneration of such appointment / reappointment or any change in
their office or remuneration shall be subject to the prior approval in writing
of the Debenture Holders;

<PAGE>

     ii) The Company shall satisfy the Debenture Holders that it has appointed /
will appoint technical, financial and executive staff of proper qualifications
and experience for the key posts;

     iii) The Company shall prepare and furnish to the Debenture Holder an
organisation chart showing the name of the senior executives in its employ,
their duties and responsibilities, etc. and shall also keep the Debenture
Holders informed of the change in the composition of the Board of Directors and
of the senior executives and when brought about in organisation.

     iv) In case the Company is not regular or if there is a default in the
payment of instalment or interest or if the business of the Company is conducted
in a manner opposed to public policy or in the opinion of the Debenture Holders
in a manner prejudicial to the interests of the Debenture Holders, the Debenture
Holders shall have the right to review the management set up or organisation of
the company and to require the Company to restructure the management set up or
organisation in a manner considered suitable by the Debenture Holders and the
Company shall comply with the same.

7.8 Listing of the Debentures:

The Company shall get the aforesaid debentures listed on the wholesale debt
market segment of the National Stock Exchange within three months from the date
of allotment.

All expense, costs, charges incurred for the purpose of listing of the
Debentures, as also for making the offer for sale of Debentures shall be borne
and paid by the Company.

7.9 The Company shall not without prior permission of Debenture holders sanction
interest free loan or loans to subsidiary companies or to the companies sanction
loan or loans at a rate of interest lower than the rate of interest payable to
debenture holders.

                                 ARTICLE - VIII

                                     REPORTS

8.1  i) SUBMISSION OF ANNUAL AUDITED BALANCE SHEETS

          The Company shall submit to LIC within thirty days after the date when
they are approved by the Board of Directors of the Company copies of the annual
audited balance sheet, and trading and profit and loss Account of the Company.

     ii)  NOTICES, CIRCULARS AND MINUTES OF BOARD MEETINGS AND SHAREHOLDERS
          MEETINGS

          The Company shall submit to LIC and Debenture Trustees copies of all
notices, circulars and minutes and proceedings of all the Meetings of the Board
of Directors and of Shareholders simultaneously with the issuance thereof to the
Directors and shareholders as the case may be.

     iii) LIST OF LARGEST SHAREHOLDERS

          The Company shall submit to LIC and Debenture Trustees within sixty
days following the termination of each financial year, a current list according
to the records of the Company, of the ten largest shareholders of each class of
share capital of the Company and the number of shares held by each.

                                       12

<PAGE>

                                  ARTICLE - IX

                                    REMEDIES

9.1. EVENTS OF DEFAULT

     If one or more of the events specified in this clause (hereinafter called
'events of default') shall have happened, then the Debenture Holders by a notice
in writing to the Company may declare all the Debentures outstanding and all
accrued interest thereon to be due and upon such declaration the same shall
thereupon become due and payable forthwith and the security created in terms of
Article - IV hereof shall become enforceable (anything in this Agreement to the
contrary notwithstanding):-

     A)   DEFAULT IN REDEMPTION OF DEBENTURES

          Default shall have occurred in the redemption of the Debentures as and
when the same shall have become due and payable.

     B)   DEFAULT IN PAYMENT OF INTEREST

          Default shall have been committed by the Company in the payment of any
instalment of interest on the Debenture and such default shall have continued
for a period of thirty days.

     C)   ARREARS OF INTEREST

          Interest amounting to at least Rs. 500/- shall have been in arrears
and unpaid for thirty days after becoming due.

     D)   DEFAULT IN PERFORMANCE OF COVENANTS AND CONDITIONS

          Default shall have accrued in the performance of any other covenants,
conditions or agreements on the part of the Company under this Agreement or any
other deed between the Company and the Debenture Holders / Trustees and such
default shall have continued for a period of thirty days after notice in writing
thereof has been given to the Company by the Debenture Holders / Trustees.

     E)   SUPPLY OF MISLEADING INFORMATION

          Any information given by the Company in its application to LIC for
financial assistance by way of subscription to privately placed Debentures is
found to be misleading or incorrect in any material respect or any warranty
referred in hereinbefore is found to be incorrect.

     F)   INABILITY TO PAY DEBTS

          If there is reasonable apprehension that the Company is unable to pay
its debts or proceedings for taking it into liquidation either voluntarily or
compulsorily may be or have been commenced in respect thereof.

     G)   INADEQUATE INSURANCE

          If the properties and assets offered as security to the Trustees /
Debenture Holders for the Debentures are not insured and kept insured by the
Company or depreciate in value to such an extent that in the opinion of the
Debenture Holders / Trustees further security to the satisfaction of the
Debenture Holders / Trustees should be given and such security is not given.

     H)   SALE, DISPOSAL AND REMOVAL OF ASSETS

          If without the prior approval of the Trustees and Debenture Holders
any land, buildings, structures, plant and machinery of the Company are sold,
disposed of, charged

                                       13

<PAGE>

encumbered or alienated or the said buildings, structures, machinery, plant or
other equipment are removed, pulled down or demolished.

     I)   PROCEEDINGS AGAINST COMPANY

          The Company shall have voluntarily or involuntarily become the subject
of proceedings under bankruptcy or insolvency law.

     J)   INABILITY TO PAY DEBTS ON MATURITY

          The Company is unable or has admitted in writing its inability to pay
its debts as they mature.

     K)   LIQUIDATION OR DISSOLUTION OF COMPANY

          The Company has taken or suffered any action to be taken for its
reorganisation, liquidation or dissolution.

     L)   APPOINTMENT OF RECEIVER OR LIQUIDATOR

          A receiver or liquidator is appointed or allowed to be appointed of
all or any part of the undertaking of the Company.

     M)   ATTACHMENT OR DISTRAINT ON MORTGAGED PROPERTIES

          If an attachment or distraint is levied on the mortgaged properties or
any part thereof and / or certificate proceedings are taken or commenced for
recovery of any dues from the Company.

9.2 CONSEQUENCES OF DEFAULT

     On the happening of any of the events of default, in addition to the rights
specified in Section 8.1 hereof, the Debenture Holders shall have the following
further rights; the Debenture Holders shall be entitled to appoint and remove
from time to time whole time Directors on the Board of Directors of the Company
during the currency of this agreement (such Director/s are hereinafter referred
to as 'the whole-time Nominee Director/s'). The Company procure an undertaking
from such persons as may be specified by the Debenture Holders to the effect
that they shall support where necessary the appointment of whole-time nominee
Director/s at meetings of the Board and of the shareholders. Such whole-time
Nominee Director/s shall exercise such powers and duties as may be approved by
the Debenture Holders and have such rights as are usually exercised by or are
available to a whole-time Director, in the management of the affairs of the
Company. Such whole-time nominee Director/s shall not be required to hold
qualification shares, nor be liable to retire by rotation and shall be entitled
to receive such remuneration, fees, commission and monies as may be approved by
the Debenture Holders. Such Whole-time Nominee Director/s shall have the right
to receive notices and attend all general meetings and Board Meetings or any
Committee(s) of the Company of which they are members.

     Any expenses that may be incurred by the Debenture Holders or such
Whole-time Nominee Director/s in connection with their appointment or
Directorship shall be paid or reimbursed by the Company to the Debenture Holders
or as the case may be, to such Whole-time Nominee Director.

9.3 APPOINTMENT OF NOMINEE DIRECTOR

     On behalf of the Debenture Holders, only in the event of default, Debenture
Trustee shall have a right to appoint a Debenture Director on the Board of
Directors of the Company (hereinafter referred to as 'the Debenture Director').
The right to appoint the Debenture Director shall be exercised by the Debenture
trustees as per the statutory guidelines as may be applicable for the purpose in
consultation with the participating Debenture Holders.

     In case of default in payment of interest/principal on the due date(s) each
of the Institutional Debenture Holders shall have a right to appoint a Nominee
Director on the Board of Directors of the Company.

                                       14

<PAGE>

     The Nominee Director appointed pursuant to above Clauses shall not be
liable to retire by rotation nor shall be required to hold any qualification
shares. The Company shall take steps to amend its Articles of Association, if
necessary.

9.4 APPOINTMENT OF CHARTERED ACCOUNTANTS

     The Company agrees that the Debenture Holders shall have the right to
appoint, whenever they consider necessary, any Chartered Accountant / Cost
Accountant or firm of Chartered Accountants (hereinafter referred to as 'The
Auditors') for carrying out any specific assignment/s to examine the financial
and / or cost accounting systems and procedures adopted by the Company for the
working of its undertaking or concurrent / internal auditors. Such Auditor/s
shall give their reports to each of the Debenture Holders. The Company shall
give full cooperation and provide the necessary assistance to the Auditor/s or
firm so appointed by the Debenture Holders in carrying out his / their
examination. The costs, charges and expenses including professional fees and
travelling and other expenses for such examination shall be payable by the
Company and shall on demand be reimbursed to them by the Company together with
interest thereon at the same rate as on defaulted instalments in respect of
Debentures specified in Clause 3.2 hereof with quarterly rests from the date of
payment and until such reimbursement the same shall be secured under the
security created in terms of Articles thereof.

9.5 DISSOLUTION

     If the Company shall be voluntarily or involuntarily dissolved or become
bankrupt or insolvent or in the happenings of any of the events of default, the
principal of and all accrued interest on the Debentures shall thereupon become
due and payable forthwith (anything in this Agreement to the contrary
notwithstanding).

9.6 NOTICE TO EACH OF THE DEBENTURE HOLDERS ON DEFAULT

     If any event of default or any event which, after the notice, or lapse of
time, or both would constitute an event of default shall have happened, the
Company shall forthwith give the Debenture Holders notice thereof in writing,
specifying the nature of such event of default or of such event.

9.7 EXPENSES OF PRESERVATION OF ASSETS OF THE COMPANY & OF COLLECTION

     All costs incurred by the Debenture holders after an event of default has
occurred, in connection with:

     i) Preservation of the assets of the undertaking of the Company (whether
then or thereafter existing); or

     ii) Collection of amounts due under this Agreement, shall stand secured
under the security created in terms of Article IV hereof.

                                   ARTICLE - X

                    CANCELLATION, SUSPENSION AND TERMINATION

10.1 SUSPENSION

     LIC may suspend its financial assistance to the Company at any time with
respect to its subscription to Debentures without assigning any reasons thereof
on the happening of the following:

A)   NON COMPLIANCE OF TERMS AND CONDITIONS

     Upon failure by the Company to carry out all or any of the terms included
in this Agreement or on the happening of any event of default referred to in
Article - IX hereinbefore.

                                       15

<PAGE>

B)   EXTRA ORDINARY SITUATION

     If any extra ordinary situation shall make it improbable that the Company
would be able to perform its obligations under this Agreement.

C)   ASSIGNMENT OR TRANSFER OF PROPERTIES TO RECEIVER, ASSIGNEE, ETC.

     If the Company shall take or permit to be taken any action or proceedings
whereby any of its properties shall or may be assigned or, in any manner,
transferred or delivered to any receiver, assignee, liquidator or other person
whether appointed by the Company or by any Court of Law whereby such property
shall or may be distributed among the creditors of the Company or the Company
suffers any charge to be created over its properties in any legal proceedings.

D)   CHANGE IN COMPANY'S SET UP

     If any change in the Company's set up has taken place which in the opinion
of the Debenture Holders (which will be final and binding on the Company), would
adversely affect the conduct of the Company's business or the financial position
of the efficiency of the Company's management and / or personnel.

                                   ARTICLE XI

                                   INSPECTION

As from the date of the said Deed and so long as any Debentures remain
outstanding, the Company shall permit the Debenture Holders and their authorised
representatives to carry out technical and legal inspections both during the
construction and operation periods of the Project and to inspect all records,
registers and accounts of the Company. Any such representatives of the said
Debenture Holders shall have free access at all reasonable times to any part of
the Company's factory and to its records, registers and accounts and to all
schedules, cost, estimates, plans and specifications relative to the plant and
shall receive full co-operation and assistance from the employees of the
Company. The cost of such inspection shall be borne and paid by the Company on
demand and until payment the same shall carry interest at the same rate as on
defaulted instalments in respect of the Debentures specified in Clauses 3.2
hereof with quarterly rests and shall stand secured under the security created
in terms of Article - IV hereof.

                                   ARTICLE XII

                                     WAIVER

12.1 WAIVER NOT TO IMPAIR THE RIGHTS OF THE DEBENTURE HOLDERS

     No delay in exercising, or omission to exercise any right, power or remedy
accruing to the Debenture Holders upon any default under this Agreement,
Mortgage Deed or any other agreement or document shall impair any such right,
power of remedy or shall be construed to be a waiver thereof or any acquiescence
in such default, nor shall the action or inaction of the Debenture Holders in
respect of any default or any acquiescence by it in any default affect or impair
any right, power or remedy of the Debenture Holders in respect of any other
default.

                                       16

<PAGE>

                                  ARTICLE XIII

13.  AGREEMENT TO BECOME EFFECTIVE FROM THE DATE OF EXECUTION

     The Agreement shall become binding on the Company and Debenture Holders on
and from the date of this Agreement first above written. It shall be in force
till all the debentures proposed to be issued have been issued, allotted and
redeemed in full.

                                   ARTICLE XIV

                                  MISCELLANEOUS

14.1 PLACE AND MODE OF PAYMENT BY COMPANY

     All monies due and payable by the Company to the Debenture Holders under or
in terms of this agreement shall be paid by cheque or bank draft drawn on a
scheduled bank at Mumbai or at such places as may be specified by the Debenture
Holders. Credit for all payment by cheque/bank draft will be given only on
realisation thereof by the respective Debenture Holders or on the due dates to
which the payment relates, whichever is later.

14.2 SERVICE OF NOTICE

     Any notice or request required or permitted to be given or made under this
Agreement to the Debenture Holders or to the Company shall be in writing. Such
notice or request shall be deemed to have been duly given or made when it shall
be delivered by hand, registered post or telegram to the party to which it is
required or permitted to be given or made at such party's designated address.

14.3 GUIDELINES

     The Company shall abide by and comply with the guidelines issued by the
Government of India in respect of the issue of Debentures by public limited
companies and such other guidelines as may be issued by the Government of India
or any prescribed authority in their behalf from time to time.

14.4 HEADINGS

     The Headings of the Articles and Sections and the table of contents,
margins and footnotes are inserted for convenience of reference only and not
deem to affect the construction of the provisions of this agreement.

14.5 SAVINGS CLAUSE

     A) In the event of complete collapse or dislocation of the business on the
Financial markets of our country due to war, insurrection, or any other serious
or sustained political or industrial disturbance, sustained political or
industrial disturbance, or if the whole present basis of the Stock Exchange
prices in our country should undergo a substantial change through the occurance
of some catastrophe or similar even prior to the subscription of the said
Debentures, the Corporation shall have the exclusive option of terminating the
commitment / offer under this letter even if the above terms have been accepted
by the company and/or Advance Subscription has been granted by the Corporation.
On exercising such options, the Corporation shall be free from all the
obligations arising out of the commitment and the company shall immediately
thereupon refund the advance subscription (if any) together with interest
thereon to the Corporation.

                                       17

<PAGE>

     B) TERMS STIPULATED BY THE OTHER PARTICIPATING FINANCIAL INSTITUTIONS.

          In case any of the Debenture Holder(s) impose any special condition(s)
not included herein, or in case any of the terms offered by the Company to the
other Debenture Holder(s) is more favourable to them than the terms on which LIC
has agreed to subscribe to the said Debentures, such of those conditions as may
be considered appropriate by LIC shall apply to the said Debentures subscribed /
to be subscribed by LIC as if the Company had agreed to them with LIC.

     C) This document may be read in conjunction with the Trustees Agreement and
Letter of Sanction and it is specifically agreed between the Debenture Holders
and the Company that in case of any repugnancy, inconsistency or where there is
any conflict between the conditions as are stipulated in the Subscription
Agreement and the Trustee Agreement, the provisions as contained in the
Subscription Agreement and Letter of Sanction shall prevail and override the
provisions of the Trustee Agreement.

                                       18

<PAGE>

IN WITNESS WHEREOF The Parties have caused this Agreement to be executed on the
day, month and year first above written.

The Common Seal of Sterlite Industries
(I) Ltd has been affixed, pursuant to             /s/  Lalit Singhvi
the Resolutions passed at the Meetings
of the Board of Directors of the Company
held on 29.01.2003 in the presence of             /s/  Deepak Harlalkar
Shri Lalit Singhvi & Shri Deepak
Harlalkar of the Company who have, in
token thereof, affixed their respective
signatures hereto.

The Common Seal of LIFE INSURANCE
CORPORATION OF INDIA was hereunto
affixed in the presence of Shri N. Mohan          /s/  Mohan Raj
Raj its Secretary (Investments) who has
set his own signature hereto in token of
the Seal having been affixed.

                                       19
<PAGE>

                                  SCHEDULE - I
                  (Forming part of the Subscription Agreement)

                          CHARGES RANKING PARRI PASSU
                    (Referred to in Article IV, Clause 4.1)

<TABLE>
<CAPTION>

                                                                               TOTAL PRINCIPAL AMOUNT
NAME OF HOLDER OF SECURITY                       SECURITY                     OF INDEBTEDNESS SECURED
--------------------------                       --------                     -----------------------
                                                                               (RUPEES, IN MILLIONS)
<S>                            <C>                                            <C>
United Bank of India (as       Pari Passu First charge on the immovable
Trustee) for non convertible   properties of the Borrower [Illegible] &
debentures:                    Silvassa in the form of a joint mortgage by
                               deposit of title deeds by the Borrower in
                               favour of United Bank of India, as
                               trustee.
Series II                                                                              470.0
Series III                                                                             400.0
Series V                                                                                50.0
Series VIII                                                                            500.0
Series IX                                                                              250.0
                                                                                      ------
                                                                                      1670.0
                                                                                      ------

ICICI Bank Limited (formerly   Pari passu charge and mortgage on the                    53.1
known as ICICI Limited)        immovable properties of the Borrower at
                               Lonawala, [Illegible] & Silvassa by the
                               Borrower in favour of ICICI Bank Limited and
                               hypothecation of all movable assets
                               except debts, both present and future,
                               subject to prior charge in favour of the
                               Borrower's bankers, by the Borrower in
                               favour of ICICI Bank Limited.

ICICI Bank Limited (formerly   Pari passu first charge on the immovable               3950.0
known as ICICI Limited),       properties of the Borrower at [Illegible] &           (US$81 Mn)
against guarantee assistance   Silvassa in the form of a joint mortgage by
for US$81,000,000 FRN with     deposit of title deeds by the Borrower in
applicable interest.           favour of ICICI Bank Limited.

The Western India Trustee      Pari passu first charge on the immovable               1015.0
And Executor Co. Ltd.          properties of the Borrower at [Illegible] &
(subsidiary of the United      Silvassa in the form of a joint mortgage by
Western Bank Limited).         deposit of title deeds by the Borrower
                               in favour of The Western India Trustee And
For Non-Convertible            Executor Co. Ltd.
Debentures

Development Bank of            Pari passu first charge on the immovable               2423.0
Singapore                      properties of the Borrower at [Illegible] &         (US$19.65 Mn &
                               Silvassa in the form of a joint mortgage by          JPY3570 Mn)
For ECB                        deposit of title deeds by the Borrower in
                               favour of Development Bank of Singapore

Union Bank of India            Pari passu first charge on the immovable               1207.0
                               properties of the Borrower at [Illegible] &           (US$25 Mn)
For FCNR(B)                    Silvassa in the form of a joint mortgage by
                               deposit of title deeds by the Borrower in
                               favour of Union Bank of India.
</TABLE>

                                       20

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