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Notes to Accounts of Sterlite Technologies Ltd.

Mar 31, 2017

1. Standards issued but not yet effective

The amendments to standards that are issued, but not yet effective, up to the date of issuance of the Company''s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

The Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) Amendment Rules, 2017 and has amended the following standards:

Amendments to Ind AS 7, Statement of Cash Flows

The amendments to Ind AS 7 require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. On initial application of the amendment, entities are not required to provide comparative information for preceding periods. These amendments are effective for annual periods beginning on or after 1 April 2017. Application of these amendments will not have any recognition and measurement impact. However, it will require additional disclosures in the financial statements.

Amendments to Ind AS 102, Share-based Payment

The MCA has issued amendments to Ind AS 102 that address three main areas: the effects of vesting conditions on the measurement of a cash-settled share-based payment transaction, the classification of a share-based payment transaction with net settlement features for withholding tax obligations, and accounting where a modification to the terms and conditions of a share-based payment transaction changes its classification from cash settled to equity settled. The amendments are effective for annual periods beginning on or after 1 April 2017. The Company is assessing the potential effect of the amendments on its financial statements.

The Company performed its annual impairment test for the year ended 31 March 2017 as of 31 December 2016. The recoverable amount of Telecom software product CGU as at 31 December 2016 is determined based on a value in use calculation using cash flow projections from financial budgets approved by senior management covering a five-year period. The pre-tax discount rate applied to the cash flow projections for impairment testing during the current year is 20.98%. The growth rate used to extrapolate the cash flows of the unit beyond the five-year period is 5% which is consistent with the industry forecasts. As a result of the analysis, management did not identify impairment for this CGU.

Key assumptions used in the value in use calculations

The calculation of value in use for the CGU is most sensitive to the following assumptions:

EBITDA margins

EBITDA margins are based on the actual EBITDA of telecom software product division for past 3 years preceding the beginning of the budget period. The EBITDA margins considered are from 10%-13.5% over the budget period for anticipated order flows.

Discount Rate

Discount rates represent the current market assessment of the risks specific to the CGU, taking into consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and the CGU and is derived from its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return on investment by the Company''s investors. The cost of debt is based on the interest-bearing borrowings the Company is obliged to service. CGU specific risk is incorporated by applying individual beta factor. The beta factor is evaluated annually based on publicly available market data. Adjustments to the discount rate are made to factor in the specific amount and timing of the future tax flows in order to reflect a pre-tax discount rate.

Growth rates used to extrapolate cash flows beyond the forecast period

The Company has considered growth rate of 5% to extrapolate cash flows beyond the forecast period which is consistent with the industry forecasts.

Sensitivity to changes in assumptions

The implications of the key assumptions for the recoverable amount are discussed below:

Growth rate assumptions - The management recognizes that the speed of technological change and the possibility of new entrants can have a significant impact on growth rate assumptions. A reduction to 2% in the long-term growth rate would result in impairment.

Discount rates A rise in post-tax discount rate to 17.80% (Pre-tax discount rate 24.41%) would result in impairment.

EBITDA margins A decreased demand can lead to a decline in EBITDA. A decrease in EBITDA below 11% would result in impairment

The Company''s investment property consists of a commercial property in India.

As at 31 March 2017 and 31 March 2016 the fair values of the investment property are Rs. 14.64 crores and Rs. 13.21 crores respectively. These values are based on valuations performed by the management on the basis of available market quotes/ prevalent property prices in the same and nearby localities.

The Company has no restrictions on the reliability of its investment property and no contractual obligations to purchase, construct or develop investment property or for repairs, maintenance and enhancements.

Fair value hierarchy disclosures for investment property have been provided in Note 50.

Security deposits are non-derivative financial assets and are refundable in cash. These are measured based on effective interest method.

Advances recoverable in cash are non-derivative financial assets. These pertain to costs incurred as part of project execution which is recoverable from customer on actual basis.

Derivative instruments reflect the change in fair value of foreign exchange forward contracts and Currency and Interest rate swaps, designated as cash flow hedges to hedge highly probable forecasts/firm commitments for sales and purchases in US Dollars (USD), Euros (EUR) and GB pound sterling (GBP) and hedge of interest rate and foreign exchange fluctuation risks on foreign currency loan in USD.

2. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share except for the underlying 85,550 (31 March 2016: 85,550, 1 April 2015: 85,550) equity shares held by custodian bank against Global Depository Receipts (‘GD'') which do not have voting rights.

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2017, the amount of per share dividend recognized as distributions to equity shareholders was Rs. 1.50 (31 March 2016 : Rs. 0.60).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. Non convertible debentures carry 8.45% rate of interest. Out of the total non-convertible debenture, 50% are redeemable at par during the FY 2019-20 and balance in the FY 2020-21. These non-convertible debenture are secured by way of first pari passu charge on entire movable fixed assets (both present & future) and mortgage of certain immovable fixed assets of the Company.

4. Indian rupee term loan from banks amounting to Rs. 36.46 crores carries interest @ Base rate 1.00 % p.a. Loan amount is repayable in 5 quarterly equated installments of Rs. 6.25 crores (excluding interest) and 6th installment of Rs. 5.21 crores.The term loan is secured by first pari passu charge on entire movable fixed assets (both present and future) and mortgage of certain immovable fixed assets of the Company.

5. Indian rupee term loan from the bank amounting to Rs. 1.00 crores carries interest @ LTMLR 1.10% p.a. Loan amount is repayable in June 2017. The term loan is secured by way of first pari passu charge on entire movable fixed assets (both present and future) and mortgage of certain immovable fixed assets of the Company.

6. Indian rupee term loan from banks amounting to Rs. 120.00 crores carries interest @ LTMLR 0.75% p.a. Loan amount is repayable in 12 quarterly equated installments of Rs. 10.00 crores (excluding interest) starting from July 2017. The term loan is secured by first pari passu charge on entire movable fixed assets (both present and future) and mortgage of certain immovable fixed assets of the Company.

7. Foreign Currency term loan from banks amounting to Rs. 161.97 crores (USD 2.5 crores) carries interest @ Libor 2.70 % p.a. Loan amount is repayable in 20 quarterly equated installments of USD 0.125 crores starting from April 2018.The term loan is secured by first pari passu charge on entire movable fixed assets (both present and future) and mortgage of specified immovable fixed assets of the Company.

8. Foreign currency term loan from bank of Rs. 2.09 crores (USD 0.03 crore) carries interest ranging from 6.20% to 6.65% p.a. Loan amount is repayable in 5 quarterly equated installments of Rs. 0.42 crores (excluding interest) from the end of this financial period. The term loan is secured by first pari passu charge by way of hypothecation on certain present and future current assets and certain movable fixed assets of the Company and by way of mortgage on certain present and future immovable fixed assets of the Company.

9. Finance lease obligation is secured by hypothecation of laptops taken on lease. The interest rate implicit in the lease is 10% p.a. The gross investment in lease i.e. lease obligation and interest is payable in quarterly installments of approximately Rs. 0.30 crore.

Loan Covenants

Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, net Borrowings to EBITDA ratio and debt service coverage ratio. The limitation on indebtedness covenant gets suspended if the Company meets certain prescribed criteria. The debt covenant related to limitation on indebtedness remained suspended as of the date of the authorization of the financial statements. The Company has also satisfied all other debt covenants prescribed in the terms of bank loan/non convertible debentures. The other loans do not carry any debt covenant.

Provision for litigations / contingencies

The provision of Rs. 9.50 crores as at March 31, 2017 (31 March 2016: Rs. 9.50 crores, 1 April, 2015: Rs. 9.50) is towards contingencies in respect of disputed claims against the Company as described in note 40 and note 53, the timing of outflow and quantum of which is presently unascertainable. There is no movement in the provision for litigations/contingencies during the year.

Provision for warranty

The Company has given warranty on products and services forming part of projects being undertaken by the Company to repair or replace the items that fail to perform satisfactorily during the warranty period and on telecom software and licences/services sold to customers. The timing of the outflow is expected to be within a period of three years from the date of completion of the projects and within six months from the date of sale of telecom software.

10. Cash credit is secured by hypothecation of raw materials, work-in-progress, finished goods and trade receivables. The cash credit is repayable on demand and carries interest @ 8.95% -12.50 % p.a.

11. Working capital demand loan from banks is secured by first pari passu charge on entire current assets of the Company (both present and future) and second pari passu charge on plant & machinery and other movable fixed assets of the Company. Working Capital Demand Loan has been taken for a period of 30 days and carries interest @ 7.80%.

12. Commercial Papers are unsecured and are generally taken for a period from 80 to 90 days and carry interest @ 6.47% - 6.60% p.a.

13. Other loans from banks include buyer''s credit arrangements (secured) and export packing credit (unsecured). Buyer''s credit are secured by hypothecation of raw materials, work-in-progress, finished goods and trade receivables. Buyer''s credit is repaid/rolled over after a period of six months and carry interest @ 0.55% - 2.10% p.a. (excluding hedging premium). Export packing credit is generally taken for a period of 90-180 days and carries interest @ 4.00% to 4.90% p.a.

14.Other Financial Liabilities

*Payables for purchase of property, plant and equipment are non-interest bearing and are normally settled on 90-120 days terms. It also includes the current maturities of long-term payables for purchase of property, plant and equipment which have been valued at Amortized cost. It also includes deferred payables for purchase of property, plant and equipment. Deferred payables where credit terms allowed by the vendors are beyond normal credit terms have been measured at cash price equivalent and the differential amount is recognized as interest expense over the period of credit.

Derivative instruments reflect the change in fair value of foreign exchange forward contracts and Currency/Interest rate swaps, designated as cash flow hedges to hedge highly probable forecasts/firm commitments for sales and purchases in US Dollars (USD), Euros (EUR) and GB pound sterling (GBP) and hedge of interest rate and foreign exchange fluctuation risks on foreign currency loan in USD.

Other payables are non-interest bearing and have an average term of six months.

Interest payable is normally settled monthly throughout the financial year.

For explanations on the Company''s credit risk management processes, refer to Note 47.

15.Earnings per Share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity shares.

16.Significant Accounting Judgments, Estimates and Assumptions

The preparation of the Company''s standalone financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budget for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable amount for goodwill including a sensitivity analysis, are disclosed and further explained in Note 5.

Excise/Customs matter pending with Hon. Supreme Court

The Company had in an earlier year received an order of CESTAT upholding a demand of Rs. 188 crores (including penalties and excluding interest) (Rs. 188 crores as at March 31, 2016) in a pending excise/customs matter against which the Company''s appeal with the Honourable Supreme Court has been admitted. The details of the matter and the amount of provision made based on management''s estimate are disclosed and further explained in Note 53.

Estimated costs (including estimates of liquidated damages) for revenue recognition on projects

For the purpose of revenue recognition on fixed price projects based on percentage of completion method, the Company determines the stage of completion of the project as proportion of actual cost incurred to total estimated cost of the project. The Company estimates the total cost of the project at each period end (including the estimates of liquidated damages). These estimates are based on the rates agreed with vendors/sub contractors and management''s best estimates of the costs that would be incurred for the completion of project based on past experience and/or industry data. These estimates are re-assessed at each period end.

Share-based payments

The Company measures the cost of equity-settled transactions with employees using Black and Scholes model and Binomial model to determine the fair value of options. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 37.

Estimation of provision for warranty claims

Provision for warranty claims is recognized based on management''s best estimates of the costs that would be incurred on warranty claims on the basis of historical experience and/or nature of business. Refer Note 20 for further details on provision for warranty claims.

19. Employee Share Based Payments

The Company has granted employees stock options plan, 2006 (ESOP Scheme 2006) and employees stock options plan, 2010 (ESOP Scheme 2010) to its employees pursuant to the resolution passed by the shareholders at the extraordinary general meeting held on March 13, 2006 and annual general meeting held on 14 July 2010 respectively. The Company has followed the fair value methods like Black Scholes Options Pricing Model and Binomial Model for the valuation of these options. The compensation committee of the Company has approved twelve grants vide their meetings held on 14 June 2006; 19 March 2007; 28 September 2007; 14 June 2008; 26 June 2009; 29 December 2011; 27 July 2012; 30 April 2014; 30 March 2015; 28 January 2016; 25 July 2016 and 18 January 2017. As per the plans, Options granted under ESOP would vest in not less than one year and not more than five years from the date of grant of such options. Vesting of options is subject to continued employment with the Company. All the plans are equity settled plans.

The Company has charged Rs. 11.30 crore (31 March 2016: Rs. 13.46 crores) to the statement of profit and loss in respect of options granted under ESOP scheme 2006 and options granted under ESOP scheme 2010

(*)The measure of volatility used in the above model is the annualized standard deviation of the continuously compounded rates of return on the stock over a period of time. The volatility periods considered above, corresponding to the respective expected lives of the different vests are prior to the grant date. The daily volatility of stock prices is considered as per the National Stock Exchange (NSE) prices over these years.

ESOP Scheme 2016 and ESAR Scheme 2016 have been approved by the shareholders through postal ballot on 30 March, 2016. However no grant has been made under ESOP Scheme 2016 or ESAR Scheme 2016 and accordingly no charge in respect of the same has been accrued in the financial statements for the year ended 31 March, 2017.

As part of the Scheme of Arrangement for demerger, employees of power business have been transferred to Sterlite Power Transmission Limited (‘SPTL''). ESOPs granted to such employees will continue to be held and exercised by them. The charge in respect of ESOPs held by employees transferred from the Company to SPTL shall be borne by SPTL with effect from 1 April, 2015. Accordingly, an amount of Rs. 0.76 crore and 3.37 crores pertaining to charge for the year ended 31 March, 2017 and 31 March, 2016 respectively, on ESOPs held by such employees has been transferred to SPTL.

20.LEASES Operating lease Company as lessee :

The Company has taken office buildings on operating lease. The lease term is for periods of three to nine years and renewable at the option of the Company.

Future minimum lease payments over non cancellable period of operating leases are as follows :

21. Lease payments recognized in the statement of profit and loss for the year is Rs. 23.62 crore (31 March 2016: Rs. 13.25 crore, 1 April 2015: Rs. 9.05 crore).

22. The future minimum lease payments payable over the next one year is Rs. 21.03 crore (31 March 2016: Rs. 18.15 crore, 1 April 2015: Rs. 7.69 crore).

23. The future minimum lease payments payable later than one year but not later than five years is Rs. 33.57 crore (31 March 2016: Rs. 30.63 crore, 1 April 2015: Rs. 19.95 crore).

24. The future minimum lease payments payable later than five years is Rs. 15.36 crore (31 March 2016: Rs. 0.35 crore, 1 April 2015: Rs. 0.45 crore).

Company as lessor :

The Company has given office building on operating lease. The lease term is for non cancellable period of three years and renewable at the option of the Lessee. Future minimum lease receipts over non cancellable period of operating leases are as follows:

25. Lease income recognized in the statement of profit and loss for the year is Rs. 1.03 crore (31 March 2016: Rs. 0.54 crore, 1 April 2015: Rs. 0.39 crore).

26. The future minimum lease payments receivable over the next one year is Rs. 1.94 crore (31 March 2016: Rs. 0.76 crore, 1 April 2015: Rs. 0.39 crore).

27. The future minimum lease payments receivable later than one year but not later than five year is Rs. 2.57 crore (31 March 2016: Rs. 1.14 crores, 1 April 2015: Rs. 1.20 crores).

Finance lease Company as lessee :

The Company has taken laptops on finance lease. The lease term is for periods of three years.

The terms of the foreign currency forward contracts match the terms of the expected highly probable forecast transactions. As a result, no hedge ineffectiveness arise requiring recognition through profit or loss.

The cash flow hedges as at 31 March 2017 were assessed to be highly effective and a net unrealized gain of Rs. 3.24 crore, with a deferred tax liability of Rs. 1.12 crore relating to the hedging instruments, is included in OCI. Comparatively, the cash flow hedges as at 31 March 2016 were assessed to be highly effective and an unrealized gain of Rs. 1.98 crore with a deferred tax liability of Rs. 0.69 crore was included in OCI in respect of these contracts. The amounts retained in OCI at 31 March 2017 are expected to mature and affect the statement of profit and loss during the year ended 31 March 2018.

At 31 March 2017, the Company had currency/interest rate swap agreements in place with a notional amount of USD 2.50 crore (Rs. 162.13 crore) whereby the Company receives a variable rate of interest of Libor 2.70% and pays interest at a fixed rate equal to 10.0425% on the notional amount with USD-INR rate fixed at INR 66.3850 per USD. The swaps are being used to hedge the exposure to changes in the foreign exchange rates and interest rates. The cash flow hedges during the year ended 31 March 2017 were assessed to be highly effective and a net unrealized loss of Rs. 4.07 crore, with a deferred tax asset of Rs. 1.41 crore relating to the hedging instruments, is included in OCI. The amounts retained in OCI at 31 March 2017 are expected to mature and affect the statement of profit and loss during the year ended 31 March 2018.

28.Financial risk management objectives and policies

The Company'' s principal financial liabilities, comprise borrowings, trade and other payables and other financial liabilities. The main purpose of these financial liabilities is to finance the Company''s operations. The Company''s principal financial assets include Investments, loans, trade and other receivables, cash and short-term deposits and other financial assets that derive directly from its operations. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk. The Company''s senior management oversees the management of these risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company''s policy that no trading in derivatives for speculative purposes may be undertaken. The Company reviews and agrees policies for managing each of these risks, which are summarized below.

The Risk Management policies of the Company are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s activities.

Management has overall responsibility for the establishment and oversight of the Company''s risk management framework. In performing its operating, investing and financing activities, the Company is exposed to the Credit Risk, Liquidity Risk and Market risk.

29. Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments and derivative financial instruments.

The sensitivity analysis in the following sections relate to the position as at 31 March 2017 and 31 March 2016.

The sensitivity analysis have been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant and on the basis of hedge designations in place at 31 March 2017.

The analyses exclude the impact of movements in market variables on: the carrying values of gratuity and provisions.

The following assumption has been made in calculating the sensitivity analyses:

- The sensitivity of the relevant statement of profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2017 and 31 March 2016.

Interest rate risk

Interest rate risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rate primarily relates to the Company''s long-term debt obligations with floating interest rates.

The Company is exposed to the interest rate fluctuation in both domestic and foreign currency borrowing. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company enters into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. At 31 March 2017, after taking into account the effect of interest rate swaps, approximately 80% of the Company''s borrowings are at a fixed rate of interest (31 March 2016: 52%, 1 April 2015: 50%).

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in the interest rates on that portion of loans and borrowings affected. With all the other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities (when revenue or expense is denominated in a foreign currency).

The Company has a policy to keep minimum forex exposure on the books that are likely to occur within a maximum 12-month period for hedges of forecasted sales and purchases.

When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.

Out of total foreign currency exposure the Company has hedged the exposure of 99.50% as at 31 March 2017 and 99% as at 31 March 2016.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD, EUR and GBP exchange rates, with all other variables held constant. The impact on the Company''s profit before tax is due to changes in the fair value of monetary assets and liabilities. The impact on the Company''s pre-tax equity is due to changes in the fair value of forward exchange contracts

Commodity price risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase and manufacture of copper cables and therefore require a continuous supply of copper. Due to the volatility of the price of the copper, the Company also entered into various purchase contracts for copper on London Metal Exchange. The prices in these purchase contracts are linked to the price on London Metal Exchange.

The Company''s Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation.

Based on a 1 month forecast of the required copper supply, the Company hedges the purchase price using future commodity purchase contracts. The forecast is deemed to be highly probable.

Commodity price sensitivity

As per the Company''s policy for commodity price hedging, all the commodity price exposures as on reporting dates are fully hedged. Thus, there are no open unhedged exposures on the reporting dates.

Equity price risk

The Company''s non-listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company''s senior management on a regular basis. The Company''s Board of Directors reviews and approves all equity investment decisions.

At the reporting date, the exposure to unlisted equity securities (other than investments in subsidiaries) at fair value was ''Rs.13.20 crores (31 March 2016: Rs. 1.60 crores). Sensitivity analysis of these investments have been provided in Note 49.

29. Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored and any shipments to major customers are generally covered by letters of credit or other forms of credit insurance.

An impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on losses historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company''s treasury department in accordance with the Company''s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company''s Board of Directors on an annual basis, and may be updated throughout the year. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

The Company''s maximum exposure to credit risk for the components of the balance sheet at 31 March 2017 and 31 March 2016 is the carrying amounts of each class of financial assets except for financial guarantees and derivative financial instruments. The Company''s maximum exposure relating to financial guarantees and financial derivative instruments is noted in note 41 and the liquidity table below:

30. Liquidity risk

Liquidity risk is the risk that the Company may encounter difficulty in meeting its present and future obligations associated with financial liabilities that are required to be settled by delivering cash or another financial asset. The Company''s objective is to, at all times, maintain optimum levels of liquidity to meet its cash and collateral obligations. The Company requires funds both for short-term operational needs as well as for long-term investment programs mainly in growth projects. The Company closely monitors its liquidity position and deploys a robust cash management system. It aims to minimize these risks by generating sufficient cash flows from its current operations, which in addition to the available cash and cash equivalents, liquid investments and sufficient committed fund facilities, will provide liquidity.

The liquidity risk is managed on the basis of expected maturity dates of the financial liabilities. The average credit period taken to settle trade payables is about 60 - 90 days. The other payables are with short-term durations. The carrying amounts are assumed to be reasonable approximation of fair value. The table below summarizes the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:

31. Capital Management

For the purpose of the Company''s capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company''s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value.

The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company''s policy is to keep the gearing ratio optimum. The Company includes within net debt, interest bearing loans and borrowings, trade and other payables less cash and cash equivalents excluding discontinued operations.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current period.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2017 and 31 March, 2016.

32. Fair Values

Set out below, is a comparison by class of the carrying amounts and fair value of the Company''s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values as of 31 March, 2017:

The management assessed that cash and cash equivalents, trade receivables, trade payables, other current assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. The management has further assessed that borrowings availed and loans given approximate their carrying amounts largely due to the interest rates being variable or in case of fixed rate borrowings/loans, movements in interest rates from the recognition of such financial instrument till period end not being material.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

- The fair values of the quoted mutual funds are based on price quotations at the reporting date.

- The fair values of the unquoted equity shares have been estimated using a DCF model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management''s estimate of fair value for these unquoted equity investments.

- The Company enters into derivative financial instruments with financial institutions with investment grade credit ratings. Foreign exchange forward contracts, interest rate swaps are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing model, using present value calculations. The models incorporate various inputs including the credit quality counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spread between the respective currencies, interest rate curves etc. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.

The significant unobservable inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis as at 31 March 2017, 31 March 2016 and 1 April 2015 are as shown below:

33. Related Party Disclosures (A) Name of related party and nature of its relationship:

34. Related parties where control exists

35. Holding company

Twin Star Overseas Limited, Mauritius (Immediate holding company) Volcan Investments Limited, Bahamas (Ultimate holding company)

36. Subsidiaries

Jiangsu Sterlite Tongguang Fiber Co. Ltd. Sterlite Global Ventures (Mauritius) Limited Maharashtra Transmission Communication Infrastructure Limited

Sterlite Technologies UK Ventures Limited Speedon Network Limited Sterlite Telesystems Limited Elitecore Technologies (Mauritius) Limited Elitecore Technologies SDN BHD. (Malaysia) Sterlite (Shanghai) Trading Company Limited Sterlite Technologies Americas LLC*

Sterlite Technologies Europe Ventures Limited Sterlite Power Technologies Private Limited#

*Liquidated during the year with effect from June 22, 2016. #Transferred to Twin Star Overseas Limited, Mauritius.

37. Joint ventures

Sterlite Conduspar Industrial Ltda (58:42 joint venture between Sterlite Technologies UK Ventures Limited and Conduspar Condutores Eletricos Limitada)

38. Other related parties under IND AS-24 "Related party disclosures" with whom transactions have taken place during the year

39. Key management personnel (KMP)

Mr. Pravin Agarwal

(Vice Chairman & Whole-time Director)

Dr. Anand Agarwal

(CEO & Whole-time Director)

Mr. A. R. Narayanaswamy (Non-Executive & Independent Director)

Mr. Arun Todarwal

(Non-Executive & Independent Director)

Mr. C. V. Krishnan

(Non-Executive & Independent Director) Avaantika Kakkar (Non-Executive & Independent Director)

Mr Pratik Agarwal (Non-Executive Director)

40. Relative of key management personnel (KMP)

Mr. Ankit Agarwal

41. Entities where key management personnel / relatives of key management personnel have significant influence (EKMP)

Bharat Aluminum Company Limited Sterlite Power Transmission Ltd.

Hindustan Zinc Limited Twin Star Technologies Limited Sterlite Power Grid Ventures Limited Sterlite Grid 1 Limited

East North Interconnection Company Limited Jabalpur Transmission Company Limited Bhopal Dhule Transmission Company Limited Twin Star Display Technologies Limited Vedanta Limited Fujairah Gold FZE

Sterlite Power Technologies Private Limited Khaitan & Co. LLP Universal Floritech LLP Sterlite Tech Foundation

42. Additional related parties as per Companies Act, 2013 with whom transactions have taken place during the year (i) Key management personnel (KMP)

Mr. Anupam Jindal (Chief Financial Officer)

Mr. Amit Deshpande (Company Secretary)

43. FIRST TIME ADOPTION OF IND AS

These financial statements, for the year ended 31 March 2017, are the first the Company has prepared in accordance with Ind AS. For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for period ending on 31 March 2017, together with the comparative period data as at and for the year ended 31 March 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at 1 April 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1 April 2015 and the financial statements as at and for the year ended 31 March 2016.

Exemptions Applied

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

- Ind AS 103 Business Combinations has not been applied to acquisitions of subsidiaries, which are considered businesses under Ind AS that occurred before 1 April 2015. Use of this exemption means that the Indian GAAP carrying amounts of assets and liabilities, that are required to be recognized under Ind AS, is their deemed cost at the date of the acquisition. After the date of the acquisition, measurement is in accordance with respective Ind AS.

The Company recognizes all assets acquired and liabilities assumed in a past business combination, except (i) certain financial assets and liabilities that were derecognized and that fall under the de recognition exception, and (ii) assets (including goodwill) and liabilities that were not recognized in the acquirer''s balance sheet under its previous GAAP and that would not qualify for recognition under Ind AS in the individual balance sheet of the acquire. Assets and liabilities that do not qualify for recognition under Ind AS are excluded from the opening Ind AS balance sheet. The Company did not recognize or exclude any previously recognized amounts as a result of Ind AS recognition requirements.

- An item of freehold land has been measured at fair value at the date of transition to Ind AS being 1 April 2015. The Company has elected to regard the fair value of land as deemed cost at the date of transition to Ind AS.

- Since there is no change in the functional currency, the Company has elected to continue with the carrying value of its investment property as recognized in its Indian GAAP financials as deemed cost at the transition date.

- Ind AS 102 Share-based Payments has not been applied to equity instruments in share-based payment transactions that vested before 1 April 2015.

Estimates

The estimates at 1 April 2015 and at 31 March 2016 are consistent with those made for the same dates in accordance with Indian GAAP (after adjustments to reflect any differences in accounting policies). The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at 1 April 2015, the date of transition to Ind AS and as of 31 March 2016.

Hedge accounting

The Company uses derivative financial instruments, such as forward currency contracts, currency/interest rate swaps and forward commodity contracts, to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Under Indian GAAP, there is no mandatory standard that deals comprehensively with hedge accounting, which has resulted in the adoption of varying practices. The Company has designated various economic hedges and applied economic hedge accounting principles to avoid profit or loss mismatch. All the hedges designated under Indian GAAP are of types which qualify for hedge accounting in accordance with Ind AS 109 also. Moreover, the Company, before the date of transition to Ind AS, has designated a transaction as hedge and also meets all the conditions for hedge accounting in Ind AS 109. Consequently, the Company continues to apply hedge accounting after the date of transition to Ind AS.

Footnotes to the reconciliation of equity as at 1 April 2015 and 31 March 2016 and profit or loss for the year ended 31 March 2016: 1 Property, plant and equipment

The Company has elected to measure an item of freehold land at fair value of Rs. 50.96 crore at the date of transition to Ind AS. Hence at the date of transition to Ind AS, an increase of Rs. 45.46 crore (31 March 2016: Rs. 45.46 crores) was recognized in property, plant and equipment. This amount has been recognized against retained earnings net of tax.

The impact of componentization of items of property, plant and equipment of Rs. 18.93 crore has been disclosed under Ind AS adjustments. The same was considered in the Indian GAAP financial statements for the year ended 31 March 2016 based on the requirements of Schedule II to the Companies Act, 2013. The corresponding charge has been considered in Other equity of Rs. 12.38 crore (net of deferred tax of Rs. 6.55 crore)

Commercial property of Rs. 9.35 crore (31 March 2016: Rs. 9.19 crore) shown as fixed assets under Indian GAAP has been reclassified to Investment property under Ind AS.

44. Financial Assets - Loans

The Company has given loans to subsidiaries at lower than market rates of interest. Accordingly an amount of Rs. 3.73 crore being the difference between the nominal value of the loan and its fair value calculated based on market interest rate has been classified as equity investment of the Company in subsidiary. The differential interest is accrued as income over the period of the loan. Accordingly, as at the date of transition to Ind AS, Rs. 0.65 crore (31 March 2016: Rs. 1.03 crore) accrued interest income was included in the loan amount.

45. Other non-current financial assets

Interest free security deposits have been accounted for at Amortized cost using market rates of interest. The difference between the nominal amount of deposits and the Amortized cost as at the date of transition to Ind AS of Rs. 1.66 crore (31 March 2016: Rs. 2.76 crore) has been classified as prepaid expenses under other non-current assets. Interest income on deposits is recognized on EIR basis disclosed under Finance income and the prepaid expense is Amortized on a straight line basis over the period of deposit disclosed under Other expenses.

46. Other non-current assets

MAT credit of Rs. 25.95 crore (31 March 2016: Rs. 27.20 crore) shown under noncurrent assets in Indian GAAP as at the date of transition to Ind AS has been reclassified to deferred tax under Ind AS.

47. Financial assets - Investments

Under Indian GAAP, investment in mutual funds were measured at lower of cost and fair value. Under Ind AS, these are measured at fair value.

48. Other current financial assets / liabilities

The adjustments of Rs. 3.67 crore (31 March 2016: Rs. 2.77 crore) in Other current financial assets and Rs. 2.61 crore (31 March 2016: Rs. 4.77 crore) in Other current financial liabilities pertain to accounting for derivatives. The fair value of forward foreign exchange contracts is recognized under Ind AS, and was not recognized under Indian GAAP. The contracts, which were designated as hedging instruments under Indian GAAP, have been designated as at the date of transition to Ind AS as hedging instrument in cash flow hedges of either expected future sales or purchases for which the Company has firm commitments or expected sales or purchases that are highly probable.

The corresponding adjustment has been recognized as a separate component of equity, in the cash flow hedge reserve. On the date of transition, cash flow hedge reserve was credited by Rs. 1.85 crore on 1 April 2015 (31 March 2016: Rs. 2.28 crore) and net movement of Rs. 1.29 crore (net of tax) during the year ended on 31 March 2016 was recognized in OCI and subsequently taken to cash flow hedge reserve.

49. Securities premium

Under Indian GAAP, the balance in securities premium was utilised towards expenses on issue of non-convertible debentures. Under Ind AS, the NCDs are measured at Amortized cost using effective interest method. The difference between the carrying amount of NCDs under Indian GAAP and the Amortized cost under Ind AS as at the date of transition to Ind AS has been credited to securities premium.

50. Borrowings

Under Indian GAAP, transaction costs incurred in connection with borrowings are Amortized and charged to profit or loss over the period of the borrowings. UnAmortized costs were disclosed under Other assets. Under Ind AS, transaction costs are included in the initial recognition amount of financial liability and charged to profit or loss using the effective interest method.

51. Other financial liabilities

Under Ind AS, deferred payables for purchase of property, plant and equipment beyond normal credit terms have been measured at cash price equivalent and the differential amount is recognized as interest expense over the period of credit. Under Indian GAAP, such payables were recognized and measured at nominal amounts.

52. Non-current provisions

Under Indian GAAP, provisions were not discounted. Under Ind AS, provisions are discounted to present value, where the effect of time value of money is material.

53. Current provisions

Under Indian GAAP, proposed dividends including dividend distribution taxes are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid. In case of the Company, the declaration of dividend occurs after period end. Therefore, the liability of Rs. 28.45 crore for the year ended on 31 March 2015 recorded for dividend has been derecognized against retained earnings on 1 April 2015. The proposed dividend for the year ended on 31 March 2016 of Rs. 47.57 crore recognized under Indian GAAP was reduced from provisions and with a corresponding impact in the retained earnings.

54. Trade payables and other current liabilities

For the purpose of Ind AS financial statements, certain amounts have been reclassified among trade payables, other current financial liabilities and other current liabilities based on the requirements of Ind AS. There is no change in the measurement of such amounts under Ind AS as compared to Indian GAAP.

55. Revenue from operations

Under Indian GAAP, Revenue from operations was disclosed net of Excise duty on sales of Rs. 131.07 crore for the year ended 31 March 2016. Under Ind AS, Revenue is shown gross of Excise duty and the amount of Excise duty is shown as expense in the Statement of Profit and Loss.

The Company changed the accounting policy for revenue recognition on telecom software solutions (software license sale and related services) to percentage of completion method (POCM) from the earlier method of recognizing products sale based on delivery and sale of services based on milestones achieved as per terms and conditions of the specific customer contracts. The effect of the above change (i.e. reduction in revenue by Rs. 8.07 crore) has been given retrospectively in the year ended 31 March 2016 as required by Ind AS - 8 "Accounting policies, changes in accounting estimates and errors". Further, provision for onerous contracts of Rs. 5.44 crore recognized under Indian GAAP in Other expenses has been reversed under Ind AS due to change in accounting policy to POCM.

56. Other expenses - Leases

The Company has evaluated an arrangement under the requirements of Appendix C to Ind AS 17 "Leases" for procurement of raw materials from a plant located in Company''s premises but owned by vendor. Based on such evaluation, the arrangement contains an operating lease. Accordingly, Rs. 3 crore being part of the amounts paid towards procurement of raw materials from the vendor plant has been reclassified to lease rent under Other expenses.

57. Employee benefits expense

Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to profit or loss. Under Ind AS, re measurements (comprising of actuarial gains and losses and the return on plan assets excluding amounts included in net interest on the net defined benefit liability) are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus the employee benefit cost is reduced by Rs. 3.34 crore and re measurement loss on defined benefit plans has been recognized in the OCI net of tax.

58. Finance income

Interest subvention received on certain short-term borrowings relating to exports has been re-classified to finance income under Ind AS.

Under Ind AS, Finance income has been shown separately. Under Indian GAAP, such income was disclosed under Other Income.

59. Other comprehensive income

Under Indian GAAP, the Group has not presented other comprehensive income (OCI) separately. Hence, it has reconciled Indian GAAP profit or loss to profit or profit or loss as per Ind AS. Further, Indian GAAP profit or loss is reconciled to total comprehensive income as per Ind AS.

60. Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows.

61.Excise /Customs Matter Pending with Hon. Supreme Court

The Company had in an earlier year received an order of CESTAT upholding the demand of Rs. 188 crores (including penalties and excluding interest) (31 March 2016: Rs. 188 crores; 1 April 2015: Rs. 188 crores) in the pending excise/custom matters on various grounds. The Company''s appeal with the Honorable High Court of Mumbai was rejected on the grounds of jurisdiction. The Company preferred an appeal with the Honorable Supreme Court of India against the order of CESTAT which has been admitted. The Company has re-evaluated the case on admission of appeal by the Honorable Supreme Court. Based on their appraisal of the matter, the legal advisors/consultants are of the view that under most likely event, the provision of Rs. 4.50 crores made by the Company against the above demand is adequate. The management is confident of a favorable order and hence no further provision is considered against the said demand.

62. Other Notes

63. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

64. The Company has spent an amount of Rs. 3.05 crores (31 March 2016: 2.23 crores) during the year as required under section 135 of the Companies Act, 2013 in the areas of skill development, education and health in the cities of Pune, Aurangabad, Silvassa and Mumbai. Out of Rs. 3.05 crores (31 March 2016: Rs. 2.23 crores), an amount of Rs. 2.71 crore (31 March 2016: Rs. 0.57 crore) was spent by way of contribution to Sterlite Tech Foundation, in which directors/senior executives of the Company and their relatives are trustees.

65. Acquisition and Amalgamation of Elitecore Technologies Private Limited

The Company acquired 100% of the paid up equity share capital of Elitecore Technologies Private Limited (''ETPL''), a global telecom software product company, on 29 September 2015, pursuant to share purchase agreement dated 22 September 2015 for a total purchase consideration of Rs. 187.37 crores which was discharged through bank payments. Post the acquisition, ETPL has been merged with the Company with appointed date of 29 September 2015 under the Scheme of Amalgamation (''the Scheme'') approved by Hon''ble Gujarat High Court vide Order dated 21 March 2016 and effective date 20 May 2016 (being the date of filing with Registrar of Companies).

The Company has accounted for the merger in accordance with the provisions of the Scheme as approved by the High Court whereby the assets and liabilities of ETPL have been recognized at their book values. The excess of amount of investments in ETPL cancelled pursuant to the merger over the net asset value of ETPL on the Appointed Date has been treated as Goodwill. Such Goodwill shall be amortized over a period of 5 years from the Appointed date as per the Court order.

As a result of the amalgamation, the financial statements of the Company for the year ended 31 March 2016 incorporate the operations of ETPL with effect from the Appointed date i.e. 29 September 2015.

66. Disclosure related to


Mar 31, 2016

NOTE 1: EMPLOYEE STOCK OPTION SCHEME

The Company has granted employees stock options plan, 2006 (ESOP Scheme 2006) and employees stock options plan, 2010 (ESOP Scheme 2010) to its employees pursuant to the resolution passed by the shareholders at the extraordinary general meeting held on March 13, 2006 and annual general meeting held on July 14, 2010 respectively. The Company has followed the fair value method (Black Scholes Options Pricing Model) for the valuation of these options. The compensation committee of the Company has approved ten grants vide their meetings held on June 14, 2006; March 19, 2007, September 28, 2007, June 14, 2008, June 26, 2009, December 29, 2011, July 27,2012, April 30, 2014, March 30,2015 and January 28, 2016. As per the plans, Options granted under ESOP would vest in not less than one year and not more than fve years from the date of grant of such options. Vesting of options is subject to continued employment with the Company. The plans are equity settled plans.

The Company will restructure/modify the ESOP schemes to give effect of the impact of demerger on the fair value of equity shares of the Company as required under the Scheme of demerger as well as the ESOP Schemes. The additional ESOPs that will be required to be issued is not presently ascertainable. However, the management believes that since the beneft to ESOP holders in terms of the total fair value of ESOPs before and after the demerger would be same, no additional charge on account of ESOP restructuring has been accrued in the financial statements for the year ended March 31, 2016.

NOTE 2: LEASES OPERATING LEASE

company as lessee :

The Company has taken offce buildings on operating lease. The lease term is for periods of three to nine years and renewable at the option of the Company. Disclosures in respect of operating leases of offce buildings as per the requirement of Accounting Standard- 19 on Leases, are as under:

(a) Lease payments recognised in the Statement of profit and Loss for the year is Rs. 9.77 crores (31 March 2015: Rs. 5.86 crores).

(b) The future minimum lease payments payable over the next one year is Rs. 14.40 crores (31 March 2015: Rs. 4.50 crores).

(c) The future minimum lease payments payable later than one year but not later than five year is Rs. 26.32 crores (31 March 2015: Rs. 12.46 crores).

company as lessor :

The Company has given office building on operating lease. The lease term is for non cancellable period of three years and renewable at the option of the Lessee. Disclosures in respect of operating leases of office building as per the requirement of Accounting Standard- 19 on Leases are as under:

(a) Lease income recognised in the Statement of profit and Loss for the year is Rs. 0.54 crore (31 March 2015: Rs. 0.39 crore).

(b) The future minimum lease payments receivable over the next one year is Rs. 0.76 crore (31 March 2015: Rs. 0.39 crore).

(c) The future minimum lease payments receivable later than one year but not later than five year is Rs. 1.14 crores (31 March 2015: Rs. 1.20 crores).

NOTE 3: CAPITALISATION OF EXCHANGE DIFFERENCE

The Ministory of Corporate Affairs (MCA) issued the amendment dated 29 December 2011 to AS - 11 The Effect of Changes in Foreign Exchange Rate, to allow companies deferral / capitalisation of exchange difference arising on long-term foreign currency monetory items. In accordance with the amendment to AS- 11, the Company has adjusted exchange loss / (gain) arising on long-term foreign currency loan amounting to Rs. 0.73 crore (31 March 2015: Rs. 0.67 crores) to the value of plant and machinery.

NOTE 4: CAPITAL AND OTHER COMMITMENTS

(a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) are Rs. 59.78 crores (31 March 2015: Rs. 121.93 crores.)

(b) As on March 31, 2016, the Company has commitments of Rs. 17.33 crores (31 March 2015: Rs. 72.85 crores) relating to further investment in subsidiaries.

(c) For commitments relating to lease arrangments please refer note 30.

(d) The Company has entered into agreements with the lenders of following subsidiaries wherein it has committed to hold directly or indirectly at all times at least 51% of equity share capital of below mentioned subsidiaries and not to sell, transfer, assign, pledge or create any security interest except pledge of shares to the respective lenders as covered in respective agreements with lenders.

The Company has not provided for disputed sales tax, excise duty, customs duty and service tax arising from disallowances made in assessments which are pending with appellate authorities for its decision. The Company is contesting the demands and the management, including its tax advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the company''s financial position and results of operations.

In respect of the claims against the Company not acknowledged as debts as above, the management does not expect these claims to succeed. Accordingly, no provision for the contingent liability has been recognized in the financial statements.

It is not practicable to indicate the uncertainties which may affect the future outcome and estimate the financial effect of the above liabilities.

* In an earlier year, one of the Bankers of the Company had wrongly debited an amount of Rs. 18.87 crores, towards import consignment under letter of credit not accepted by the company, owing to discrepancies in the documents. Thereafter, the bank fled claim against the company in the Debt Recovery Tribunal (DRT). Against the DRT Order dated 28-Oct-2010, the parties had fled cross appeals before the Debt Recovery Appellate Tribunal. The Debt Recovery Appellate Tribunal vide its Order dated 28-Jan-2015 has allowed the appeal fled by the company and has dismissed the appeal fled by the bank. The bank has challenged the said order in WRIT before the Bombay High Court. The management doesn''t expect the claim to succeed.

NOTE 5: OTHER NOTES

A. The Company had in an earlier year received an order of CESTAT upholding the demand of Rs. 188 crores (including penalties and excluding interest) (31 March 2015: Rs. 188 crores) in the pending excise/custom matters on various grounds. The Company''s appeal with the Honorable High Court of Mumbai was rejected on the grounds of jurisdiction. The Company preferred an appeal with the Honorable Supreme Court of India against the order of CESTAT which has been admitted. The Company has re-evaluated the case on admission of appeal by the Honorable Supreme Court. Based on their appraisal of the matter, the legal advisors/consultants are of the view that under most likely event, the provision of Rs. 4.50 crores made by the Company against the above demand is adequate. The management is confident of a favorable order and hence no further provision is considered against the said demand.

B. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

C. The Company has adopted component accounting as required under Schedule II to the Companies Act, 2013.

Due to application of Schedule II to the Companies Act, 2013, the Company has changed the manner of depreciation for its fixed assets. Now, the Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset. These components are depreciated separately over their useful lives; the remaining components are depreciated over the life of the principal asset. The company has used transitional provisions of Schedule II to adjust the impact of component accounting arising on its first application. If a component has zero remaining useful life on the date of component accounting becoming effective, i.e., 1 April 2015, its carrying amount, after retaining any residual value, is adjuted to opening general reserve (net of tax). As a result an amount of Rs.12.38 crores (net of tax of Rs. 6.55 crores) pertaining to components of fixed assets for which the remaining useful lives were nil as at April 1, 2015 has been adjusted to General Reserve. The carrying amount of other components, i.e., components whose remaining useful life is not nil on 1 April 2015, is depreciated over their remaining useful lives.

As a result of the above change, the depreciation charge for the current year is higher by Rs. 1.22 crores and profit for the current year is lower by Rs. 0.80 crore (net of tax impact of Rs. 0.42 crore).

D. The company has spent an amount of Rs. 2.23 crores (31 March 2015: 1.35 crores) during the year as required under section 135 of the Companies Act, 2013 in the areas of skill development, education and health in the cities of Pune, Aurangabad, Silvassa and Mumbai. Out of Rs. 2.23 crores (31 March 2015: Rs. 1.35 crores), an amount of Rs.0.57 crore (31 March 2015: Rs. 0.27 crore) was spent by way of contribution to Sterlite Tech Foundation, in which directors/senior executives of the Company and their relatives are trustees.

E. Demerger of Power Business

The Board of directors of the Company on May 18, 2015 approved the Scheme of Arrangement under Sections 391 – 394 of the Companies Act, 1956 (''the Scheme'') between Sterlite Technologies Limited (''STL'' or ''Demerged company''), Sterlite Power Transmission Limited (''SPTL'' or ''Resulting company'') and their respective shareholders and creditors for the demerger of power products and solutions business (including the investments of STL in power transmission infrastructure subsidiaries i.e. Sterlite Power Grid Ventures Limited and East North Interconnection Company Limited) into SPTL with the appointed date of April 1, 2015. The Scheme was approved by the Hon''ble Bombay High Court vide Order dated April 22, 2016 and it became effective from May 23, 2016 (being the date of fling with Registrar of Companies). The Scheme inter alia provides for issue by SPTL, at the option of the shareholder of STL, of either one equity share of face value of Rs. 2 or one redeemable preference share of face value of Rs. 2 issued at a premium of Rs. 110.30 per share for every 5 fully paid up equity shares of Rs. 2 each of the Demerged Company and redeemable on expiry of eighteen months from the date of allotment at a premium of Rs. 123.55 per share for eligible members other than non residents. In case of non residents one equity share of face value of Rs. 2 for every 5 fully paid up equity shares of Rs. 2 each of the Demerged Company and all such equity shares shall be purchased by the promoters of the Demerged Company and/or their affiliates or any other person and/or entity identified by them, in accordance with the scheme.

F. Acquisition and Amalgmation of Elitecore Technologies Private Limited

The Company acquired 100% of the paid up equity share capital of Elitecore Technologies Private Limited (''ETPL''), a global telecom software product company, on September 29, 2015, pursuant to share purchase agreement dated September 22, 2015 for a total purchase consideration of Rs. 187.37 crores which was discharged through bank payments. Post the acquisition, ETPL has been merged with the Company with appointed date of September 29, 2015 under the Scheme of Amalgamation approved by Hon''ble Gujarat High Court vide Order dated March 21, 2016 and effective date May 20, 2016 (being the date of fling with Registrar of Companies).

As required under the Scheme, the Company has accounted for the amalgamation as per Accounting Standard-14 "Accounting for Amalgamations" under the purchase method and has recognized the assets and liabilities acquired at their book value. The excess of amount of investments in ETPL cancelled pursuant to the merger over the net asset value of ETPL on the Appointed Date has been treated as Goodwill. Such Goodwill shall be amortized over a period of 5 years in accordance with AS-14.

As a result of the amalgamation, the financial statements of the Company for the year ended March 31, 2016 incorporate the operations of ETPL with effect from the appointed date i.e. September 29, 2015 and are therefore to that extent not comparable with the figures as at and for the year ended March 31, 2015.

NOTE 6: SEGMENT REPORTING

As a result of the demerger of Sterlite Power Transmission Limited as explained in note 45(E), the Company''s operations predominately relate to Telecom product and solutions and accordingly this is the only primary reportable segment as per AS?17 "Segment Reporting.

NOTE 7: PREVIOUS YEAR FIGURES

Previous year figures have been regrouped/reclassified where necessary, to confirm to this year''s classification. The financial statements for the year ended March 31,2016 incorporate the impact of the demerger and merger mentioned in Note 45 E and Note 45 F from the appointed dates April 1, 2015 and September 29, 2015 respectively. Hence, the amounts for the financial year ended March 31,2016 are not comparable with the previous financial year ended March 31, 2015.


Mar 31, 2014

1.The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements.

2. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

During the year ended 31 March 2014, the amount of per share dividend recognised as distributions to equity shareholders was Rs. 0.30 (31 March 2 013 : Rs. 0.30)

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. Aggregate number of bonus shares issued, share issued for consideration other than cash during the period of five years immediately preceding the reporting date:

In addition company has issued total 1,208,596 shares (31 March 2013 : 1,173,950 shares) during the period of five years immediately preceding the reporting date on exercise of option granted under the employee stock option plan (ESOP) wherein part consideration was received in form of employee services.

4. Shares reserved for issue under options:

For details of shares reserved for issue under the employee stock option (ESOP) plan of the Company, refer note 29.

NOTE 5: LONG-TERM BORROWINGS

i. 11.45 % Non convertible debentures are redeemable at par in financial year 2016-17, and secured by way of frst pari passu charge on entire movable fixed assets (both present and future) and mortgage of certain immovable fixed assets of the Company.

ii. Indian rupee term loan from banks amounting to Rs. 92.50 crores carries interest @ LTMLR 1.10% p.a. Loan amount is repayable in 19 quarterly equated installments of Rs. 4.87 crores (excluding interest) from the end of this financial year. The term loan is secured by frst charge on the movable fixed assets of the Company (both present and future).

iii. Indian rupee term loan from bank amounting to Rs. 109.83 crores carries interest @ Base rate 1% p.a. Loan amount is repayable in 13 quarterly equated installments of Rs. 8.45 crores (excluding interest) from the end of this financial year. The term loan is secured by frst charge on the movable fixed assets of the Company (both present and future).

iv. Indian rupee term loan from the bank amounting to Rs. 250.00 crores carries interest @ Base rate 1% p.a. Loan amount is repayable in 16 quarterly equated installments of Rs. 15.62 crores (excluding interest) starting from quarter ended March 2015 The term loan is secured by frst charge on the movable fixed assets of the Company (both present and future).

v. Indian rupee term loan from the bank amounting to Rs. 50.00 crores carries interest @ Base rate. Loan amount is repayable in April 2016. The term loan is secured by stand by letter of credit issued by a bank which inturn is secured by movable fixed assets of the Company.

# The Company had paid an amount of Rs. 5.10 crores towards Right of Way granted to Maharashtra Transmission Communication Infrastructure Limited (MTCIL) in which the Company owns 51% of equity share capital and the balance 49% of equity share capital is owned by Maharashtra State Electricity Transmission Company Limited . MTCIL is engaged in establishing communication network in the state of Maharashtra. This amount has been considered as cost of investment in the subsidiary.

NOTE 6: GRATUITY

The Company has a Defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

NOTE 7: EMPLOYEE STOCK OPTION SCHEME

The Company has granted employees stock options plan, 2006 (ESOP Scheme 2006) and employees stock options plan, 2010 (ESOP Scheme 2010) to its employees pursuant to the resolution passed by the shareholders at the extraordinary general meeting held on March 13, 2006 and annual general meeting held on July 14, 2010 respectively. The Company has followed the fair value method (Black Scholes Options Pricing Model) for the valuation of these options. The compensation committee of the Company has approved six grants vide their meeting held on June 14, 2006; March 19, 2007, September 28, 2007, June 14, 2008, June 26, 2009 and December 29, 2011 As per the plan, Options granted under ESOP would vest in not less than one year and not more than five years from the date of grant of such options. Vesting of options is subject to continued employment with the Company. The plan is an equity settled plan.

The Company has charged Rs. 0.25 crore (31 March 2013: Rs. 0.44 crore) to the statement of Profit and loss in respect of options granted under ESOP scheme 2006 and options granted under ESOP scheme 2010.

NOTE 8: OPERATING LEASE

Company as lessee:

The Company has taken ofce buildings on operating lease. The lease term is for periods of three to nine years and renewable at the option of the Company. Disclosures in respect of operating leases of ofce buildings as per the requirement of AS- 19 on Leases, notified under the Rules are as under:

i. Lease payments recognised in the statement of Profit and loss for the year is Rs. 4.26 crores (31 March 2013: Rs. 5.46 crores). ii. The future minimum lease payments payable over the next one year is Rs. 1.77 crores (31 March 2013: Rs. 3.22 crores). iii. The future minimum lease payments payable later than one year but not later than five year is Rs. 0.66 crores (31 March 2013: Rs. 7.48 crores).

Company as lessor:

The Company has given ofce building on operating lease. The lease term is for non cancellable period of three years and renewable at the option of the Lessee. Disclosures in respect of operating leases of ofce building as per the requirement of AS- 19 on Leases, notified under the Rules are as under:

i. Lease income recognised in the statement of Profit and loss for the year is Rs. 0.10 crores (31 March 2013: Nil).

ii. The future minimum lease payments receivable over the next one year is Rs. 0.39 crores (31 March 2013:Nil).

iii. The future minimum lease payments receivable later than one year but not later than five year is Rs. 0.69 crores (31 March 2013:Nil).

NOTE 9: CAPITALISATION OF EXPENDITURE

During the year, the Company has capitalised the following expenses to the cost of fixed assets/ capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.

NOTE 10: CAPITAL AND OTHER COMMITMENTS

a. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) are Rs. 63.96 crores (31 March 2013: Rs. 91.14 Crores).

b. As on March 31, 2014, the Company has commitments of Rs. 419.72 crores (31 March 2013: Rs. 146.00 crores) relating to further investment in subsidiaries.

c. For commitments relating to lease arrangments please refer note 30.

d. The Company has entered into agreements with the lenders of following subsidiaries companies wherein it has committed to hold directly or indirectly at all times at least 51% of equity share capital of below mentioned subsidiaries and not to sale, transfer,assign,pledge or create any security interest except pledge of shares to the respective lenders as covered in respective agreements with lenders.

NOTE 11: CONTINGENT LIABILITIES

31 March 2014 31 March 2013 (Rs. in Crores) (Rs. in Crores)

1 Disputed liabilities in appeal

i. Sales tax 0.43 0.43

ii. Excise duty (Including excise duty case in Supreme Court, Refer note 8 and note 43(A)) 258.18 248.99

iii. Customs duty 69.60 67.24

iv. Income tax 18. 09 6.92

v. Claims lodged by a bank against the Company * (Refer note 8) 18.87 18.87

vi. Claims against the Company not acknowledged as debt 25.27 25.17

2 Outstanding amount of export obligation against advance licence – 45.86

3 Corporate guarantee to the income tax department on behalf of group companies. 114.00 114.00

4 Corporates guarantees given on behalf of its subsidiaries for loans and hedging facilities taken from bank / financial institution (to the extent of loans and hedging facilities outstanding as at balance sheet date) ((The total amount of corporate guarantees is Rs. 842.02 Crores (31 March 2013: Rs. 832.46 Crores)) 574.83 548.34

5 Bank guarantee given to Long-term Transmission Customers on behalf of its subsidiary company. 176.72 125.42

The Company has not provided for disputed sales tax, excise duty, customs duty and service tax arising from disallowances made in assessments which are pending with appellate authorities for its decision.

It is not practicable to indicate the uncertainties which may afect the future outcome and estimate the financial efect of the above liabilities.

*In an earlier year, one of the Bankers of the Company had wrongly debited an amount of Rs. 18.87 crores, towards import consignment under letter of credit not accepted by the Company, owing to discrepancies in the documents. The Company has fled the case against the bank in the High Court of Mumbai. The bank has also fled a claim against the Company in the Debt Recovery Tribunal. The Company does not believe that any liability will arise to the Company.

NOTE 12: DERIVATIVE INSTRUMENTS

The Company has entered into the following derivative instruments:

i. The following are the outstanding forward exchange contracts entered into by the Company, for hedge purpose, as on March 31, 2014

ii.The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below:

a. Amount receivable in foreign currency on account of the following:

NOTE 13: OTHER NOTES

A. The Company had in an earlier year received an order of CESTAT upholding the demand of Rs. 188 crores (including penalties and excluding interest) (31 March 2013: Rs. 188 crores) in the pending excise/custom matters on various grounds. The Company''s appeal with the Honorable High Court of Mumbai was rejected on the grounds of jurisdiction. The Company preferred an appeal with the Honorable Supreme Court of India against the order of CESTAT which has been admitted. The Company has re-evaluated the case on admission of appeal by the Honorable Supreme Court. Based on their appraisal of the matter, the legal advisors/consultants are of the view that under most likely event, the provision of Rs. 4.50 crores made by the Company against the above demand is adequate. The management is confdent of a favorable orde and hence no further provision is considered against the said demand.

B. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

NOTE 14: RELATED PARTY DISCLOSURES

1. Name of related party and nature of its relationship: i. Related parties where control exists

(a) Holding company

Twin Star Overseas Limited, Mauritius (Immediate holding company) Volcan Investments Limited, Bahamas (Ultimate holding company)

(b) Subsidiaries

Sterlite Display Technologies Private Limited

East North Interconnection Company Limited

Sterlite Grid Limited

Jabalpur Transmission Company Limited

Bhopal Dhule Transmission Company Limited

Sterlite Global Ventures (Mauritius) Limited

Jiangsu Sterlite and Tongguang Fiber Co. Limited

Sterlite Networks Limited

Sterlite Technologies Americas LLC

Sterlite Technologies Europe Ventures Limited

Sterlite Technologies UK Ventures Limited

Purulia & Kharagpur Transmission Company Limited

RAPP Transmission Company Limited

Maharashtra Transmission Communication Infrastructure Limited

(c) Joint Ventures

Sterlite Conduspar Industrial Ltda (50:50 joint venture between Sterlite Technologies UK Ventures Limited and Conduspar Condutores Eletricos Limitada)

ii. Other related parties with whom transactions have taken place during the year

(a) Key management personnel (KMP)

Mr. Pravin Agarwal Dr. Anand Agarwal

(b) Entities where key management personnel / relatives of key management personnel have significant infuence (EKMP)

Sesa Sterlite Limited* (erstwhile "Sesa Goa Limited")

Fujairah Gold FZE

Bharat Aluminium Company Limited

Hindustan Zinc Limited

Vedanta Resources PLC

Sterlite Industries (India) Limited*

Sterlite Energy Limited*

Vedanta Aluminium Limited*

2. Rs. 3.14 crores have been written of in respect of advances due from subsidiary.

NOTE 15: SEGMENT INFORMATION

In accordance the Accounting Standard 17 notified under the Act on "Segment Reporting", the Company has identified two reportable Business Segments i.e. Telecom Product and Solutions Business and Power Product and Solutions Business, which are regularly evaluated by the Management, in deciding the allocation of resources and assessment of performance. Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common cost. The segment performance is as follows:

NOTE 16: PREVIOUS YEAR FIGURES

Previous year figure have been regrouped / reclassified where necessary, to conform to this year''s classifcation.


Mar 31, 2013

NOTE 1. CORPORATE INFORMATION

Sterlite Technologies Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is primarily engaged in the manufacture and sale of Power and Telecom products and solutions. Telecom products and solutions mainly include integrated optical fiber, other Telecom products such as fiber optical cables, copper Telecom cables,structured data cables, access equipments, fiber connectivity and system integration solution offerings for Telecom networks and other service providers. Power products and solutions mainly includes power transmission conductors and cables.

NOTE 2. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention, except in case of assets which have been impaired and derivative financial instruments which have been measured at fair value.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

Note 3: Gratuity

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days'' salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

Note 4: Employee Stock Option Scheme

The Company has granted employees stock options plan, 2006 (ESOP Scheme 2006) and employees stock options plan, 2010 (ESOP Scheme 2010) to its employees pursuant to the resolution passed by the shareholders at the extraordinary general meeting held on March 13, 2006 and annual general meeting held on July 14, 2010 respectively. The Company has followed the fair value method (Black Scholes Options Pricing Model) for the valuation of these options. The compensation committee of the Company has approved six grants vide their meeting held on June 14, 2006; March 19, 2007; September 28, 2007; June 14, 2008; June 26, 2009 and December 29, 2011 As per the plan, Options granted under ESOP would vest in not less than one year and not more than five years from the date of grant of such options. Vesting of options is subject to continued employment with the company. The plan is an equity settled plan.

The Company has charged Rs. 0.44 Crores (31 March, 2012: Rs.1.00 Crores) to the statement of profit and loss in respect of options granted under ESOP scheme 2006 and options granted under ESOP scheme 2010.

Note 5: Operating Lease

The Company has taken office buildings on operating lease. The lease term is for periods of three to nine years and renewable at the option of the Company.

Disclosures in respect of operating leases of office buildings as per the requirement of AS- 19 on Leases, notified under the Rules are as under:

(a) Lease payments recognised in the statement of profit and loss for the year is Rs. 5.46 Crores (31 March 2012: Rs. 4.31 Crores).

(b) The future minimum lease payments payable over the next one year is Rs. 3.22 Crores (31 March 2012: Rs. 2.64 Crores).

(c) The future minimum lease payments payable later than one year but not later than five year is Rs. 7.48 Crores (31 March 2012: Rs. 1.65 Crores).

Note 6: Capitalisation of Expenditure

During the year, the Company has capitalised the following expenses to the cost of fixed assets/ capital work-in-progress (CWIP). Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.

Note 7: Capital Commitments

a] Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) are Rs. 91.14 Crores (31 March 2012: Rs. 38.07 Crores.)

b] As on March 31, 2013, the Company has commitments of Rs. 146.00 Crores (31 March 2012: Rs. 897.18 Crores) relating to further investment in subsidiaries.

Note 8: Contingent liabilities

31 March, 2013 31 March, 2012 Rs. in Crores Rs. in Crores

1 Disputed liabilities in appeal

a) Sales tax 0.43 0.43

b) Excise duty (Including excise duty case in Supreme Court, refer note 8 and note 43 (A)) 248.99 248.18

c) Customs duty 67.24 67.24

d) Income tax 6.92 6.92

e) Claims lodged by a bank against the Company (*) (refer note 8) 18.87 18.87

f) Claims against the Company not acknowledged as debt 25.17 22.32

2 Outstanding amount of export obligation against advance licence 45.86 36.58

3 The company has given corporate guarantee to the income tax department on behalf of 114.00 114.00 group companies.

4 Corporates guarantees given on behalf of its subsidiaries for loans and hedging facilities taken from bank / financial institution (to the extent of loans and hedging facilities outstanding as at balance sheet date)

((The total amount of corporate guarantees is Rs. 832.46 Crores (31 March 2012: Rs.119.59 Crores)) 548.34 30.00

5 Bank guarantee given to Long-term Transmission Customers on behalf of its subsidiary company. 30.00 30.00

The Company has not provided for disputed sales tax, excise duty, customs duty and service tax arising from disallowances made in assessments which are pending with appellate authorities for its decision.

It is not practicable to indicate the uncertainties which may affect the future outcome and estimate the financial effect of the above liabilities.

(*)In an earlier year, one of the Bankers of the Company had wrongly debited an amount of Rs. 18.87 Crores, towards import consignment under letter of credit not accepted by the company, owing to discrepancies in the documents. The company has filed the case against the bank in the High Court of Mumbai.

The bank has also filed a claim against the company in the Debt Recovery Tribunal. The company does not believe that any liability will arise to the company.

Note 9: Derivative instruments

The Company has entered into the following derivative instruments:

(a) The following are the outstanding forward exchange contracts entered into by the company, for hedge purpose, as on March 31, 2013:

Note 10: Share Application Money

Share application money pertains to the amount of exercise price of Rs. 2 per share for 3,650 equity shares (31 March 2012: 22,822 equity shares) under Employee Stock Option Plan.

Note 11: Accounting for Amalgamation

The Hon''ble High Court of judicature at Mumbai vide its Order dated October 21, 2011 approved the Scheme of Amalgamation of Sterlite Infra-Tech Limited (100% subsidiary of the Company) with the company. The subsidiary was engaged in the manufacture of optical fiber. The appointed date as per the scheme of amalgamation was April 1, 2011. Sterlite Infra-Tech Limited amalgamated with the Company effective from the appointed date. The Company has accounted for the amalgamation under the pooling of interests method.

Note 12: other notes

A. The Company had in an earlier year received an order of CESTAT upholding the demand of Rs. 188 Crores (including penalties and excluding interest) (31 March 2012: Rs. 188 Crores) in the pending excise/custom matters on various grounds. The Company''s appeal with the Honourable High Court of Mumbai was rejected on the grounds of jurisdiction. The Company preferred an appeal with the Honourable Supreme Court of India against the order of CESTAT which has been admitted. The Company has re-evaluated the case on admission of appeal by the Honourable Supreme Court. Based on their appraisal of the matter, the legal advisors/consultants are of the view that under most likely event, the provision of Rs. 4.50 Crores made by the company against the above demand is adequate. The management is confident of a favourable order and hence no further provision is considered against the said demand.

B. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

Note 44: Related Party Disclosures

(A) Name of related party and nature of its relationship:

(a) Related parties where control exists

(i) Holding company

Twin Star Overseas Limited, Mauritius (Immediate holding company)

Volcan Investments Limited, Bahamas (Ultimate holding company)

(ii) Subsidiaries

Sterlite Grid Limited

East North Interconnection Company Limited

Jabalpur Transmission Company Limited

Bhopal Dhule Transmission Company Limited

Sterlite Global Ventures (Mauritius) Limited

Jiangsu Sterlite Tongguang Fiber Co. Limited

Sterlite Networks Limited

Sterlite Display Technologies Private Limited

Sterlite Technologies Americas LLC

Sterlite Technologies Europe Ventures Limited

Maharashtra Transmission Communication Infrastructure Limited

(b) Other related parties with whom transactions have taken place during the year

(i) Key management personnel (KMP)

Mr. Pravin Agarwal

Dr. Anand Agarwal

(ii) Entities where key management personnel / relatives of key management personnel have significant influence (EKMP)

Sterlite Industries (India) Limited

Fujairah Gold FZE

Bharat Aluminium Company Limited

Hindustan Zinc Limited

Sterlite Energy Limited

Vedanta Aluminium Limited

Vedanta Resources PLC

(B) The transactions with related parties during the year and their outstanding balances are as follows:-

Note 13: Segment information

In accordance with the Notified AS 17 under the Companies (Accounting Standards) Rules, 2006 (as amended) on "Segment Reporting", the Company has identified two reportable Business Segments i.e. Telecom Product and Solutions Business and Power Product and Solutions Business, which are regularly evaluated by the Management, in deciding the allocation of resources and assessment of performance. Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common cost. The segment performance is as follows:

Note 14: Previous Year Figures

Previous year figure have been regrouped / reclassified where necessary, to confirm to this year''s classification.


Mar 31, 2012

NOTE 1. CORPORATE INFORMATION

Sterlite Technologies Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on two stock exchanges in India. The company is primarily engaged in the manufacture and sale of Power and Telecom products and solutions. Telecom products and solutions mainly include integrated optical fiber, other telecom products such as fiber optical cables, copper telecom cables, structured data cables, access equipments, fiber connectivity and system integration solution offerings for telecom networks and other service providers. Power products and solutions mainly include power transmission conductors and cables.

NOTE 2. BASIS OF PREPARATION

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention, except in case of assets which have been impaired.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

Note 3: Employee Stock Option Scheme

The company has granted employees stock options plan, 2006 (ESOP) and employees stock options plan, 2010 (ESOP) to its employees pursuant to the resolution passed by the shareholders at the extraordinary general meeting held on March 13, 2006 and annual general meeting held on July 14, 2010 respectively. The Company has followed the fair value method (Black Scholes Options Pricing Model) for the valuation of these options. The compensation committee of the company has approved six grants vide their meeting held on June 14, 2006; March 19, 2007; September 28, 2007; June 14, 2008; June 26, 2009 and December 29, 2011 As per the plan, Options granted under ESOP would vest in not less than one year and not more than five years from the date of grant of such options. Vesting of options is subject to continued employment with the company. The plan is an equity settled plan.

The company has charged Rs. 1.00 Crores (Rs. 2.02 Crores) to the statement of Profit and loss in respect of options granted under ESOP scheme 2006 and options granted under ESOP scheme 2010.

Note 4: Operating Lease

The company has taken office buildings on operating lease. The lease terms are for periods of three to nine years and renewable at the option of the company.

There is no escalation clause in the lease agreement. Disclosures in respect of operating leases of office buildings as per the requirement of AS-19 on Leases, notified under the Rules are as under:

a) Lease payments recognised in the statement of Profit and loss for the year is Rs. 4.31 Crores (31 March, 2011: Rs. 3.05 Crores).

b) The future minimum lease payments payable over the next one year is Rs. 2.64 Crores (31 March, 2011: Rs. 1.55 Crores).

c) The future minimum lease payments payable later than one year but not later than five year is Rs. 1.65 Crores (31 March, 2011: Rs. 2.66 Crores).

Note 5: Capital Commitments

a) Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) are Rs. 38.07 Crores (31 March, 2011: Rs. 52.65 Crores).

b) As on March 31, 2012, the Company has commitments of Rs. 897.18 Crores (31 March, 2011: Rs. 1,126.59 Crores) relating to further investments in subsidiaries.

Note 6: Contingent Liabilities

31 March, 2012 31 March, 2011 Rs. in Crores Rs. in Crores

1) Disputed liabilities in appeal

a) Sales tax 0.43 0.59

b) Excise duty (Including excise duty case in supreme court, refer note 8 & note 44(A)) 248.18 247.07

c) Customs duty 67.24 74.31

d) Service tax - 2.48

e) Income tax 6.92 11.26

f) Claims lodged by a bank against the company (*) 18.87 18.87

g) Claims against the company not acknowledged as debt 22.32 19.80

2) Outstanding amount of export obligation against advance licence 36.58 87.19

3) The company has given corporate guarantee to the Income Tax department on behalf of group companies. The outstanding amount is Rs. 114.00 Crores (31 March, 2011: Rs. 114.00 Crores) on this account as at the year-end.

4) The company has given corporate guarantee to long term transmission customers and State Bank of India on behalf of its subsidiary company. The outstanding amount is Rs. 119.59 Crores (31 March, 2011: Rs. 30.00 Crores) on this account as at the year-end.

The Company has not provided for disputed sales tax, excise duty, customs duty and service tax arising from disallowances made in assessments which are pending with appellate authorities for its decision.

It is not practical to indicate the uncertainties which may affect the future outcome and estimate the financial effect of the above liabilities.

(*) In an earlier year, one of the bankers of the company had wrongly debited an amount of Rs. 18.87 Crores, towards import consignment under Letter of Credit not accepted by the company, owing to discrepancies in the documents. The company has f led the case against the bank in the High Court of Mumbai. The bank has also f led a claim against the company in the Debt Recovery Tribunal. The company does not believe that any liability will arise to the company.

Note 7: Share Application Money

Share application money pertains to the amount of exercise price of Rs. 2 per share for 22,822 ESOPs for which equity shares have been subsequently allotted on April 17, 2012.

Note 8: Accounting for Amalgamation

The Hon'ble High Court of judicature at Mumbai vide its Order dated October 21, 2011 approved the Scheme of Amalgamation of Sterlite Infra-Tech Limited (100% Subsidiary of the company) with the company. The subsidiary was engaged in the manufacture of optical fibre. The appointed date as per the Scheme of Amalgamation is April 1, 2011. Sterlite Infra-Tech Limited stands amalgamated with the company ef -fective from the appointed date. The company has accounted for the amalgamation under the pooling of interests method. The impact of amalgamation has been given in the financial statements w.e.f. April 01, 2011.

Note 9: Other Notes

A. The company had in an earlier year received an order officeSTAT upholding the demand of Rs. 188 Crores (including penalties and excluding interest)(31 March 2011: Rs. 188 Crores) in the pending excise/custom matters on various grounds. The company's appeal with the Honourable High Court of Mumbai was rejected on the grounds of jurisdiction. The company preferred an appeal with the Honourable Supreme Court of India against the order office STAT which has been admitted. The company has revaluated the case on admission of appeal by the Honourable Supreme Court. Based on their appraisal of the matter, the legal advisors/consultants are of the view that under most likely event, the provision of Rs. 4.50 Crores made by the company against the above demand is adequate. The management is conf dent of a favourable order and hence no further provision is considered against the said demand.

B. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

Note 10: Related Party Disclosures

Related party disclosures as required by AS 18, Related Party Disclosures issued by the ICAI and notified under Rules are given below:-

(a) Name of related party and nature of its relationship: (i) Subsidiaries

Sterlite Display Technologies Private Limited

Sterlite Infra-Tech Limited (refer note 43)

East North Interconnection Company Limited

Sterlite Grid Limited (Formerly known as Sterlite Transmission Projects Private Limited)

Jabalpur Transmission Company Limited

Bhopal Dhule Transmission Company Limited

Sterlite Global Ventures (Mauritius) Limited

Jiangsu Sterlite and Tongguang Optical Fiber Co. Limited

Sterlite Networks Limited

Sterlite Technologies Americas, LLC

Sterlite Technologies Europe Ventures Limited

(ii) Key management personnel (KMP)

Mr. Pravin Agarwal Dr. Anand Agarwal

(iii) Entities where key management personnel/relative of key management personnel have significant influence (EKMP)

Sterlite Industries (India) Limited

Fujairah Gold FZE

Bharat Aluminium Company Limited

Hindustan Zinc Limited

Sterlite Energy Limited

Vedanta Aluminium Limited

Vedanta Resources PLC

(iv) Holding Company

Volcan Investments Limited (Ultimate holding company) Twin Star Overseas Limited (Immediate holding company)

(b) There are no provisions for doubtful debts or no amounts have been written of in respect of debts due to or from related parties.

Note 11: Segment Reporting

As permitted by paragraph 4 of Accounting Standard-17 (AS-17), 'Segment Reporting', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS-17 are given in the consolidated financial statements.


Mar 31, 2011

1. NATURE OF OPERATIONS

The Company is primarily engaged in the manufacture of Power Transmission and Telecom products in India. Telecom Business includes integrated Optical Fiber, Telecom Cables (Fiber Optic Cables, Copper Telecom Cables and Structured Data Cables), access equipments and integrated management business. Power Transmission Business includes power transmission conductors.

2. The amount of foreign exchange (gain)/loss adjusted during the year to the carrying cost of the fixed assets and capital work in progress is Rs. 1.15 crores (Rs. 5.00 crores) and that (credited)/debited to respective heads of accounts in Profit and Loss Account is Rs. (6.73) crores (Rs. 12.39 crores); premium on forward exchange contract to be recognised in the Profit and Loss account of subsequent accounting periods is Rs. 10.03 crores (Rs. 5.75 crores).

3. In terms of accounting policy (Refer Note 2 (o) of Schedule 21) for the accrual of export incentives, estimated benefits of Rs. 50.63 crores (Rs. 32.07 crores) have been taken into account under the DEPB /High Value Add Income scheme/Duty Drawback scheme. These have been grouped as part of turnover in the profit and loss account.

4. The provision for tax has been made in accordance with provisions of Section 115 JB (Minimum Alternate Tax, 'MAT') of the Income Tax Act, 1961. The Company is entitled to avail Credit under Section 115JAA (1A) and accordingly it has considered MAT credit entitlement as an asset.

5. The Company had in an earlier year received an order of CESTAT upholding the demand of Rs. 188 crores (including penalties and excluding interest) (Rs. 188 crores as at March 31, 2010) in the pending excise/custom matters on various grounds. The Company's appeal with the Honourable High Court of Mumbai was rejected on the grounds of jurisdiction. The Company preferred an appeal with the Honourable Supreme Court of India against the order of CESTAT which has been admitted. The Company has revaluated the case on admission of appeal by the Honourable Supreme Court. Based on their appraisal of the matter, the legal advisors/consultants are of the view that under most likely event, the provision of Rs. 5 crores made by the Company against the above demand is adequate. The management is confident of a favourable order and hence no provision is considered against the said demand.

6. EMPLOYEE STOCK OPTION SCHEME

The Company has granted Employees Stock Options Plan, 2006 (ESOP) to its employees pursuant to the resolution passed by the shareholders at the Extraordinary General Meeting held on March 13, 2006. The Company has followed the fair value method (Black Scholes Options Pricing Model) for the valuation of these options. The Compensation Committee of the Company has approved five grants vide their meeting held on June 14, 2006; March 19, 2007, September 28, 2007, June 14, 2008 and June 26, 2009. As per the plan, Options granted under ESOP would vest in not less than one year and not more than five years from the date of grant of such options. Vesting of options is subject to continued employment with the Company. The plan is an equity settled plan.

7. Estimated amount of contracts remaining to be executed on Capital Account and not provided for (Net of Advances) are Rs. 52.65 crores (Rs. 75.58 crores.)

8. DETAILS OF LOANS AND ADVANCES GIVEN TO SUBSIDIARIES

The details are provided as required by schedule VI of the Companies Act, 1956 and SEBI Circular SMD/Policy/Cir-2/2003 dated 10 January, 2003 of the Listing Agreement.

Outstanding Loans/Advances given to subsidiary Sterlite Display Technologies Private Limited (formerly known as 'Sterlite Infrastructure Private Limited') is Rs. 6.16 crores (Rs. Nil). The maximum amount outstanding from Sterlite Display Technologies Private Limited (formerly known as 'Sterlite Infrastructure Private Limited') during the year is Rs. 6.16 crores (Rs. 0.56 crore).

Outstanding Loans/Advances (including interest) given to subsidiary Sterlite Infra-tech Limited is Rs. 46.17 crores (Rs. 6.56 crores). The maximum amount outstanding from Sterlite Infra-tech Limited during the year is Rs. 46.17 crores (Rs. 6.59 crores).

Outstanding Loans/Advances given to subsidiary Sterlite Global Ventures (Mauritius) Limited is Rs. 0.42 crore (Rs. Nil).The maximum amount outstanding from Sterlite Global Ventures (Mauritius) Limited during the year is Rs. 0.42 crore (Rs. Nil).

9. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

10. RELATED PARTY DISCLOSURES

Related party disclosures as required by AS-18, Related Party Disclosures issued by the ICAI and notified under Rules are given below: (a) Name of related party and nature of its relationship: (i) Subsidiary

Sterlite Display Technologies Private Limited (formerly known as Sterlite Infrastructure Private Limited)

Sterlite Infratech Limited

East North Interconnection Company Limited

Sterlite Transmission Projects Private Limited

Jabalpur Transmission Company Limited (*)

Bhopal Dhule Transmission Company Limited (*)

Sterlite Global Ventures (Mauritius) Limited

Jiangsu Sterlite and Tongguang Optical Fiber Co. Limited (*)

(ii) Key Management Personnel

Mr. Pravin Agarwal Dr. Anand Agarwal

(iii) Entities where Key Management Personnel / relative of key management personnel has significant influence

Sterlite Industries (India) Limited Fujairah Gold FZE

Bharat Aluminium Company Limited Hindustan Zinc Limited Sterlite Energy Limited Vedanta Aluminium Limited

(iv) Investing Company

Twin Star Overseas Limited

3. Share application money paid include Sterlite Transmission Project Private Limited Rs. 39.84 crores (Rs. Nil), East North Interconnection Company Limited Rs. 51.57 crores (Rs. Nil).

4. Advances given during the year include Sterlite Display Technologies Private Limited Rs. 6.16 crores (Rs. 0.25 crore).

5. Repayment of advances include Sterlite Display Technologies Private Limited Rs. Nil (Rs. 0.56 crore).

6. Loans given/(repayment) during the year include Sterlite Infratech Limited Rs. 37.35 crores (Rs. 6.37 crores), East North Interconnection Company Limited Rs. (21.87 crores)(Rs. 21.87 crores).

7. Interest charged on loans include Sterlite Infratech Limited Rs. 2.24 crores (Rs. 0.19 crore)

8. Sale of fixed assets include Sterlite Infratech Limited Rs. 3.75 crores (Rs. Nil).

9. Purchase of goods include Vedanta Aluminium Limited Rs. 483.88 crores (Rs. 560.06 crores), Bharat Aluminium Company Limited Rs. 90.53 crores (Rs. 115.45 crores).

10. Sale of goods include Sterlite Energy Limited Rs. 24.31 crores (Rs. 13.27 crores).

11. Expenses incurred include Sterlite Industries (India) Limited Rs. 0.64 crore (Rs. 0.33 crore), Vedanta Aluminium Limited Rs. 0.21 crore (Rs. Nil).

12. Interest include Vedanta Aluminium Limited Rs. 0.65 crore [Rs. (0.26) crore], Bharat Aluminium Company Limited Rs. 0.11 crore (Rs. 0.02 crore).

13. Advances received against supplies include East North Interconnection Company Limited Rs. 19.01 crores (Rs. Nil).

Note: As the liabilities for gratuity and leave encashment are provided on an actuarial basis for the Company as a whole, the amounts pertaining to the directors are not included above.

14. OPERATING LEASES

The Company has taken office buildings on operating lease. The lease term is for a period of three years and renewable at the option of the Company. There is no escalation clause in the lease agreement. Disclosures in respect of operating leases of office buildings as per the requirement of AS-19 on Leases, notified under the Rules are as under:

(a) Lease payments recognised in the statement of Profit and Loss for the year is Rs. 3.05 crores (Rs. 2.62 crores).

(b) The future minimum lease payments payable over the next one year is Rs. 1.55 crores (Rs. 0.53 crore).

(c) The future minimum lease payments payable later than one year but not later than five year is Rs. 2.66 crores (Rs. 0.54 crore).

15. The disclosures as per AS-15, Employee benefits notified under the Rules are as follows:-

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

16. CONTINGENT LIABILITIES (Rs. in crores)

Sr. No. Particulars 2010-11 2009-10

1. Disputed Liabilities in Appeal

a) Sales Tax 0.59 0.59

b) Excise Duty (Including Excise duty case in 247.07 266.69 Supreme Court, Refer Note 8, Schedule 21)

c) Customs Duty 74.31 74.31

d) Service Tax 2.48 2.45

e) Claims lodged by a Bank Against the company (*) 18.87 18.87

f) Claims against the company not acknowledged as Debt -- 2.07

2. Outstanding amount of Export obligation against 87.19 58.99 Advance Licence

3. The company has given Corporate Guarantee to the Income Tax Department on behalf of group companies. The outstanding amount is Rs. 114.00 crores (Rs. 114.00 crores) on this account as at the year-end.

The company has given Corporate Guarantee to Long Term Transmission Customers on behalf of its subsidiary company. The outstanding amount is Rs. 30.00 crores (Rs. Nil) on this account as at the year-end.

The Company has not provided for disputed Sales Tax, Excise Duty, Customs Duty and Service Tax arising from disallowances made in assessments which are pending with Appellate Authorities for its decision.

It is not practicable to indicate the uncertainties which may affect the future outcome and estimate the financial effect of the above liabilities.

(*) In an earlier year, one of the Bankers of the Company had wrongly debited an amount of Rs. 18.87 crores, towards import consignment under Letter of Credit not accepted by the Company, owing to discrepancies in the documents. The Company has filed the case against the bank in the High Court of Mumbai. The bank has also filed a claim against the Company in the Debt Recovery Tribunal. The Company does not believe that any liability will arise to the Company.

17. Expenditure of Rs. 1.88 crores (Rs. 4.39 crores) and 1.12 crores (Rs. 0.35 crore) on account of financing cost relating to borrowed funds for construction or acquisition of fixed assets is debited to "Fixed Assets" and "Capital work-in-Progress" respectively.

18. Excise duty on sales amounting to Rs. 54.14 crores (Rs. 63.87 crores) has been reduced from sales in profit & loss account and excise duty on increase/decrease in stock amounting to Rs. 3.50 crores (Rs. 0.83 crore) has been disclosed in Schedule 15 of financial statements.

19. PREVIOUS YEAR COMPARATIVES

Previous Year's figures have been regrouped where necessary to confirm to current year's classification.


Mar 31, 2010

1. NATURE OF OPERATIONS

The Company is primarily engaged in the manufacturer of Power Transmission and Telecom products in India. Telecom Business includes integrated Optical Fiber, Telecom Cables (Fiber Optic Cables, Copper Telecom Cables and Structured Data Cables), access equipments and integrated management business.

2. The amount of foreign exchange (gain)/loss adjusted during the year to the carrying cost of the fixed assets and capital work in progress is Rs. 5.00 Crores (Rs. 0.87 Crore) and that (credited)/debited to respective heads of accounts in Profit and Loss Account is Rs. (12.39) Crores (Rs. 12.53 Crores); premium on forward exchange contract to be recognised in the Profit and Loss account of subsequent accounting period is Rs. 5.75 Crores (Rs. 6.37 Crores).

3. The provision for tax has been made as per Minimum Alternative Tax under Section 115 JB of the Income Tax Act, 1961. The Company is entitled to avail Credit under Section 115JAA (1A) and accordingly it has considered MAT credit entitlement as an asset.

4. The Company had in an earlier year received an order of CESTAT upholding the demand of Rs. 188 Crores (including penalties and excluding interest) (Rs. 188 Crores as at March 31, 2009) in the pending excise/custom matters on various grounds. The Companys appeal with the Honourable High Court of Mumbai was rejected on the grounds of jurisdiction. The Company preferred an appeal with the Honourable Supreme Court of India against the order of CESTAT which has been admitted. The Company has reevaluated the case on admission of appeal by the Honourable Supreme Court. Based on their appraisal of the matter, the legal advisors/consultants are of the view that under most likely event, the provision of Rs. 5 Crores made by the Company against the above demand is adequate. The management is confident of a favourable order and hence no further provision is considered against the said demand.

5. EMPLOYEE STOCK OPTION SCHEME

The Company has granted Employees Stock Options Plan, 2006 (ESOP) to its employees pursuant to the resolution passed by the shareholders at the Extraordinary General Meeting held on March 13, 2006. The Company has followed the fair value method (Black Scholes Options Pricing Model) for the valuation of these options. The Compensation Committee of the Company has approved five grants vide their meeting held on June 14, 2006; March 19, 2007, September 28, 2007, June 14, 2008 and June 26, 2009. As per the plan, Options granted under ESOP would vest in not less than one year and not more than five years from the date of grant of such options. Vesting of options is subject to continued employment with the company. The plan is an equity settled plan.

6. Estimated amount of contracts remaining to be executed on Capital Account and not provided for (Net of Advances) are Rs. 75.58 Crores (Rs. 25.80 Crores.)

7. LOANS AND ADVANCES GIVEN TO SUBSIDIARIES

The details are provided as required by Schedule VI of Companys Act, 1956 and SEBI circular SMD/policy cir-2/2003 dated 10 January, 2003 of the listing agreement.

Outstanding Loans/Advance given to subsidiary Sterlite Infrastructure Private Limited is Rs. Nil Crore (Rs. 0.31 Crore). The maximum amount outstanding from Sterlite Infrastructure Private Limited during the year is Rs. 0.56 Crore (Rs. 0.31 Crore).

Outstanding Loans/Advance (including interest) given to subsidiary Sterlite Infra-tech Limited is Rs. 6.56 Crores (Rs. Nil). The maximum amount outstanding from Sterlite Infra-tech Limited during the year is Rs. 6.59 Crores (Rs Nil).

Outstanding Loans/Advance given to subsidiary East North Interconnection Company Limited is Rs. 21.87 Crores (Rs. Nil). The maximum amount outstanding from East North Interconnection Company Limited during the year is Rs. 21.87 Crores (Rs. Nil).

8. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund.

9. RELATED PARTY DISCLOSURES

Related party disclosures as required by AS-18, Related Party Disclosures issued by the Institute of Chartered Accountants of India and notified under the Companies (Accounting Standards) Rules, 2006 are given below:

(a) Name of related party and nature of its relationship:

(i) Subsidiary

Sterlite Infrastructure Private Limited

Sterlite Infratech Limited (*) (100% subsidiary incorporated in December 2009)

East North Interconnection Company Limited (**) (The Company was acquired on March 31, 2010)

(ii) Key Management Personnel

Mr. Pravin Agarwal

Dr. Anand Agarwal

(iii) Investing Company

Twin Star Overseas Limited.

(b) There are no provisions for doubtful debts or no amounts have been written off in respect of debts due to or from related parties.

10. OPERATING LEASES

The Company has taken Office Buildings on Operating lease. The lease term is for a period of three years and renewable at the option of the Company. Disclosures in respect of Operating Leases of office buildings as per the requirement of Notified AS-19 under the Companies (Accounting Standard) Rules, 2006 on Leases issued by The Institute of Chartered Accountants of India, is as under:

(a) Lease payments recognised in the statement of Profit and Loss for the period is Rs. 0.85 Crore (Rs. 1.23 Crores).

(b) The future minimum lease payments payable over the next one-year is Rs. 0.53 Crore (Rs. 1.37 Crores).

(c) The future minimum lease payments payable later than one year but not later than five year is Rs 0.54 Crore (Rs. 1.92 Crores).

11. The disclosures as per AS-15, Employee benefits, issued by the Institute of Chartered Accountants of India and notified under the Companies (Accounting Standards) Rules, 2006 are as follows:-

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with Life Insurance Corporation of India in the form of a qualifying insurance policy.

12. CONTINGENT LIABILITIES INCLUDING INTEREST AND PENALTY

(Rs. inCrores)

Sr. No. particulars 2009-2010 2008-2009

1. Disputed Liabilities in Appeal

a) Sales Tax 0.59 0.59

b) Excise Duty 78.69 78.80

c) Customs Duty 74.31 74.52

d) Service Tax 2.45 2.45

e) Claims lodged by a Bank Against the company (*) 18.87 18.87

f) Claims against the company not acknowledged as Debt 2.07 2.78

g) Excise Duty Case in Supreme Court (Refer Note 8, Schedule 21)

2. Outstanding amount of Export obligation against Advance Licence 58.99 0.37

3. The company has given Corporate Guarantee to the Income Tax Department on behalf of group companies. The outstanding amount is Rs. 114.00 Crores (Rs. 114.00 Crores) on this account as at the year-end.

The Company has deposited Rs. Nil (Rs. 8.14 Crores) under protest against above contingent liabilities.

The Company has not provided for disputed Sales Tax, Excise Duty, Customs Duty and Service Tax arising from disallowances made in assessments which are pending with Appellate Authorities for its decision.

It is not practicable to indicate the uncertainties which may affect the future outcome and estimate the financial effect of the above liabilities.

(*) In earlier year, one of the bank of the Company had wrongly debited an amount of Rs. 18.87 Crores, towards import consignment under Letter of Credit not accepted by the Company, owing to discrepancies in the documents. The Company has filed the case against the bank in the High Court of Mumbai. The bank has also filed a claim against the Company in the Debt Recovery Tribunal. The Company does not believe that any liability will arise to the Company.

13. Expenditure of Rs. 4.39 Crores (Rs. Nil) and 0.35 Crore (Rs. 2.30 Crores) on account of financing cost relating to borrowed funds for construction or acquisition of fixed assets is debited to "Fixed Assets" and "Capital work-in-Progress" respectively.

14. Excise duty on sales amounting to Rs. 63.87 Crores (Rs. 100.47 Crores) has been reduced from sales in profit & loss account and excise duty on increase/decrease in stock amounting to Rs. 0.83 Crore (Rs. (0.11) Crore) has been disclosed in Schedule 15 of financial statements.

15. OTHER NOTES

(a) Effective February 25, 2010, the Company has subdivided the face value of equity shares from Rs. 5 each to Rs. 2 each (share split), after obtaining shareholders approval vide Extra-Ordinary General Meeting held on February 25, 2010. Accordingly, the number of equity shares and face value of shares disclosed in the financial statements have been adjusted for the impact of share split. Further, the basic and diluted earnings per share disclosed have been computed for the current year and recomputed for the previous year based on the revised face value of Rs. 2 each. In the same meeting the Company has declared bonus shares in the ratio of 1:1 to all existing shares holders along with outstanding equity share warrants and outstanding ESOP scheme as disclosed in the Note 9 of Schedule 21.

During the current year, the company has issued 16,125,000 share warrants at a price of Rs. 26 per warrant and 18,250,000 warrants at a price of Rs. 59.40 per warrant to Twinstar Overseas Limited a promoter of the Company, 16,125,000 shares have been converted into equity shares in the ratio of 1:1 and bonus shares in the ratio of 1:1 have also been given on these shares. The balance warrants outstanding as at year end aggregating 18,250,000 are convertible within a period of 18 months from the date of issue.

16. PREVIOUS YEAR COMPARATIVES

Previous Years figures have been regrouped where necessary to confirm to current years classification.

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