Home  »  Company  »  Vedanta  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Vedanta Ltd.

Mar 31, 2017

Notes:

a) Additions to mining property includes deferred stripping cost of Rs.4.13 Crore (March 31, 2016 Nil

b) Capital work-in-progress is net of impairment of Rs.539.90 Crore (March 31, 2016 Rs.339.20 Crore, April 01, 2015 Rs.213.84 Crore). (Refer note-34)

c) Certain property, plant and equipment are pledged as collateral against borrowings, the details related to which have been described in Note 19 on “Borrowings”.

d) In accordance with the exemption given under Ind AS 101, which has been exercised by the Company, a first time adopter can continue its previous GAAP policy for accounting for exchange differences arising from translation of long-term foreign currency monetary items recognised in the previous GAAP financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period i.e. April 01, 2016.(Refer note 55- First time adoption of Ind AS)

Accordingly, foreign currency exchange differences arising on translation/settlement of long-term foreign currency monetary items acquired before April 01, 2016 pertaining to the acquisition of a depreciable asset amounting to Rs.4.16 Crore loss (March 31, 2016 Rs.33.02 Crore loss) are adjusted to the cost of respective item of property, plant and equipment which is included in foriegn exchange difference above.

Capital work-in-progress is net of foreign currency exchange differences of Rs.27.12 Crore gain adjusted during the year (March 31, 2016 Rs.114.44 Crore loss).

e) Gross block of property, plant and equipment includes Rs.31,966.62 Crore (March 31, 2016 Rs.31,939.92 Crore, April 01, 2015 Rs.28,633.24 Crore) representing Company’s share of assets co-owned with the joint venture partners. Accumulated depreciation and impairment on these assets is Rs.29,790.01 Crore (March 31, 2016 Rs.28,763.54 Crore, April 01, 2015 Rs.20,872.23 Crore) and net book value is Rs.2,176.61 Crore (March 31, 2016 Rs.3,176.38 Crore, April 01, 2015 Rs.7,761.01 Crore).

Capital work-in-progress includes Rs.1,001.18 Crore (March 31, 2016 Rs.1,781.81 Crore, April 01, 2015 Rs.2,687.81) representing Company’s share of assets coowned with the joint venture partners.

Exploration intangible assets under development represents Company’s share of assets co-owned with the joint venture partners.

h) Freehold Land includes Rs.110.61 Crore (March 31, 2016 Rs.68.52 Crore, April 01, 2015 Rs.64.66 Crore), accumulated amortisation of Rs.81.51 Crore (March 31, 2016 Rs.60.76 Crore and April 01, 2015 Rs.52.70 Crore), which is available for use during the lifetime of the Production Sharing Contract of the respective Oil and Gas blocks.

1 Financial assets- non current: Investments

a. Pursuant to the Government of India’s policy of disinvestment, the Company in April 2002 acquired 26% equity interest in Hindustan Zinc Limited (HZL) from the Government of India. Under the terms of the Shareholder’s Agreement (‘SHA’), the Company had two call options to purchase all of the Government of India’s shares in HZL at fair market value. The Company exercised the first call option on August 29, 2003 and acquired an additional 18.9% of HZL’s issued share capital. The Company also acquired an additional 20% of the equity capital in HZL through an open offer, increasing its shareholding to 64.9%. The second call option provided the Company the right to acquire the Government of India’s remaining 29.5% share in HZL. This call option was subject to the right of the Government of India to sell 3.5% of HZL shares to HZL employees. The Company exercised the second call option on July 21, 2009. The Government of India disputed the validity of the call option and refused to act upon the second call option. Consequently the Company invoked arbitration which is in the early stages. The next date of hearing is scheduled for July 15, 2017. Meanwhile, the Government of India without prejudice to the position on the Put/Call option issue has received approval from the Cabinet for disinvestment and the Government is looking to divest through the auction route.

b. Pursuant to the Government of India’s policy of divestment, the Company in March 2001 acquired 51% equity interest in BALCO from the Government of India. Under the terms of the SHA, the Company had a call option to purchase the Government of India’s remaining ownership interest in BALCO at any point from March 2, 2004. The Company exercised this option on March 19, 2004. However, the Government of India contested the valuation and validity of the option and contended that the clauses of the SHA violate the erstwhile Companies Act, 1956 by restricting the rights of the Government of India to transfer its shares and that as a result such provisions of the SHA were null and void. In the arbitration filed by the Company, the arbitral tribunal by a majority award rejected the claims of the Company on the ground that the clauses relating to the call option, the right of first refusal, the “tagalong” rights and the restriction on the transfer of shares violate the erstwhile Companies Act, 1956 and are not enforceable.

The Company has challenged the validity of the majority award before the Hon’ble High Court at Delhi and sought for setting aside the arbitration award to the extent that it holds these clauses ineffective and inoperative. The Government of India also filed an application before the High Court of Delhi to partially set aside the arbitral award in respect of certain matters involving valuation. The matter is currently scheduled for hearing by the Delhi High Court on July 10, 2017. Meanwhile, the Government of India without prejudice to its position on the Put/Call option issue has received approval from the Cabinet for divestment and the Government is looking to divest through the auction route.

On January 9, 2012, the Company offered to acquire the Government of India’s interests in HZL and BALCO for Rs.15,492.00 Crore and Rs.1,782.00 Crore respectively. This offer was separate from the contested exercise of the call options, and Company proposed to withdraw the ongoing litigations in relation to the contested exercise of the options should the offer be accepted. To date, the offer has not been accepted by the Government of India and therefore, there is no certainty that the acquisition will proceed.

I n view of the lack of resolution on the options, the non response to the exercise and valuation request from the Government of India, the resultant uncertainty surrounding the potential transaction and the valuation of the consideration payable, the Company considers the strike price of the options to be at the fair value, which is effectively nil, and hence the call options have not been recognised in the financial statements.

c. The Company’s investment in CMHPL was for funding the operations of an oil and gas block in Srilanka, held by CMHPL’s step down subsidiary, Cairn Lanka Private Limited. Given the level of gas prices and fiscal terms, the development of hydrocarbons in the said block was not commercially viable. Therefore, the value of the investment had been considered as permanently diminished in the earlier years. The said subsidiary has been transferred to Cairn Energy Hydrocarbons Limited during the year ended March 31, 2016.

d. During the current year, the Company made an investment of Rs.14,729.58 Crore in 220 Crore equity shares of USD 1 each of its subsidiary Bloom Fountain Limited.

e. During the year ended March 31, 2016, the Company had subscribed to Compulsorily Convertible Debentures (CCDs) of Rs.100 each at a premium of Rs.900 each carrying coupon of 2% per annum issued by its wholly owned subsidiary Malco Energy Limited (‘MALCO’). CCDs shall be compulsorily convertible into equity shares not later than 10 years from the date of issue of such CCDs or at such other dates as may be mutually agreed between the parties at the fair value prevailing at the date of conversion. During the current year, the coupon rate of these CCD’s have been changed to 0% and the conversion ratio also has been fixed at the fair value as on March 31, 2016.

f. During the year, the Company disposed of its investment in its subsidiary “Sterlite Infraventures Limited” and incurred a loss of Rs.2.66 Crore on the same, which has been recognised as an expense under Other Expenses.

g. During the year pursuant to demerger of “Sterlite Technologies Limited” into “Sterlite Technologies Limited” and “Sterlite Power Transmission Limited”, 9,52,859 shares of “Sterlite Power Transmission Limited” have been alloted to the Company.

2 Non-current financial assets - Others

(i) Bank deposits earns interest at fixed rate based on respective deposit rate.

(ii) Bank deposits includes site restoration fund amounting to Rs.275.23 Crore (March 31, 2016: Rs.234.91 Crore and April 01, 2015: Rs.172.68 Crore)

3 Other non-current assets

(a) Represents prepayments in respect of land taken under operating leases, being amortised equally over the period of the lease.

(b) IncludesRs.30.00 Crore (March 31, 2016: Rs.30.00 Crore and April 01, 2015: Rs.30.00 Crore), being Company’s share of gross amount of Rs.85.85 Crore paid under protest on account of Education Cess and Secondary Higher Education Cess for the year ended 2013-14.

(c) Includes Rs.45.85 Crore (March 31, 2016: Nil and April 01, 2015: Nil), being Company’s share of gross amount of Rs.130.99 Crore, of excess oil cess paid under OIDA Act.

4 Inventories

(i) For method of valuation of inventories, refer note 3(n).

(ii) Inventories with a carrying amount of Rs.5,124.94 Crore (March 31, 2016 : Rs.4,756.27 Crore and April 01, 2015: Rs.5,047.51 Crore) have been pledged as security against certain bank borrowings of the Company (Refer note 19).

(iii) Inventory held at net realizable value amounted to Rs.1.72 Crore (March 31, 2016 : Rs.48.75 Crore and April 01, 2015: Rs.67.25 Crore).

5 Trade receivables

(i) The interest free credit period given to customers is upto 90 days. Also refer note 50.

(ii) Trade receivables with a carrying value of Rs.1,917.20 Crore (March 31, 2016 : Rs.1,321.08 Crore and April 01, 2015: Rs.744.37 Crore) have been given as collateral towards borrowings (Refer note 19).

(iii) For amounts due and terms and conditions relating to related party receivables see note 53.

Bank deposits earns interest at fixed rate based on respective deposit rate.

a. Includes Rs.0.91 Crore (March 31, 2016 : Rs.3.72 Crore and April 01, 2015: Rs.7.46 Crore) on lien with banks and margin money Nil (March 31, 2016 : Rs.37.69 Crore and April 01, 2015: Nil)

b. Includes Rs.306.38 Crore (March 31, 2016 : Rs.187.00 Crore and April 01, 2015: Rs.187.00 Crore) on lien with banks and margin money Rs.40.02 Crore (March 31, 2016 : Nil and April 01, 2015: Rs.38.13 Crore)

c. Include a sum of Nil (March 31, 2016: Nil and April 01, 2015: Rs.143.12 Crore) deposited in an escrow account for the buyback of its own shares by erstwhile Cairn India Limited.

d. Earmarked unpaid dividend accounts are restricted in use as it relates to unclaimed or unpaid dividend.

6 Share capital

(a) includes 310,632 (March 31, 2016: 310,632 and April 01, 2015: 310,632) equity shares kept in abeyance. These shares are not part of listed equity capital.

(b) includes 39,84,256 (March 31, 2016: Nil and April 01, 2015: Nil) equity shares held by Vedanta Limited ESOS Trust (Refer note 38).

(c) voting rights exercisable upon issuance.

G. Other disclosures

(7) The Company has one class of equity shares having a par value of Rs.1 per share. Each shareholder is eligible for one vote per share held and dividend as and when declared by the Company. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend which is paid as and when declared by the Board of Directors. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.

(8) The Company has one class of 7.5% non-cumulative redeemable preference shares having a par value of Rs.10 per share. Each preference shareholder is eligible for one vote per share as per terms of Section 47(2) of the Companies Act 2013 and dividend as and when declared by the Company. As per the terms of preference shares, these shares are redeemable at par on expiry of 18 months from the date of their allotment. In the event of winding up of Vedanta Limited, the holders of Preference Shares shall have a right to receive repayment of capital paid up and arrears of dividend, whether declared or not, up to the commencement of winding up, in priority to any payment of capital on the equity shares out of the surplus of Vedanta Limited.

(9) ADS shareholders do not have right to attend General meetings in person and also do not have right to vote. They are represented by depository, CITI Bank N.A. New York. As on March 31, 2017, 217,019,900 equity shares were held in the form of 54,254,975 ADS.

(10) I n terms of Scheme of Arrangement as approved by the Hon’ble High Court of Judicature at Mumbai, vide its order dated April 19, 2002 the erstwhile Sterlite Industries (India) Limited (merged with the Company during 2013-14) during 20022003 reduced its paid up share capital by Rs.10.03 Crore There are 199,026 equity shares (March 31, 2016: 198,900 equity shares) of Rs.1 each pending clearance from NSDL/CDSL. The Company has filed application in Hon’ble High Court of Mumbai to cancel these shares, the final decision on which is pending. Hon’ble High Court of Judicature at Mumbai, vide its interim order dated September 06, 2002 restrained any transaction with respect to subject shares.

11 Other equity (Refer statement of changes in equity)

a) General reserve: Under the erstwhile Companies Act 1956, general reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable regulations. The purpose of these transfers was to ensure that if a dividend distribution in a given year is more than 10% of the paid-up capital of the Company for that year, then the total dividend distribution is less than the total distributable results for that year. Consequent to introduction of Companies Act 2013, the requirement to mandatorily transfer a specified percentage of the net profit to general reserve has been withdrawn.

b) Debenture redemption reserve: The Companies Act requires companies that issue debentures to create a debenture redemption reserve from annual profits until such debentures are redeemed. Companies are required to maintain 25% as a reserve of outstanding redeemable debentures. The amounts credited to the debenture redemption reserve may not be utilised except to redeem debentures.

c) Preference share redemption reserve: The Companies Act provides that companies that issue preference shares may redeem those shares from profits of the Company which otherwise would be available for dividends, or from proceeds of a new issue of shares made for the purpose of redemption of the preference shares. If there is a premium payable on redemption, the premium must be provided for, either by reducing the additional paid in capital (securities premium account) or net income, before the shares are redeemed. If profits are used to redeem preference shares, the value of the nominal amount of shares redeemed should be transferred from profits (retained earnings) to the preference share redemption reserve account. This amount should then be utilised for the purpose of redemption of redeemable preference shares. This reserve can be used to issue fully paid-up bonus shares to the shareholders of the Company.

(i) The Company has not defaulted in the repayment of loans and interest as at Balance Sheet date.

(ii) Bank loans availed by the Company are subject to certain covenants relating to interest service coverage, current ratio, debt service coverage ratio, total outside liabilities to total net worth, fixed assets coverage ratio, ratio of total term liabilities to net worth and return on fixed assets. The Company has complied with the covenants as per the terms of the loan agreement.

(iii) Summary of Redeemable non convertible debentures (Carrying Value):

*The debenture holders of these NCDs and the Company have put and call option at the end of 5 years from the respective date of the allotment of the NCDs.

(iv) Summary of Secured borrowings:

The company has taken borrowings in various countries towards funding of its acquisitions, capital expenditure and working capital requirements. The borrowings comprise of funding arrangements from various banks . The Company’s total secured borrowings and a summary of security provided by the Company are as follows -

12 Other non-current liabilities

a. Advances from customers include amount received under long term supply agreements. The advance would be settled by supplying goods as per the terms of the agreement.

b. Represents government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme and Special Economic Zone (SEZ) scheme on purchase of property, plant and equipments accounted for as government grant and being amortised over the useful life of such assets.

The Company has discounted trade receivable on recourse basis of Rs.520.34 Crore (March 31, 2016: Rs.431.05 Crore and April 01, 2015: Rs.629.31 Crore). Accordingly, the monies received on this account are shown as borrowings as the trade receivable does not meet de-recognisation criteria. The above borrowings pertaining to trade receivables discounted has been restated on account of foreign exchange fluctuation.

13 Current financial liabilities - Trade payables

(a) Trade payables are non- interest bearing and are normally settled up to 180 days terms.

(b) Operational Buyer’s Credit is availed from banks at an interest rate ranging from 1% to 2% per annum and are repayable within one year from the date of draw down, based on the letter of comfort issued under working capital facilities sanctioned by domestics banks. Some of these facilities are secured by first pari-passu charge over the present and future current assets of the Company.

14 Current financial liabilities - Others

a Current Maturities of Long Term Borrowings consists of

b Does not include any amounts, due and outstanding, to be credited to Investor Education and Protection Fund except Rs.0.38 Crore (March 31, 2016 Rs.0.38 Crore and April 01, 2015: Rs.0.38 Crore ) which is held in abeyance due to a pending legal case.

c Other liabilities include reimbursement of expenses, provision for expenses, liabilities related to compensation/claim, etc.

15 Other current liabilities

a Statutory and other liabilities mainly includes contribution to PF, ESIC, withholding taxes, excise duty, VAT, service tax etc. Also includes amount payable to owned provident fund trust. (Refer note 53) b Advance from customers includes the amount received under long term supply agreements. The portion of advance that is expected to be settled within next 12 months has been classified as current liability. c Represents current portion of government assistance in the form of the duty benefit availed under Export Promotion Capital Goods (EPCG) Scheme and Special Economic Zone (SEZ) scheme on purchase of property, plant and equipments accounted for as government grant and being amortised over the useful life of such assets.

16 Provisions

Current liabilities - provisions

a) The Company had created a provision for meeting certain obligation of one of its subsidiaries CIG Mauritius Holding Private Limited. As part of internal re-organisation, the said subsidiary was transferred to Cairn Energy Hydrocarbons Limited, another wholly owned subsidiary of the Company and the above obligation was discharged for a total of Rs.264.23 Crore.

17 Employee benefits expense

18 Exceptional items

a. Impairment loss on capital work-in-progress represents non-cash provision during the year ended March 31, 2017 of Rs.200.70 Crore relating to certain old items of capital work-in-progress at the Alumina refinery operations and Rs.115.44 Crore during the year ended March 31, 2016 against the idle plant and equipment and building at Bellary, Karnataka.

b. During the year ended March 31, 2017, the Company has recognized net impairment reversal of Rs.251.39 Crore relating to Rajasthan Oil and Gas block. Of this net reversal, Rs.114.11 Crore charge has been recorded against cost of oil and gas producing facilities and Rs.365.50 Crore reversal has been recorded against exploration intangible assets under development. During the year ended March 31, 2016, the Company had recognised an impairment charge on its oil and gas assets of Rs.16,117.51 Crore mainly relating to Rajasthan oil and gas block, triggered by the significant fall in the crude oil prices, prevailing discount of Rajasthan crude and adverse long term impact of revised oil cess. Of this charge, Rs.3,515.78 Crore had been recorded against cost of oil and gas producing facilities, Rs.9.92 Crore against capital work in progress and Rs.12,591.81 Crore against exploration intangible assets under development.

Further impairment reversal of Rs.313.42 Crore and impairment charge of Rs.3,724.85 Crore during the year ended March 31, 2017 and March 31, 2016 respectively relates to investment in Cairn India Holdings Limited “CIHL” which holds 35% share in Rajasthan oil and gas block through its step down subsidiary Cairn Energy Hydrocarbons Limited.

The recoverable amount of the Company’s share in Rajasthan Oil and Gas cash generating unit “RJ CGU” was determined to be Rs.6,814.54 Crore and Rs.7,522.15 Crore as at March 31, 2017 and March 31,2016 respectively and that of CIHL was determined to be Rs.17,156.78 and Rs.25,147.98 as at March 31, 2017 and March 31, 2016 respectively (valuation of CIHL is represented by its share of discounted cash flows in RJ CGU held through its subsidiary and net fair value of its other assets).

The recoverable amount of the RJ CGU was determined based on the fair value less costs of disposal approach, a level-3 valuation technique in the fair value hierarchy, as it more accurately reflects the recoverable amount based on the Company’s view of the assumptions that would be used by a market participant. This is based on the cash flows expected to be generated by the projected oil and natural gas production profiles up to the expected dates of cessation of production sharing contract (PSC)/cessation of production from each producing field based on the current estimates of reserves and risked resources.

Reserves assumptions for fair value less costs of disposal tests consider all reserves that a market participant would consider when valuing the asset, which are usually broader in scope than the reserves used in a value-in-use test. Discounted cash flow analysis used to calculate fair value less costs of disposal uses assumption for short-term oil price of US$ 54 per barrel for the next one year (March 31, 2016: US$ 41 per barrel) and scales up to long-term nominal price of US$ 68 per barrel three years thereafter (March 31, 2016: US$ 70 per barrel) derived from a consensus of various analyst recommendations. Thereafter, these have been escalated at a rate of 2.5% per annum. The cash flows are discounted using the post-tax nominal discount rate of 10.2% (March 31, 2016: 11%) derived from the post-tax weighted average cost of capital and has been adjusted for risks associated with the business including extension of PSC, which is due for renewal in May 2020.

c. Provision for diminution in value of investments for the year ended March 31, 2017 of Rs.96.53 Crore includes impairment of investment in Bloom Fountain Limited of Rs.409.95 Crore, due to reduction in its value as a result of the effect of merger of Cairn India Limited with Vedanta Limited (Refer note 4). Provision for dimunition in value of investments for the year ended March 31, 2016 of Rs.4,851.19 Crore includes, diminution of investment in Bloom Fountain Limited of Rs.1,126.34 Crore as a result of underlying assets of Western Cluster Limited, due to low iron ore prices and geo-political factors resulting in continued uncertainty in the project.

There are certain income-tax related legal proceedings which are pending against the Company. Potential liabilities, if any have been adequately provided for, and the Company does not currently estimate any probable material incremental tax liabilities in respect of these matters. (Refer note 51)

Certain businesses of the company are eligible for specified tax incentives which are included in the table above as tax holidays and similar exemptions. These are briefly described as under:

Sectoral Benefit - Power Plants

To encourage the establishment of certain power plants, provided certain conditions are met, tax incentives exist to exempt 100% of profits and gains for any ten consecutive years within the 15 year period following commencement of the power plant’s operation. However, such undertakings generating power would continue to be subject to the MAT provisions.

Sectoral benefit - oil & gas

Provided certain conditions are met, profits of newly constructed industrial undertakings engaged in the oil & gas sector may benefit from a deduction of 100% of the profits of the undertaking for a period of seven consecutive years. This deduction is only available to blocks licensed prior to March 31, 2011. However, such businesses would continue to be subject to the MAT provisions.

Erstwhile Cairn India Limited (now merged with Vedanta Limited) benefited from such deductions till March 31, 2016.

Investment Allowance U/s 32 AC of the Income Tax Act -

Incentive for acquisition and installation of new high value plant or Machinery to manufacturing companies by providing an additional deduction of 15% of the actual cost of plant or Machinery acquired and installed during the year. The actual cost of the new Plant or Machinery should exceed Rs.25 Crore. to be eligible for this deduction. Deduction U/s.32AC is available up to financial year March 31, 2017.

(c) Deferred tax assets/liabilities

The Company has accrued significant amounts of deferred tax. The majority of the deferred tax liability represents accelerated tax relief for the depreciation of property, plant and equipment and the depreciation on mining reserves, net of losses carried forward by Vedanta Limited (post the re-organisation) and unused tax credit in the form of MAT credits carried forward. Significant components of Deferred tax (assets) & liabilities recognized in the standalone statements of financial position as follows:

Deferred tax assets on carry forward unused tax losses have been recognised to the extent of deferred tax liabilities on taxable temporary differences available. It is expected that any reversals of the deferred tax liability would be offset against the reversal of the deferred tax asset.

Unused tax losses/ unused tax credit for which no deferred tax asset is recognized amount to Rs.Nil, Rs.269.70 Crore and Rs.464.27 Crore as at March 31, 2017, March 31, 2016, April 01, 2015 respectively. The unused tax losses expire as detailed below:

19 Share based payments

The Company offers equity based award plans to its employees, officers and directors through the Company’s stock option plan introduced in the current year, Cairn India’s stock option plan now administered by the Company pursuant to merger with the Company and Vedanta Resources Plc [Vedanta Resources Long-Term Incentive Plan (“LTIP”), Employee Share Ownership Plan (“ESOP”), Performance Share Plan (“PSP”) and Deferred Share Bonus Plan (“DSBP”)] collectively referred as ‘VRPLC ESOP’ scheme.

The Vedanta Limited Employee Stock Option Scheme (ESOS) 2016

During the year, the Company introduced an Employee Stock Option Scheme 2016 (“ESOS”), which was approved by the Vedanta Limited shareholders to provide equity settled incentive to all employees of the Company including holding and subsidiary companies. The ESOS scheme includes both tenure based and performance based on stock option awards. The value of options that can be awarded to members of the wider management group is calculated by reference to the grade average CTC and individual grade of the employee. The performance conditions attached to the award is measured by comparing Company’s performance in terms of Total Shareholder Return (TSR) over the performance period with the performance of two group of comparator companies (i.e. Indian and global comparator companies) defined in the scheme. The extent to which an award vests will depend on the Vedanta Limited’s TSR rank against a group or groups of peer companies at the end of the performance period and as moderated by the Remuneration Committee. Dependent on the level of employee, part of these awards will be subject to a continued service condition only with the remainder measured in terms of TSR.

The performance condition is measured by taking Vedanta Limited’s TSR at the start and end of the performance period (without averaging), and comparing its performance with that of the comparator group or groups. The information to enable this calculation to be carried out on behalf of the Remuneration Committee (the Committee) is provided by the Company’s advisers. The Committee considers that this performance condition, which requires that the Vedanta Limited’s total return has outperformed a group of industry peers, provides a reasonable alignment of the interests of participants with those of the shareholders.

Initial awards under the ESOS were granted on December 15, 2016. The exercise price of the awards is Rs.1 per share and the performance period is three years, with no re-testing being allowed.

The fair value of all awards has been determined at the date of grant of the award allowing for the effect of any market-based performance conditions. This fair value, adjusted by the Company’s estimate of the number of awards that will eventually vest as a result of non-market conditions, is expensed on over the vesting period.

The fair values were calculated using the Black-Scholes Model for tenure based awards and Monte Carlo simulation model for performance based awards. The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility has been calculated using historical return indices over the period to date of grant that is commensurate with the performance period of the award. The volatilities of the industry peers have been modelled based on historical movements in the indices over the period to date of grant which is also commensurate with the performance period for the option. The history of return indices is used to determine the volatility and correlation of share prices for the comparator companies and is needed for the Monte Carlo model to estimate their future TSR performance relative to the Vedanta Limited’s TSR performance. All options are assumed to be exercised immediately after vesting, as the exercise period is 6 months.

The Company recognized total expenses of Rs.6.68 Crore related to above equity settled share-based payment transactions in the year ended March 31, 2017 out of which Rs.3.27 Crore was recovered from group companies. Equity settled employee stock options reserve outstanding with respect to the above scheme as at year end is Rs.6.68 Crore.

Employee stock option plans of estwhile Cairn India Limited:

The Company has provided various share based payment schemes to its employees. During the year ended 31 March 2017, the following schemes were in operation:

CIPOP plan (including phantom options)

Options will vest (i.e., become exercisable) at the end of a “performance period” which has been set by the remuneration committee at the time of grant (although such period will not be less than three years). However, the percentage of an option which vests on this date will be determined by the extent to which pre-determined performance conditions have been satisfied. Phantom options are exercisable proportionate to the period of service rendered by the employee subject to completion of one year.

CIESOP plan (including phantom options)

There are no specific vesting conditions under CIESOP plan other than completion of the minimum service period. Phantom options are exercisable proportionate to the period of service rendered by the employee subject to completion of one year.

Volatility is the measure of the amount by which the price has fluctuated or is expected to fluctuate during the period. The measure of volatility used in Black-Scholes option-pricing model is the annualized standard deviation of the continuously compounded rates of return on the stock over a period of time. Time to maturity /expected life of options is the period for which the Company expects the options to be live. Time to maturity has been calculated as an average of the minimum and maximum life of the options.

Modification in terms of Employee stock option plans

Pursuant to the merger of Cairn India Limited with the Company as referred to in note 4, the stock option plans of Cairn India Limited stands modified as follows:

a) The exercise price of CIESOP plan is reduced by Rs.40 per option.

b) The liability w.r.t. the CIPOP plans (including phantom options) has been fixed based on the share price of Cairn India Limited as on March 27, 2017, being the effective date of merger. Accordingly, the outstanding employee stock option liability (Equity Settled) and Provision for employee stock option (Cash Settled) of Rs.62.51 Crores and Rs.8.25 Crores respectively, has been transferred to financial liability.

The incremental fair value for the remaining stock options, being the difference between the fair value of the modified equity instrument and that of the original equity instrument, has been re-estimated on the effective date of merger and the difference has been recognised in the statement of profit and loss account.

Employee share option plan of Vedanta Resources Plc

The value of shares that are awarded to members of the group is calculated by reference to the individual fixed salary and share-based remuneration consistent with local market practice. ESOP scheme of VRPLC is both tenure and performance based share schemes. The awards are indexed to and settled by Parent’s shares (Vedanta Resources Plc shares as defined in the scheme). The awards have a fixed exercise price denominated in Parent’s functional currency (10 US cents per share), the performance period of each award is three years and is exercisable within a period of six months from the date of vesting beyond which the option lapses.

Amount recovered by the Parent and recognized by the Company in the Statement of Profit and Loss (net of capitalisation) for year ended March 31, 2017 is Rs.33.89 Crore (March 31, 2016: Rs.33.04 Crore). The Company considers these amounts as not material and accordingly has not provided further disclosures.

20 Employee benefit plans

a) Defined contribution plans

The Company contributed a total of Rs.54.45 Crore for the year ended March 31,2017 and Rs.55.85 Crore for the year ended March 31, 2016 to the following defined contribution plans.

Central provident fund

In accordance with The Employees Provident Funds Act, 1952 employees are entitled to receive benefits under the provident fund. Both the employee and the employer make monthly contributions to the plan at a predetermined rate (12% for fiscal year 2017 and 2016) of an employee’s basic salary. All employees have an option to make additional voluntary contributions. These contributions are made to the fund administered and managed by the Government of India (GOI) or to independently managed and approved funds. The Company has no further obligations under the fund managed by the GOI beyond its monthly contributions which are charged to the statement of profit and loss in the period they are incurred. Where the contributions are made to independently managed and approved funds, shortfall in actual return, if any, from the return guaranteed by the State are made by the employer, these are accounted for as defined benefit plans. The benefits are paid to employees on their retirement or resignation from the Company.

Superannuation

Superannuation, another pension scheme applicable in India, is applicable only to senior executives. The Company holds a policy with Life Insurance Corporation of India (“LIC”), to which it contributes a fixed amount relating to superannuation and the pension annuity is met by LIC as required, taking into consideration the contributions made. The Company has no further obligations under the scheme beyond its monthly contributions which are charged to the Statement of Profit and Loss in the period they are incurred.

b) Defined benefit plans

Contribution to provident fund (the ‘trust’)

The provident fund of the Iron Ore division is exempted under section 17 of The Employees Provident Fund and Miscellaneous Provisions Act, 1952. Conditions for grant of exemption stipulates that the employer shall make good deficiency, if any, between the return guaranteed by the statute and actual earning of the Fund. Based on actuarial valuation in accordance with Ind AS 19 and Guidance note issued by Institute of Actuaries of India for interest rate guarantee of exempted provident fund liability of employees, there is no interest shortfall in the funds managed by the trust and hence there is no further liability as on March 31, 2017 and March 31, 2016. Having regard to the assets of the Fund and the return on the investments, the Company does not expect any deficiency in the foreseeble future.

The Company contributed a total of Rs.10.82 Crore for the year ended March 31,2017 and Rs.6.29 Crore for the year ended March 31, 2016, The present value of obligation and the fair value of plan assets of the trust are summarised below.

Gratuity plan

In accordance with the Payment of Gratuity Act, 1972, the Company contributes to a defined benefit plan (the “Gratuity Plan”) for employees who have completed 5 years of service. The Gratuity Plan provides a lump sum payment to vested employees at retirement, disability or termination of employment being an amount based on the respective employee’s last drawn salary and the number of years of employment with the Company. The Gratuity plan is a funded plan and the Company makes contribution to recognised funds in India.

Based on actuarial valuations conducted as at year end, a provision is recognised in full for the benefit obligation over and above the funds held in the Gratuity Plan.

Principal actuarial assumptions

Principal actuarial assumptions used to determine the present value of the defined benefit obligation are as follows:

The actual return on plan assets was Rs.7.30 Crore for the year ended March 31, 2017 and Rs.8.76 Crore for the year ended March 31, 2016.

The weighted average duration of the defined benefit obligation is 16.60 years and 17.60 years as at March 31, 2017 and March 31, 2016, respectively.

The Company expects to contribute Rs.18.99 Crore to the funded defined benefit plans in fiscal year 2018.

Sensitivity analysis

Below is the sensitivity analysis determined for significant actuarial assumptions for the determination of defined benefit obligations and based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period while holding all other assumptions constant.

The above sensitivity analysis may not be representative of the actual benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

In presenting the above sensitivity analysis, the present value of defined benefit obligation has been calculated using the projected unit credit method at the end of reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.

Risk analysis

Company is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined benefits plans, and management’s estimation of the impact of these risks are as follows:

Interest risk

A decrease in the interest rate on plan assets will increase the plan liability.

Longevity risk/ Life expectancy

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.

Salary growth risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.

Investment risk

The Gratuity plan is funded with Life Insurance Corporation of India (LIC) and ICICI Prudential Life (ICICI). Company does not have any liberty to manage the fund provided to LIC and ICICI prudential.

The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.

21 Capital management

The Company’s objectives when managing capital is to safeguard continuity, maintain a strong credit rating and healthy capital ratios in order to support its business and provide adequate return to shareholders through continuing growth. The Company’s overall strategy remains unchanged from previous year.

The Company sets the amount of capital required on the basis of annual business and long-term operating plans which include capital and other strategic investments

The funding requirements are met through a mixture of equity, internal fund generation and other non-current borrowings. The Company’s policy is to use current and non-current borrowings to meet anticipated funding requirements.

The Company monitors capital on the basis of the gearing ratio which is net debt divided by total capital (equity plus net debt) . The Company is not subject to any externally imposed capital requirements.

Net debt are non-current and current debts as reduced by cash and cash equivalents, other bank balances and current investments. Equity comprises all components including other comprehensive income.

22 The Company has incurred an amount of Rs.48.48 Crore (March 31, 2016 Rs.66.17 Crore) towards Corporate Social Responsibility (CSR) as per Section 135 of the Companies Act, 2013 and is included in other expenses.

23 Oil & gas reserves and resources

The Company’s gross reserve estimates are updated atleast annually based on the forecast of production profiles, determined on an asset-by-asset basis, using appropriate petroleum engineering techniques. The estimates of reserves and resources have been derived in accordance with the Society for Petroleum Engineers “Petroleum Resources Management System (2007)” The changes to the reserves are generally on account of future development projects, application of technologies such as enhanced oil recovery techniques and true up of the estimates. The management’s internal estimates of hydrocarbon reserves and resources at the period end, based on the current terms of the PSCs, are as follows: :

24 Advance(s) in the nature of Loan (Regulation 34 of Listing Obligations & Disclosure Requirements):

a) Loans and advances in the nature of Loans

(b) None of the loanee have made, per se, investment in the shares of the Company.

(c) Investments made by Sterlite Ports Limited in Maritime Ventures Private Limited - 10,000 equity shares and Goa Sea Port - 50,000 equity shares

Investments made by Sesa Resources Limited in Sesa Mining Corporation Limited - 11,50,000 equity shares and Goa Maritime Private Limited- 5,000 Shares

(d) The above loans and advances to subsidiary fall under the category of loans and advances in the nature of loans where there is no repayment schedule and are repayable on demand.

(e) As per the Company’s policy, loan to employees are not considered in (a) above.

25 Interest in other entities

a) Subsidiaries

The Company has a number of subsidiaries held directly and indirectly by the Company which operate and are incorporated around the world. Following are the details of shareholdings in the subsidiaries.

b) The Company participates in several unincorporated joint operations which involve the joint control of assets used in oil and gas exploration, development and producing activities which are as follows:

c) Interest in associates and joint ventures

Set out below are the associates and joint ventures of the Company as at March 31, 2017 which, in the opinion of the directors, are not material to the Company. The country of incorporation or registration is also their principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.

26 The Scheme of Amalgamation and Arrangement amongst Sterlite Energy Limited (‘SEL’), Sterlite Industries (India) Limited (‘Sterlite’), Vedanta Aluminium Limited (‘VAL’), Ekaterina Limited (‘Ekaterina’), Madras Aluminium Company Limited (‘Malco’) and the Company (the “Scheme”) had been sanctioned by the Honourable High Court of Madras and the Honourable High Court of Judicature of Bombay at Goa and was given effect to in the year ended March 31, 2014.

Subsequently the above orders of the Hon’ble High Court of Bombay and Madras have been challenged by Commissioner of Income Tax, Goa and Ministry of Corporate Affairs through a Special Leave Petition before the Supreme Court and also by a creditor and a shareholder of the Company. The said petitions are pending for hearing and admission.

27 Financial guarantees

The Company has issued financial guarantees to banks on behalf of and in respect of loan facilities availed by its group companies. In accordance with the policy of the Company (refer note 3(j) the Company has designated such guarantees as ‘Insurance Contracts’ The Company has classified financial guarantees as contingent liabilities.

Accordingly, there are no assets and liabilities recognized in the balance sheet under these contracts other than those related to commission income recognized and/or receivable from such group companies as disclosed in note 53.

28 Leases

Operating lease commitments - as lessee

The Company is having an operating lease in relation to the office premises, with a non-cancellable lease period of 3 years. There are no restrictions imposed by lease arrangements and there are no subleases. There are no contingent rents. The information required with respect to non-cancellable leases are as follow:

29 Financial instruments

This section gives an overview of the significance of financial instruments for the company and provides additional information on the balance sheet. Details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 and Note 3.

A. Financial assets and liabilities:

The accounting classification of each category of financial instruments, and their carrying amounts, are set out below:

B. Fair value hierarchy

The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by valuation techniques:

(i) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

(ii) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

(iii) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

The below table summarises the categories of financial assets and liabilities as at March 31, 2017, March 31, 2016 and April 01, 2015 measured at fair value:

The fair value of the financial assets and liabilities are at the amount that would be received to sell an asset and paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to estimate the fair values:

Investments traded in active markets are determined by reference to quotes from the financial institutions at the reporting date; for example: Net asset value (NAV) for investments in mutual funds declared by mutual fund house. For other listed securities traded in markets which are not active, the quoted price is used wherever the pricing mechanism is same as for other marketable securities traded in active markets. Other current investments are valued on the basis of market trades, poll and primary issuances for securities issued by the same or similar issuer and for similar maturities or based on the applicable spread movement for the security derived based on the aforementioned factor(s) [a level 1 technique].

Non-current fixed-rate and variable-rate borrowings: Fair value has been determined by the Company based on parameters such as interest rates, specific country risk factors, and the risk characteristics of the financed project [a level 2 technique].

Other non-current financial assets and liabilities: Fair value is calculated using a discounted cash flow model with market assumptions, unless the carrying value is considered to approximate to fair value [a level 3 technique].

Derivative financial assets/liabilities: The Company enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Interest rate swaps, foreign exchange forward contracts and commodity forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies, interest rate curves and forward rate curves of the underlying commodity. Commodity contracts are valued using the forward LME rates of commodities actively traded on the listed metal exchange i.e. London Metal Exchange, United Kingdom (U.K.) [a level 2 technique].

Trade receivables, cash and cash equivalents, other bank balances, loans, other financial assets, current borrowings, trade payables and other current financial liabilities: approximate their carrying amounts largely due to the short-term maturities of these instruments.

The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationship and the value of other financial instruments recognised at fair value.

The estimated fair value amounts as at March 31, 2017 have been measured as at that date. As such, the fair values of these financial instruments subsequent to reporting date may be different than the amounts reported at each year-end.

There were no transfers between Level 1, Level 2 and Level 3 during the year. .

C. Risk management framework

The Company’s businesses are subject to several risks and uncertainties including financial risks.

The Company’s documented risk management polices act as an effective tool in mitigating the various financial risks to which the business is exposed to in the course of the daily operations. The risk management policies cover areas such as liquidity risk, commodity price risk, foreign exchange risk, interest rate risk, counterparty and concentration of credit risk and capital management. Risks are identified through a formal risk management programme with active involvement of senior management personnel and business managers at both corporate and division level. Each operating division has in place risk management processes which are in line with the Company’s policy. Each significant risk has a designated ‘owner’ within the Company at an appropriate senior level. The potential financial impact of the risk and its likelihood of a negative outcome are regularly updated.

The risk management process is coordinated by the Management Assurance function and is regularly reviewed by the Company’s Audit Committee. The Audit Committee is aided by the CFO Committee and the Risk Management Committee, which meets regularly to review risks as well as the progress against the planned actions. Key business decisions are discussed at the meetings of the CFO Committee and Executive Committee. The overall internal control environment and risk management programme including financial risk management is reviewed by the Audit Committee on behalf of the Board.

The risk management framework aims to:

- improve financial risk awareness and risk transparency

- identify, control and monitor key risks

- identify risk accumulations

- provide management with reliable information on the Company’s risk situation

- improve financial returns

Treasury management

Treasury management focuses on liability management, capital protection, liquidity maintenance and yield maximisation. The treasury policies are approved by the Committee of the Board. Daily treasury operations of the Company are managed by the finance team within the framework of the Company’s treasury policies. Long-term fund raising including strategic treasury initiatives are handled by a central team. A monthly reporting system exists to inform senior management of investments, debt, currency, commodity and interest rate derivatives. The Company has a strong system of internal control which enables effective monitoring of adherence to Company’s policies. The internal control measures are supplemented by regular internal audits.

The investment portfolio at the Company is independently reviewed by CRISIL Limited and it has been rated as “Very Good” meaning highest safety. The investments are made keeping in mind safety, liquidity and yield maximisation.

The Company uses derivative instruments to manage the exposure in foreign currency exchange rates, interest rates and commodity prices. The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into complex derivative transactions to manage the treasury and commodity risks. Both treasury and commodities derivative transactions are normally in the form of forward contracts, interest rate and currency swaps and these are in line with the Company’s policies.

Commodity price risk

The Company is exposed to the movement of base metal commodity prices on the London Metal Exchange. Any decline in the prices of the base metals that the Company produces and sells will have an immediate and direct impact on the profitability of the business. As a general policy, the Company aims to sell the products at prevailing market prices. The commodity price risk in import of Copper Concentrate and Alumina is hedged on back-to back basis ensuring no price risk for the business. Hedging is used primarily as a risk management tool and, in some cases, to secure future cash flows in cases of high volatility by entering into forward contracts or similar instruments. The hedging activities are subject to strict limits set out by the Board and to a strictly defined internal control and monitoring mechanism. Decisions relating to hedging of commodities are taken at the Executive Committee level, basis clearly laid down guidelines.

Whilst the Company aims to achieve average LME prices for a month or a year, average realised prices may not necessarily reflect the LME price movements because of a variety of reasons such as uneven sales during the year and timing of shipments.

Financial instruments with commodity price risk are entered into in relation to following activities:

- economic hedging of prices realised on commodity contracts

- cash flow hedging of revenues, forecasted highly probable transactions

Aluminum

The requirement of the primary raw material, alumina, is partly met from own sources and the rest is purchased primarily on negotiated price terms. Sales prices are linked to the LME prices. At present the Company on selective basis hedges the aluminium content in outsourced alumina to protect its margins. The Company also enters into hedging arrangements for its aluminium sales to realise average month of sale LME prices.

Copper

The Company’s custom smelting copper operations at Tuticorin is benefited by a natural hedge except to the extent of a possible mismatch in quotational periods between the purchase of concentrate and the sale of finished copper. The Company’s policy on custom smelting is to generate margins from Treatment charges /Refining charges (TC/RC), improving operational efficiencies, minimising conversion cost, generating a premium over LME on sale of finished copper, sale of by-products and from achieving import parity on domestic sales. Hence, mismatches in quotational periods are managed to ensure that the gains or losses are minimised. The Company hedges this variability of LME prices through forward contracts and tries to make the LME price a pass-through cost between purchases of copper concentrate and sales of finished products, both of which are linked to the LME price.

TC/RCs are a major source of income for the Indian copper smelting operations. Fluctuations in TC/RCs are influenced by factors including demand and supply conditions prevailing in the market for mine output. The Company’s copper business has a strategy of securing a majority of its concentrate feed requirement under long-term contracts with mines.

Iron ore

The Company sells its Iron Ore production from Goa on the prevailing market prices and from Karnataka through e-auction route as mandated by State Government of Karnataka in India.

Oil and Gas

The prices of various crude oils are based upon the price of the key physical benchmark crude oil such as Dated Brent, West Texas Intermediate, and Dubai/ Oman etc. The crude oil prices move based upon market factors like supply and demand. The regional producers price their crude basis these benchmark crude with a premium or discount over the benchmark based upon quality differential and competitiveness of various grades.

Natural gas markets are evolving differently in important geographical markets. There is no single global market for natural gas. This could be owing to difficulties in large-scale transportation over long distances as compared to crude oil. Globally, there are three main regional hubs for pricing of natural gas, which are USA (Henry Hub Prices), UK (NBP Price) and Japan (imported gas price, mostly linked to crude oil).

The above sensitivities are based on volumes, costs, exchange rates and other variables and provide the estimated impact of a change in LME prices on profit and equity assuming that all other variables remain constant. A 10% decrease in LME prices would have an equal and opposite effect on the Company’s financial instruments.

Financial risk

The Company’s Board approved financial risk policies comprise liquidity, currency, interest rate and counterparty risk. The Company does not engage in speculative treasury activity but seeks to manage risk and optimize interest and commodity pricing through proven financial instruments.

(a) Liquidity

The Company requires funds both for short-term operational needs as well as for long-term investment programmes mainly in growth projects. The Company generates sufficient cash flows from the current operations which together with the available cash and cash equivalents and short-term investments provide liquidity both in the short-term as well as in the long-term. The Company has been rated by CRISIL Limited (CRISIL) and India Ratings and Research Private Limited (India Rating) for its capital market issuance in the form of CPs and NCDs and for its banking facilities in line with Basel II norms.

CRISIL upgraded the ratings for the Company’s long-term bank facilities and its Non-Convertible Debentures (NCD) programme to CRISIL AA / Stable Outlook from CRISIL AA- / Negative at the beginning of FY2017. The revision happened in three steps in September 2016

- Change in Outlook from Negative to Stable with AA-rating; February 2017 - change in Outlook from Stable to Positive with AA- rating and April 2017 - Upgrade of Ratings from CRISIL AA- / Positive outlook to CRISIL AA / Stable Outlook. The Company has the highest short term rating on its working capital and Commercial Paper Programme at CRISIL A1 . The agency expects that the ramp-up of aluminium, iron ore and power capacities; and stable commodity prices shall aid higher cash flow generation and leverage reduction for the company in near to medium term. Also, the agency shall be guided by extent and timeline for reduction in gross debt for further positive rating action.

India Ratings has revised the outlook on the Company’s ratings from IND AA/ Negative to IND AA/Stable on account of improved financial metrics and completion of the merger with Cairn.

The Company remains committed to maintaining a healthy liquidity, ge


Mar 31, 2015

1 Company overview:

Vedanta Limited [formerly known as Sesa Sterlite Limited/ Sesa Goa Limited] ("Vedanta" or "the Company") is engaged in the business of iron ore mining, non-ferrous metals (copper and aluminium production) and commercial power generation. Vedanta''s equity shares are listed on National Stock Exchange and Bombay Stock Exchange in India and its American depository shares ("ADS") are listed on New York Stock Exchange in United States of America. Each ADS represents four equity shares. Vedanta is majority-owned and controlled subsidiary of Vedanta Resources Plc, the London listed diversified natural resource company.

The Company''s iron ore business (Iron ore) consist of iron ore exploration, mining, beneficiation and exports. Vedanta has iron ore mining operations in the States of Goa and Karnataka. Vedanta is also in the business of manufacturing pig iron and metallurgical coke.

The Company''s copper business (Copper India) principally consists of custom smelting and includes a copper smelter, a refinery, a phosphoric acid plant and power plants at Tuticorin, Tamilnadu and a refinery and two copper rod plants at Silvassa in the Union Territory of Dadra and Nagar Haveli.

The Company''s power business (Jharsuguda 2,400 MW power plant) comprise of 2,400 MW (four units of 600 MW each) thermal coal based power facility in the State of Odisha.

The Company''s aluminium business (Jharsuguda aluminium) principally consists of production of 1.0 mtpa alumina at Lanjigarh, Odisha, production of 0.5 mtpa aluminium at Jharsuguda, Odisha and captive power plants situated at Jharsuguda & Lanjigarh. The Company is also setting up a 1.25 mtpa aluminium smelter at Jharsuguda, 4.0 mtpa of alumina refinery at Lanjigarh and 210 MW at Lanjigarh.

Subsequent to the year end, pursuant to the approval of the members of the Company and the receipt of fresh certificate of incorporation from the Ministry of Corporate Affairs dated April 21,2015, name of the Company has been changed to Vedanta Limited.

During the previous year, pursuant to approval received from Registrar of Companies, the name of the Company had been changed from Sesa Goa to Sesa Sterlite Limited, w.e.f. September 18, 2013.

2. Other disclosures

(1) The Company has one class of equity shares having a par value of Rs. 1 per share. Each shareholder is eligible for one vote per share held and dividend as and when declared by the Company. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend which is paid as and when declared by the Board of Directors. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.

(2) ADS shareholders do not have right to attend General meetings in person and also do not have right to vote.

They are represented by depository, CITI Bank N.A. New York. As on March 31,2015, 221,331,788 equity shares were held in the form of 55,332,947 ADS.

(3) In terms of Scheme of Arrangement as approved by the Hon''ble High Court of Judicature at Mumbai, vide its order dated April 19, 2002 the erstwhile Sterlite Industries (India) Limited during 2002-2003 reduced its paid up share capital by Rs. 10.03 Crore. There are 219,214 equity shares of Rs. 1 each pending clearance from NSDL/CDSL. The Company has filed application in Hon''ble High Court of Mumbai to cancel these shares, the final decision on which is pending. Hon''ble High Court of Judicature at Mumbai, vide its interim order dated September 06, 2002 restrained any transaction with respect to subject shares.

3. Terms and conditions of Long-term borrowings

Secured

a) Redeemable Non Convertible Debentures (NCD''s) includes ;

(i) 9.10% NCDs issued by the Company of Rs. 2,500.00 Crore. These NCDs are secured by way of mortgage on the immovable property of the Company situated at Tuticorin in the State of Tamilnadu and also by way of first ranking pari passu charge over the tangible and intangible movable fixed assets, both present and future of Jharsuguda 2,400 MW power plant with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the tenure of the NCDs. These NCDs are redeemable on April 5, 2023. The debenture holders of these NCDs and the Company have put and call option at the end of the 5 years from the respective date of the allotment of the NCDs.

(ii) NCDs issued by the Company for an aggregate amount of Rs. 2,000.00 Crore. Out of these, Rs. 1,000.00 Crore NCDs are issued at a coupon rate of 9.40% per annum, while another Rs. 1,000.00 Crore NCDs have been issued at a coupon rate of 9.24% per annum. These NCDs are secured by way of mortgage on the immovable property of the Company situated at Sanaswadi in the State of Maharashtra and also by way of hypothecation on the movable fixed assets of Jharsuguda 2,400 MW power plant with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the currency of NCDs. These NCDs are redeemable in tranches of Rs. 500.00 Crore each on December 20, 2022, December 6, 2022, November 27, 2022 and October 25, 2022. In respect of all the four tranches of NCDs, the debenture holders and the Company have put and call option respectively at the end of the 5 years from the respective date of the allotment of the NCDs.

(iii) 11.50% Non Convertible Debentures (NCDs) issued by Aluminium division of Rs. 133.33 Crore [including current maturity of long-term borrowings (Refer note no. 10)] are secured by first pari passu charge in favour of Debenture Trustees on the immovable properties situated at Mauje Ishwarpura, Taluka Kadi, District Mehsana, Gujarat and in the District of Kalahandi, Orissa. These NCDs are further secured by first pari passu charge over the fixed assets of 1MTPA Lanjigarh Alumina Refinery. These NCDs are redeemable on October 22, 2015.

(iv) NCDs issued by the Company of Rs. 1,200.00 Crore in two tranches of Rs. 750.00 Crore and Rs. 450.00 Crore, with an interest rate of 9.17% per annum. These NCDs are secured by way of mortgage on the immovable property of theNCompany situated at Tuticorin in the State of Tamilnadu and also by way of first pari passu charge over the movable ixed assets of Lanjigarh refinery expansion project including 210 MW power plant project, with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the tenure of the NCD. hese NCDs are redeemable on July 4, 2023 for Rs. 750.00 Crore and on July 5, 2023 for Rs. 450.00 Crore. The debenture holders of these NCDs and the Company have put and call option at the end of the 5 years from the respective date of the allotment of the NCDs.

(v) 9.36% NCDs of Rs. 1,500.00 Crore issued by Iron ore division in two tranches of Rs. 975.00 Crore and Rs. 525.00 Crore during the current year. These NCDs are redeemable in two instalments of Rs. 975.00 Crore and Rs. 525.00 Crore payable on October 30, 2017 and December 30, 2017 respectively. These NCDs are secured by way of mortgage on the immovable property of the Company situated at Tuticorin in the State of Tamilnadu and also by way of first ranking pari passu charge over "movable fixed assets" in relation to the Company''s Iron Ore business (Pig Iron & Met Coke assets) and power plant assets located in Goa and the Copper plant assets located at Tuticorin with a security cover of 1.25 times on the face value of outstanding NCDs at all times during the tenure of the NCDs.

b) Term loans from banks includes :

(i) Loan from State Bank of India taken by Aluminium division amounting to Rs. 4,332.50 Crore [including current maturity of long term borrowings Rs. 187.50 Crore (Refer note no. 10)] at an interest rate of 10.60% per annum. The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and

(ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 187.50 Crore within one year, Rs. 250.00 Crore within second year, NRs. 2,000.00 Crore within third to fifth year and Rs. 1,895.00 Crore after fifth year.

(ii) Loan of Rs. 250.00 Crore taken by Aluminium division from Axis Bank at an interest rate of 10.40% per annum.

The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 75.00 Crore in February 2017, Rs. 87.50 Crore in February 2018 and Rs. 87.50 Crore in February 2019.

(in) Loan of Rs. 250.00 Crore taken by Aluminium division from Vijaya Bank at an interest rate of 10.50% per annum.

The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 75.00 Crore in February 2017, Rs. 87.50 Crore in February 2018 and Rs. 87.50 Crore in February 2019.

(iv) Loan of Rs. 500.00 Crore taken by Aluminium division from Corporation Bank at an interest rate of 10.50% per annum. The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 150.00 Crore in February 2017, Rs. 175.00 Crore in February 2018 and Rs. 175.00 Crore in February 2019.

(v) Loan of Rs. 500.00 Crore taken by Aluminium division from Bank of India at an interest rate of 10.50% per annum.

The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 150.00 Crore in February 2017, Rs. 175.00 Crore in February 2018 and Rs. 175.00 Crore in February 2019.

(vi) Loan of Rs. 500.00 Crore taken by Aluminium division from Syndicate Bank at an interest rate of 10.50% per annum.

The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 150.00 Crore in February 2017, Rs. 175.00 Crore in February 2018 and Rs. 175.00 Crore in February 2019.

(vii) Loan from Union Bank of India taken by Aluminium division amounting to Rs. 985.00 Crore [including current maturity of long-term borrowings Rs. 100.00 Crore (Refer note no.

10)] at an interest rate of 10.40% per annum. The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 100.00 Crore within one year, Rs. 140.00 Crore within second year, Rs. 660.00 Crore within third to fifth year and Rs. 85.00 Crore after fifth year.

(viii) Loan from Bank of India taken by Aluminium division amounting to Rs. 1,905.00 Crore [including current maturity of long-term borrowings Rs. 200.00 Crore (Refer note no. 10)] at an interest rate of 10.50% per annum. The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 200.00 Crore within one year, Rs. 280.00 Crore within second year, Rs. 1,320.00 Crore within third to fifth year and Rs. 105.00 Crore after fifth year.

(ix) Loan from Syndicate Bank taken by Aluminium division amounting to Rs. 1,014.75 Crore [including current maturity of long-term borrowings Rs. 102.50 Crore (Refer note no.

10)] at an interest rate of 10.50% per annum. The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 102.50 Crore within one year, Rs. 143.50 Crore within second year, Rs. 676.50 Crore within third to fifth year and Rs. 92.25 Crore after fifth year.

(x) Loan from Bank of Baroda taken by Aluminium division amounting to Rs. 1,980.00 Crore [including current maturity of long-term borrowings Rs. 200.00 Crore (Refer note no. 10)] at an interest rate of 10.50%. The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 200.00 Crore within one year, Rs. 280.00 Crore within second year, Rs. 1,320.00 Crore within third to fifth year and Rs. 180.00 Crore after fifth year.

(xi) Loan from State Bank of Bikaner and Jaipur taken by Aluminium division amounting to Rs. 495.00 Crore [including current maturity of long-term borrowings Rs. 50.00 Crore (Refer note no. 10)] at an interest rate of 10.50% per annum. The loan is secured by (i) first pari passu charge by way of hypothecation of all present and future movable fixed asset of Aluminium division, and (ii) first pari passu charge by way of mortgage on all present and future immovable fixed asset (including leasehold land, if any) acquired or to be acquired for the Aluminium division. The loan is repayable as Rs. 50.00 Crore within one year, Rs. 70.00 Crore within second year, Rs. 330.00 Crore within third to fifth year and Rs. 45.00 Crore after fifth year.

(xii) Loan of Rs. 937.50 Crore [including Rs. 250.00 Crore of current maturity of long-term borrowings (Refer note no. 10)] taken during the year by Jharsuguda 2,400 MW power plant from Canara Bank at an interest rate of 10.50 % per annum.

The loan is secured by way of second pari passu charge on specific fixed assets of Jharsuguda 2,400 MW power plant except agricultural land. The loan is repayable in fifteen equal quarterly instalments of Rs. 62.50 Crore each.

Foreign currency loans From banks includes :

c) External Commercial Borrowings ("ECB") of Aluminium division aggregating Rs. 3,408.41 Crore (US$ 544.55 million) [including current maturity of long-term borrowings Rs. 1,530.69 Crore (Refer note no 10)] in two tranches at an interest rate of LIBOR plus 170 basis points for Rs. 3,129.54 Crore (US$ 500.00 million) and LIBOR plus 129 basis points for Rs. 278.87 Crore (US$ 44.55 million). The ECB on US$ 500 million is payable in three annual instalments on April 21,2015 and April 21,2016 for US$ 200 million each and on April 21,2017 for US$ 100 million. The loan of US$ 44.55 million is due on July 24, 2015. The ECB is secured by all present and future movable asset of Aluminium division including its movable plant and machinery, equipment, machinery, spare tools and accessories and other movable whether installed or not and all replacements thereof and additions thereof whether by way of substitution, addition, replacement, conversion or otherwise howsoever together with all benefits, rights and incidental attached thereto which are now owned or to be owned in the future by the borrower. Unsecured

d) Unsecured deferred sales tax liability of Rs. 138.58 Crore [including current maturity of long-term borrowings of Rs. 5.42 Crore (Refer note no 10)] outstanding as at March 31,2015 is currently repayable in monthly instalments till March 2027.

e) The Company has not defaulted in the repayment of loans and interest as at Balance Sheet date.

4. Terms and conditions of Short-term borrowings

a) Buyer''s credit from banks (Secured) includes :

(i) Rs. 1,845.54 Crore of Aluminium division at an interest rate of LIBOR plus 22- 55 basis points secured Nby exclusive charge on the assets ofJharsuguda Aluminium imported under facility and first charge on current assets of Aluminium division on pari passu basis.

(ii) Rs. 2,800.00 Crore of Copper India at an interest rate of 0.68% per annum secured by way of first charge by hypothecation on the entire stock of raw materials, work-in-progress and all semi-finished, finished, manufactured articles together with all stores, components and spares, both present and future book debts, outstanding monies, receivables, claims and bills arising out of sale etc. and such charge in favour of the banks ranking pari passu inter se, without any preferences or priority to one over other(s) in any manner.

(iii) Rs. 168.84 Crore at the Jharsuguda 2,400 MW power plant at an interest rate ranging from 0.52% to 0.86% per annum secured against first pari passu charge on entire current assets of Jharsuguda 2,400 MW power plant.

b) Maximum amount outstanding at any time during the year was Rs. 6,485.00 Crore (Previous year Rs. 8,020.00 Crore).

c) The Company has not defaulted in the repayment of loans and interest as at Balance Sheet date.

5. a. In pursuance to the Government of India''s policy of disinvestment and the Share Purchase Agreement and a Shareholder''s Agreement ("SHA") both dated April 4, 2002 entered into with the Government of India, the Company acquired 26% equity interest in Hindustan Zinc Limited (HZL). Under the terms of the SHA, the Company had two call options to purchase all of the Government of India''s shares in HZL at fair market value. The Company exercised the first call option on August 29, 2003 and acquired an additional 18.9% of HZL''s issued share capital. The Company also acquired additional 20% of the equity capital in HZL through an open offer, increasing its shareholding to 64.9%. The second call option provides the Company, the right to acquire the Government of India''s remaining 29.5% share in HZL. This call option is subject to the right of the Government of India to sell 3.5% of HZL shares to HZL employees. The Company exercised the second call option vide its letter dated July 21,2009. The Government of India disputed the validity of call option and has refused to act upon the second call option. Consequently, the Company invoked arbitration and filed a statement of claim. The arbitration proceedings are under progress in early stages. The next date of hearing is fixed on August 08, 2015.

b. The Company purchased a 51.0% holding in Bharat Aluminium Company Limited (BALCO) from the Government of India on March 2, 2001. Under the terms of the Shareholder''s Agreement ("SHA") for BALCO, the Company has a call option that allows it to purchase the Government of India''s remaining ownership interest in BALCO at any point from March 2, 2004. The Company exercised this option on March 19, 2004. However, the Government of India has contested the valuation and validity of the option and contended that the clauses of the SHA violate the provision of Section 111A of the (Indian) erstwhile Companies Act, 1956 by restricting the rights of Government of India to transfer its shares and that as a result such provisions of the SHA were null and void. Subsequently the Company referred the matter to arbitration as provided in the SHA and the majority award of the arbitral tribunal rejected the claims of the Company on the ground that the clauses relating to the call option, the right of first refusal, the "tag-along" rights and the restriction on the transfer of shares violate the (Indian) Companies Act, 1956 and are not enforceable.

The Company challenged the validity of the majority award under section 34 of the Arbitration and Conciliation Act, 1996 in the High Court of Delhi and sought for setting aside the arbitration award to the extent that it holds these clauses ineffective and inoperative. The Government of India also filed an application before the High Court of Delhi to partially set aside the arbitral award in respect of certain matters involving valuation. The High Court of Delhi passed an order dated August 10, 2011 directing the Company''s application and the application by the Government of India to be heard together as they arise from a common arbitral award. The matter is currently pending before the High Court of Delhi and next date of hearing is fixed on August 3, 2015. On January 9, 2012, the Company offered to acquire the Government of India''s interests in HZL and BALCO for Rs. 15,492.00 Crore and Rs. 1,782.00 Crore, respectively. The Company has, by way of letters dated April 10, 2012 and July 6, 2012, sought to engage with the Government of India on the same terms as the offer. This offer was separate from the contested exercise of the call options, and the Company proposed to withdraw the ongoing litigations in relation to the contested exercise of the options should the offer be accepted. To date, the offer has not been accepted by the Government of India and therefore there is no certainty that the acquisition will proceed.

c. On February 23, 2012, the Company entered into a tripartite agreement with Larsen & Toubro Limited (L&T) and Raykal Aluminium Company Private Ltd (Raykal). L&T holds certain prospecting licenses for bauxite mines located at Sijmali and Kurumali of Rayagada and Kalahandi districts of Odisha. By this agreement the entire bauxite excavated from above mines will be available for the use of Raykal and / or to the Company. It is also further agreed that the Company will acquire 100% of equity share capital of Raykal in a phased manner at a pre-agreed consideration in a milestone based acquisition. As on the balance sheet date, the Company has acquired 24.5% of the share capital of Raykal for a consideration of Rs. 200.70 Crore. The recommendation for grant of Mining License by State Government is under active consideration.

d. Pursuant to the Scheme approved by the Honorable High Court of Madras filed by Malco Energy Limited ("MEL") in the matter of reduction of capital, MEL undertook restructuring whereby the subscribed and paid up capital was reduced from Rs. 2/- per equity share to Rs. 0.05/- per equity share and simultaneously with the reduction of share capital of the Company, 854,656,250 equity shares of the reduced face value of Rs. 0.05/- each were then consolidated into 21,366,406 equity shares of Rs. 2/- each fully paid-up. Further on March 30, 2105, the Company subscribed for 2,000,000 equity shares of Rs. 2 each at a premium of Rs. 498 per share.

e. During the year, 1,000,000 Redeemable Cumulative Preference shares having a face value of Rs. 100 Crore issued at a premium of Rs. 2,900 Crore on March 28, 2012, and redeemable on March 28, 2022 at a premium of Rs. 68,650 per preference share, were fully redeemed by MEL on March 30, 2015, together with a foreclosure cost of Rs. 200 Crore on account of early redemption.

f. Pursuant to Scheme of Amalgamation of Sterlite Infra Limited (Refer note no. 33)

6. a. Net of recoveries

b. In view of the inadequacy of profits for the FY 2013-14, the remuneration paid to the Executive Chairman of the Company was in excess of the limits specified in Section 198 read together with Schedule XIII to the erstwhile Companies Act, 1956. The Company had been legally advised that the said remuneration paid / payable by the Company to such executive / whole time directors was in continuity and in accordance with the Scheme of Arrangement sanctioned by the Honorable High Court of Madras and High Court of Judicature of Bombay at Goa, for amalgamation of Sterlite Industries (India) Limited with the Company, and hence shall not be deemed to be excess remuneration in terms of Schedule XIII to the erstwhile Companies Act, 1956. The Company had filed an application with the Ministry of Corporate Affairs (MCA) for approval of waiver of excess remuneration paid to the Executive Chairman. The Company is awaiting formal communication from the MCA.

c. The Company offers equity-based award plans to its employees, officers and directors through its parent, Vedanta Resources Plc (the "Parent"), [The Vedanta Resources Long-Term Incentive Plan ("LTIP"), Employee Share Ownership Plan ("ESOP") and Performance Share Plan ("PSP")].

During the year, the PSP is the primary arrangement under which share-based incentives are provided to the defined management group, previously these awards were granted on a similar basis under the LTIP. The maximum value of shares that can be awarded to members of the defined management group is calculated by reference to the individual fixed salary and share- based remuneration consistent with local market practice. The performance condition attaching to outstanding awards under the PSP and LTIP is that of Parent''s performance, measured in terms of Total Shareholder Return ("TSR") compared over a three year period with the performance of the competitor companies as defined in the scheme from the date of grant. Initial awards under the LTIP were granted in February 2004 and subsequently further awards were granted in the respective years until 2012- 13. Additionally, PSP vesting conditions includes continued employment with the Group till the date of vesting. Initial awards under the PSP were granted in November 2014. The awards are indexed to and settled by Parent shares. The awards have a fixed exercise price denominated in Parent''s functional currency of 10 US cents per share, the performance period of each award is three years and are exercisable within a period of six months from the date of vesting beyond which the option lapse.

The Parent has also granted awards under the ESOP scheme that shall vest based on the achievement of business performance in the performance period. The vesting schedule is staggered over a period of three years. Under these schemes the Parent is obligated to issue the shares.

Further, in accordance with the terms of the agreement between the Parent and the Company, the fair value of the awards as on

the grant date is recovered by the Parent from the Company and its subsidiaries.

Amount recovered by the Parent and recognised by the Company in the Statement of Profit and Loss (net of capitalisation) for the year ended March 31,2015 is Rs. 60.43 Crore (Previous year Rs. 70.28 Crore). The Company considers these amounts as not material and accordingly has not provided further disclosures.

7. Amalgamation schemes

The Schemes of Amalgamation (the "Schemes") amongst Goa Energy Limited (GEL), Sterlite Infra Limited (SIL) (fully owned subsidiary companies) and Vedanta Limited was sanctioned by the High Court of Judicature of Bombay at Goa vide its order dated March 12, 2015 and High Court of Madras has vide its order dated March 25, 2015 respectively. The Schemes became effective from March 24, 2015 for Vedanta and GEL and from April 8, 2015 for Vedanta and SIL, being the date of filing the respective orders with the Registrar of Companies.

The above Schemes have been given effect to in the financial statements for the year ended March 31,2015.

The appointed date as per the scheme is April 1,2014 and have been accounted under "pooling of interest method" prescribed in the Accounting Standard on Accounting for Amalgamation (AS) - 14.

I. Amalgamation of GEL with Vedanta:

a) GEL was engaged in the generation of commercial power in the State of Goa and was a wholly owned subsidiary of Vedanta.

b) In accordance with the Scheme:

(i) GEL stands dissolved without winding up with effect from April 01,2014, on the effective date.

(ii) All assets, debts and liabilities of GEL have been deemed transferred to and vested in the Company with effect from April 01,2014.

(iii) GEL carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme.

(iv) In accordance with the Scheme, GEL being a wholly owned subsidiary of Vedanta, no shares were issued and allotted by Vedanta.

(c) The amalgamation has been accounted under the ''Pooling of Interests'' method as envisaged in the Accounting Standard (AS)-14 on Accounting for Amalgamations, whereby:

(i) In accordance with the Scheme, the assets, liabilities and reserves (excluding share premium) of GEL as at April 01,2014 have been recorded at their book values. Further, equity share capital, share premium account of GEL, and investments in the equity shares of GEL has been eliminated and resultant balance amount of Rs. 14.01 Crore has been debited to General Reserve of the Company.

(ii) The operations of GEL during the year have been accounted for in the current year''s Statement of Profit and Loss of the Company. The credit balance in Surplus in Statement of Profit and Loss of GEL as at April 01, 2014 Rs. 5.67 Crore has been included in Surplus in Statement of Profit and Loss of the Company.

(iii) In terms of the Scheme inter-company balances (payables, receivables, loans, advances, etc) between GEL and the Company as at appointed date have been cancelled.

II. Amalgamation of SIL with Vedanta:

a) SIL was a wholly owned subsidiary of Vedanta, and through its overseas subsidiaries owns mines in Namibia, South Africa and Ireland. In accordance with the Scheme:

(i) SIL stands dissolved without winding up with effect from April 01,2014, on the effective date.

(ii) All assets, debts and liabilities of SIL have been deemed transferred to and vested in the Company with effect from April 01,2014.

(iii) SIL carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme.

(iv) In accordance with the Scheme, SIL being a wholly owned subsidiary of Vedanta, no shares were issued and allotted by Vedanta.

(b) The amalgamation has been accounted under the ''Pooling of Interests'' method as envisaged in the Accounting Standard (AS)-14 on Accounting for Amalgamations, whereby:

(i) In accordance with the Scheme, the assets, liabilities and reserves (excluding share premium) of SIL as at April 01,2014 have been recorded at their book values. Further, equity share capital of SIL and investments in the equity shares of SIL has been eliminated.

(ii) The operations of SIL during the year have been accounted for in the current year''s Statement of Profit and Loss of the Company. The debit balance in Surplus in Statement of Profit and Loss of SIL as at April 01, 2014 Rs. 345.85 Crore has been included in Surplus in Statement of Profit and Loss of the Company.

(iii) In terms of the Scheme inter-company balances (payables, receivables, loans, advances, etc) between SIL and the Company as at appointed date have been cancelled.

8. a) The Scheme of Amalgamation and Arrangement amongst Sterlite Energy Limited (''SEL''), Sterlite Industries (India) Limited (''Sterlite''), Vedanta Aluminium Limited (''VAL''), Ekaterina Limited (''Ekaterina''), Madras Aluminium Company Limited (''Malco'') and the Company (the "Scheme") had been sanctioned by the Honorable High Court of Madras and the Honorable High Court of Judicature of Bombay at Goa. The Scheme had been given effect to in the year ended March 31,2014. Subsequent to, the effectiveness of the Scheme, the Commissioner of income tax, Goa and the Ministry of Corporate Affairs have challenged the orders of the High Court of Judicature of Bombay at Goa by way of a Special Leave Petition before the Supreme Court. Further, a creditor and a shareholder have challenged the order of the High Court of Madras. The said petitions have not yet been admitted pending hearing.

b) By way of Slump sale agreement dated August 19, 2013 between VAL and the Company, the power business consisting of 1,215 MW (9x135 MW) captive power plants situated at Jharsuguda and 300 MW co-generation facility (90MW operational and 210 MW under development) at Lanjigarh together with the assets and liabilities, has been purchased by the Company on a going concern basis at its carrying value at a consideration of Rs. 2,893 Crore. The said consideration was fully discharged by the Company during the year.

9. The Company entered into Joint venture agreement with Orissa Mining Corporation Limited (OMCL) and incorporated South West Orissa Bauxite Mining Private Limited (SWOBM) with equity contribution of Rs. 0.05 Crore in the ratio of 74 (the Company):26 (OMCL). SWOBM was incorporated on July 15, 2009 to carry on the business of raising and mining bauxite and alumina bearing ore from the bauxite mines in the State of Odisha. As per JV agreement dated October 05, 2004 and subsequent amendment thereto in 2009, the Company was to enter into raising contract agreement with OMCL, the lessee of Niyamgiri Mines to raise bauxite from said mines. Since Ministry of Environment & Forests (MoEF) has not granted approval for forest diversion, no mining activity has been undertaken and accordingly the raising contract agreement was not entered into.

10. The Company had entered into an EPC contract with SEPCO Electric Power Construction Corporation (SEPCO) for setting up 1,980 MW Independent Power Plant at Talwandi, Punjab. The said contract has been novated in the name of Talwandi Sabo Power Limited (TSPL) by virtue of a novation agreement dated November 17, 2009 between the Company, TSPL and SEPCO and all rights and obligations of the Company have been assigned to TSPL by virtue of the novation agreement. The Company has guaranteed to SEPCO to discharge TSPL''s obligation, including right of recourse to the Company under the guarantee, in case of failure of TSPL to perform its obligations under the EPC contract.

11. The Company has subscribed to the memorandum of association of M/s Rampia Coal Mines and Energy Private Limited, a joint venture company incorporated in India under the Companies Act for the purpose of development of coal block. The Company had invested in 2.43 Crore equity shares of Rs. 1 each amounting to Rs. 2.43 Crore representing 17.39% of the total equity shares. During the current year provision of Rs. 2.43 Crore has been recognised in respect of such investment due to cancellation of coal blocks by the Supreme Court of India.

Following is the information pertaining to the Company''s interest in the above jointly controlled entity as extracted from the financial information of the jointly controlled entity.

12. (i) Karnataka mining

Consequent to the clearance for resumption of iron ore mining operations at Karnataka by the Honourable Supreme Court of India (the "Supreme Court"), the Company had resumed mining operations with effect from December 28, 2013 but had to again suspend operations from July 31, 2014 due to the expiry of Temporary Working Permission. Subsequent thereto, on execution of Mining Lease Deed (ML) and Final Forest Clearance (FC) during the year, the Company has resumed mining operations in Karnataka on February 28, 2015.

(ii) Goa mining

a) The Honourable Supreme Court of India (the "Supreme Court") vide its judgment dated April 21,2014 had lifted the ban on mining in the State of Goa, subject to certain conditions; including that no mining operations can be carried out until renewal/execution of mining lease deeds by the State Government. It also directed that out of the sale proceeds of the e-auction of excavated ore, leaseholders to be paid average cost of excavation of iron ore, and the balance amounts are to be allocated amongst various affected stakeholders and unallocated amounts to be appropriated to the State Government. In pursuance of the said judgement, the State Government of Goa has on October 1,2014 announced the Goa Grant of Mining Leases Policy, 2014. The State Government has renewed the mining leases and the Company is in the process of obtaining other approvals/clearances. The Government of Goa has vide its order dated January 15, 2015 revoked its earlier order on temporary suspension of mining operations in the State of Goa. In view of the above developments, the Company expects to restart mining activities in Goa shortly.

b) In view of the Supreme Court judgment designating the State Government as owners of the ore and mine lessees entitled to reimbursement of the average cost of excavation and based on rules framed for auction of such ore, during the year inventories of carrying value of Rs. 295.25 Crore, which would have been disclosed as such and included in inventories as at March 31, 2014, have instead been disclosed as "Claims and other receivables" under the head "Short term loans and advances" as at March 31,2015.

13. A) Contingent liabilities

(Rs. in Crore) As at As at March 31, March 31, 2015 2014 (a) Disputed liabilities in appeal :

(i) Income tax demands principally in respect of depreciation consequent to block assessment, disallowance 1,209.63 1,347.49 of short term capital loss, disallowance of commission on sales paid to non resident, Section 14A, demurrage, Section10B deduction and additional depreciation on plant and machinery.

(ii) Sales tax demands relating to tax on Freight and Entry Tax on imported goods 687.20 498.46

(iii) Excise duty relating to disputes in respect of dutiability and availing of cenvat credit 160.42 154.32 on certain capital goods and other inputs.

(iv) Service tax demands for certain services rendered 39.83 25.95

(v) Custom duty relating to differential export duty on export shipments 36.79 14.04

(vi) FERA/FEMA matters relating to disputes in respect of certain investments into the 59.90 59.90

Company

(vii) Forest development tax levied by Government of Karnataka 297.80 297.80

(viii) Cess on transportation of ore, coal and coke levied by Government of Goa under the Goa 109.38 107.33 Rural and Development and Welfare Cess Act, 2000 (Goa Act 29 of 2000)

(ix) Royalty demand in Karnataka 12.11 12.11

(x) Other matters principally related to Building Cess under Building and Construction Workers (RECS) Act, 11.07 10.63 1996 and corresponding Welfare Cess Act, 1996

(b) Claims against the Company not acknowledged as debts principally related to commercial 400.93 249.29 and employment contracts, stacking charges, dead rent on deemed mining leases and royalty.

(c) Estimated cost of variation in copper and precious metals quantity due to adjustments done based on metal contents as per laboratory assessments pending receipt of final invoice amounts to Rs. 46.13 Crore (Previous year Rs. 37.28 Crore).

(d) Shenzhen Shandong Nuclear Power Construction Co. Limited (''SSNP'') subsequent to terminating the EPC contract invoked arbitration as per the contract alleging non-payment of their dues towards construction of a 210 MW co-generation power plant for refinery expansion project, and filed a claim of Rs. 1,553.00 Crore. Based on the assessment, the Company had booked the liability for Rs. 174.00 Crore in earlier years and continues to defend the balance claim. The Company is defending the claim and has filed a counter claim of Rs. 2,458.00 Crore for delays caused for which SSNP is responsible. SSNP has also filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court praying for interim relief seeking restrain order on encashment of Advance Bank Guarantee (ABG), injunction from disposing or creating third party right over Plant & Machinery (P&M) at the project site and security for the amount due under the contract. The Bombay High Court initially dismissed their petition, but on a further appeal by SSNP, the Division Bench of the Bombay High Court directed the Company to deposit a bank guarantee for an amount of Rs. 187.00 Crore as a security, being a prima facie representation of the claim, until arbitration proceedings are completed. The Company has deposited a bank guarantee of equivalent amount to the satisfaction of the Prothonotary, Bombay High Court. Moreover, the SSNP''s Application under Section 31(6) of Arbitration Act for Interim Award of Rs. 202.00 Crore was also disallowed by the majority bench of the tribunal as pre-mature and unjustified. Management is of the opinion that this claim is not valid under the terms of the contract with SSNP and it is unlikely that SSNP can legally sustain the claim and accordingly, no provision is considered necessary.

(e) Future cash flows in respect of the above, if any, is determinable only on receipt of judgement/decisions pending with relevant authorities. The Company does not expect the outcome of matters stated above to have a material adverse effect on the Company''s financials conditions, result of operations or cash flows.

B) Capital and other commitments c) In an appeal filed by the Company against the closure order of the Tuticorin Copper smelter by Tamilnadu Pollution Control Board ("TNPCB"), the appellate authority National Green Tribunal ("NGT") passed an interim order on May 31,2013 allowing the copper smelter to recommence operations and appointed an Expert Committee to submit a report on the plant operations. Post the interim order, the plant recommenced operations on June 23, 2013. The Expert Committee submitted a report on the operations of the plant stating that the plant''s emission were within prescribed standards and based on this report, NGT ruled on July 15, 2013 that the copper smelter could continue its operations. NGT vide its final judgment dated August 08, 2013 made its interim order dated May 31,2013 absolute and allowed the copper smelter to continue its operation subject to it implementing all recommendations and suggestions given by Expert Committee for better functioning of the copper smelter in a time bound manner. The Company has implemented all of the recommendations and the copper smelter has been operating normally. TNPCB has filed appeals against the interim and final orders of the NGT before the Supreme Court of India, which are pending as on date.

D) i) Lanjigarh project - Niyamgiri mining lease:

In respect of the Niyamgiri mining lease of the Company, the Honourable Supreme Court in its order dated April 18, 2013 directed the Government of Odisha ("GOO") to place any unresolved issues and claims of the local communities under the Forest Right Act and Rules before the Gram Sabha. The GOO completed the process of conducting Gram Sabha meetings in 12 villages and submitted its report on the proceedings to the Ministry of Environment and Forests ("MOEF"). Further the MoEF based on the report submitted by the GOO rejected the grant of stage II forest clearance for the Niyamgiri project of Orissa Mining Corporation Limited, which is one of the sources of supply of bauxite to the alumina refinery at Lanjigarh. In terms of the Memorandum of Understanding with the GOO (through OMC), 150 million tonnes of bauxite is required to be made available to the Company.

The Company is also considering sourcing of bauxite from alternate sources to support the existing and the expanded refinery operations. The Company is also pursuing with Government of Odisha and Ministry of Mines, Government of India for securing bauxite to refinery in terms of MOU with GOO.

ii) Expansion of Alumina Refinery:

Environment Clearance (EC) process has gone ahead with a favorable Public Hearing, and Expert Appraisal Committee, in its meeting held on January 9, 2015, has recommended the project for EC subject to Stage-I forestry clearance for the Gramya Jungle Jogya land which is under pursuance. Pending the same, the expansion project continues to be on hold.

Both the above matters are critical to the planned operations of the aluminium division of the Company and, if government approvals are not obtained timely, could adversely impact its performance, although significant steps have been taken during the year by management for procuring bauxite from alternate mines/ sources.

E) The Central Excise Department had, in June 2010, alleged violation of Advance license conditions for the period 2005-09 on the Company. Show cause notice in this regard has been served on the Company. The Company has filed a writ petition to quash the Show Cause Notice on recoveries / further proceedings from the Honourable Madras High Court, Madurai Bench in this matter. The Company has also been legally advised that the alleged charges are not legally sustainable and there is no financial liability on the Company.

F) Except as described above, there are no pending litigations which the Company believes could reasonably be expected to have a material adverse effect on the results of operations, cash flow or the financial position of the Company.

14. Related Party disclosures

List of related parties and relationships

A) Entities controlling the Company (Holding Companies)

Volcan Investments Limited (Ultimate Holding Company)

Intermediate Holding Company

Finsider International Company Limited

Richter Holdings Limited

Twin Star Holdings Limited

Vedanta Resources Cyprus Limited

Vedanta Resources Finance Limited

Vedanta Resources Holdings Limited

Vedanta Resources Pic

Welter Trading Limited

Westglobe Limited

Chairman Emeritus

Mr. Anil Agarwal

B) Fellow Subsidiaries (with whom transactions have taken place)

Konkola Copper Mines Plc

Sterlite Grid Limited

Sterlite Iron and Steel Company Limited

Sterlite Technologies Limited

The Madras Aluminium Company Limited 2

C) Associates

Gaurav Overseas Private Limited

Raykal Aluminium Company Private Limited

RoshSk or Township (Proprietary) Limited

D) Subsidiaries

Amica Guesthouse (Proprietary) Limited

Bharat Aluminium Company Limited

Black Mountain Mining (Proprietary) Limited

Bloom Fountain Limited

Cairn Energy Australia Pty Limited#

Cairn Energy Cambay B.V.3*

Cairn Energy Discovery Limited#

Cairn Energy Gujarat B.V.3#

Cairn Energy Gujarat Block 1 Limited#

Cairn Energy Holdings Limited#

Cairn Energy Hydrocarbons Limited#

Cairn Energy India Pty Limited#

Cairn Energy India West B.V. 3#

Cairn Energy Netherlands Holdings B.V. 3#

Cairn Exploration (No. 2) Limited#

Cairn Exploration (No. 7) Limited#

Cairn Exploration (No. 6) Limited#

Cairn India Holdings Limited#

Cairn India Limited#

Cairn Lanka Private Limited#

Cairn South Africa Proprietary Limited#

CEH Australia Limited1#

CIG Mauritius Holdings Private Limited#

CIG Mauritius Private Limited#

Copper Mines of Tasmania Pty Limited

Fujairah Gold FZC Goa Energy Limited*

Hindustan Zinc Limited

Killoran Lisheen Finance Limited

Killoran Lisheen Mining Limited

Lakomasko B.V.

Lisheen Milling Limited

Malco Energy Limited (formerly Vedanta Aluminium Limited)

Maritime Ventures Private Limited

Monte Cello B.V. (MCBV)

Namzinc (Proprietary) Limited

Paradip Multi Cargo Berth Private Limited

Pecvest 17 Proprietary Limited

Rosh Pinah Health Care (Proprietary) Limited

Sesa Mining Corporation Limited

Sesa Resources Limited

Skorpion Mining Company (Proprietary) Limited

Skorpion Zinc (Proprietary) Limited

Sterlite (USA) Inc. Sterlite Infra Limited*

Sterlite Infraventures Limited

Sterlite Ports Limited

Talwandi Sabo Power Limited

Thalanga Copper Mines Pty Limited

THL Zinc Holding B.V.

THL Zinc Limited

THL Zinc Namibia Holdings (Proprietary) Limited

THL Zinc Ventures Limited

Twin Star Energy Holdings Limited

Twin Star Mauritius Holdings Limited

Vedanta Exploration Ireland Limited

Vedanta Lisheen Holdings Limited (formerly Vedanta Lisheen Finance Limited)

Vedanta Lisheen Mining Limited

Vizag General Cargo Berth Private Limited

Western Cluster Limited

Cairn Energy Investments Australia Pty Limited@#

Wessington Investments Pty Limited@#

Sydney Oil Company Pty Limited@#

Cairn Exploration (No.4) Limited@#

Cairn Petroleum India Limited@#

Cairn Energy India Holdings B.V.@#

Cairn Energy Group Holdings B.V.@#

Cairn Energy Gujarat Holding B.V.@#

Cairn Energy India West Holdings B.V.@#

Cairn Energy Cambay Holding B.V.@#

CEH Australia Pty Limited@#

Cairn Energy Asia Pty Limited@#

E) Key Management Personnel

Mr. Navin Agarwal

Mr. Tarun Jain

Mr. Thomas Albanese (w.e.f. April 1,2014)

Mr. D. D. Jalan (w.e.f. April 1,2014)

Mr. M. S. Mehta (upto March 31,2014)

Mr. P. K. Mukherjee (upto March 31,2014)

Mr. Amit Pradhan (resigned w.e.f. August 18, 2013)

F) Relatives of Key Management Personnel

Mr. Dwarka Prasad Agarwal (Father of Mr. Navin Agarwal)

Mr. Naivaidya Agarwal (Son of Mr. Navin Agarwal)

G) Others

Anil Agarwal Foundation Trust

Vedanta Foundation

Sesa Community Development Foundation

Rampia Coal Mines & Energy Private Limited (Jointly controlled entity)

Goa Maritime Private Limited (Jointly controlled entity)

1 Dissolved during the year

2 Fellow Subsidiary upto August 17, 2014

3 Deregistered during the year

* Ceases to be a related party w.e.f. April 01,2014 pursuant to the Scheme of Amalgamation (Refer note no. 33)

@ Dissolved during the previous year

# Subsidiary w.e.f. August 26, 2013 (Associate for remaining period in previous year)

15. The Company considers its investment in and loans to subsidiaries as strategic and long term in nature and accordingly, in the view of the management, any decline in the value of such long term investments in subsidiaries is considered as temporary in nature and hence no provision for dimunition in value is considered necessary.

16. Previous year''s figures have been regrouped/reclassified wherever necessary to conform with the current year''s classification / disclosure.

17. Consequent to the effectiveness of the Schemes of Amalgamation (Refer note no. 33), the current year''s figures are not comparable with the previous year''s figures.


Mar 31, 2014

1. AMALGAMATION SCHEMES

The Scheme of Amalgamation and Arrangement (the "Scheme-1") amongst Sterlite Energy Limited (''SEL), Sterlite Industries (India) Limited (''Sterlite''), Vedanta Aluminium Limited I''VAL), Madras Aluminium Company Limited (''Malco'') and the Company was sanctioned by the High Court of Judicature of Bombay at Goa vide its order dated April 3, 2013 and the Honourable High Court of Madras vide its order dated July 25, 2013. The Scheme became effective for Sterlite and Malco on August 17, 2013; and for SEL and VAL the scheme became effective on August 19, 2013.

The Honourable Supreme Court of Mauritius by an order dated August 24, 2012 and the Honourable High Court of Judicature of Bombay at Goa by an Order dated April 03, 2013, approved the Scheme of Amalgamation (the "Scheme-2") of Ekaterina (holding 70.5% shareholding in Vedanta Aluminium Limited), with the Company. The effective date of amalgamation is August 17, 2013.

NOTES

I. Amalgamation of SEL with the Company:

(a) SEL was engaged in the generation of commercial power in the State of Odisha and was a wholly owned subsidiary of erstwhile Sterlite.

(b) In accordance with the Scheme-1:

(i) SEL stands dissolved without winding up with effect from January 01, 2011, on the effective date.

(ii) All assets, debts and liabilities of SEL have been deemed transferred to and vested in the Company with effect from January 01, 2011.

(iii) SEL carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme-1.

(iv) In accordance with the Scheme-1 upon Chapter 2 of the Scheme-1 becoming effective, SEL became a wholly owned subsidiary of SGL, and accordingly no shares were issued and allotted by SGL.

(c) The amalgamation has been accounted under the ''Pooling of Interests'' method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006, whereby:

(i) In accordance with the Scheme-1, the assets, liabilities and reserves (excluding share premium) of SEL as at January 01, 2011 along with subsequent additions/deletions up to March 31, 2013 have been recorded at their book values. Further, equity share capital, share premium account of SEL, and investments in the equity shares of SEL has been eliminated and resultant balance amount of Rs. 2.48 Crore has been debited to General Reserve of the Company.

(ii) The profits of SEL from appointed date January 01, 2011 to March 31, 2013 have been transferred to the Surplus in Statement of Profit and Loss of the Company. The operations of SEL during the year have been accounted for in the current year''s Statement of Profit and Loss of the Company. The credit balance in Surplus in Statement of Profit and Loss of SEL as at April 01, 2013 Rs. 194.02 Crore (after the alignment of accounting policies of SEL in line with SGL accounting policies) has been included in Surplus in Statement of Profit and Loss of the Company.

(iii) In terms of the Scheme-1 inter-company balances (payables, receivables, loans, advances, etc) between SEL and the Company (after giving effect of Sterlite amalgamation) as at appointed date have been cancelled.

II. Amalgamation of Sterlite with the Company:

(a) Sterlite was engaged in the copper smelting business:

(b) In accordance with the Scheme-1:

(i) Sterlite stands dissolved without winding up with effect from April 01, 2011, on the effective date.

(ii) 1,656,179,625 number of equity shares have been issued to the equity shareholders of Sterlite, except for equity shares of Sterlite held by MALCO and excluding shares against which ADS were issued in the ratio of 3 equity shares of face value of Re 1/- each in the Company for every 5 equity shares held in Sterlite. 72,173,625 ADS of the Company representing 288,694,500 equity shares of the Company have been issued in the ratio of 3 ADS of the Company for every 5 ADS of Sterlite.

(iii) All assets, debts and liabilities of Sterlite have been deemed transferred to and vested in the Company with effect from April 01, 2011.

(iv) Sterlite carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme-1.

(c) The amalgamation has been accounted under the ''Pooling of Interests'' method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006, whereby:

(i) In accordance with the Scheme-1, the assets, liabilities and reserves of Sterlite as at April 01, 2011 along with subsequent addition/deletion up to March 31, 2013 have been recorded at their book values. The difference between the value of total assets, total liabilities and the face value of share capital allotted to the shareholders of Sterlite amounting to Rs. 134.45 Crore and credit balance in the General Reserve of Rs. 2,770.29 Crore has been credited to the General Reserve in accordance with the Scheme-1.

(ii) In terms of the Scheme-1, inter-company balances (payables, receivables, loans, advances, etc) between VAL-Aluminium and the Company (after giving effect of Sterlite amalgamation) as at appointed date have been cancelled.

(iii) The profits of Sterlite from the appointed date April 01, 2011 to March 31, 2013 have been transferred to Surplus in the Statement of Profit and Loss of the Company. The operations of Sterlite during the year have been accounted for in the current year''s Statement of Profit and Loss of the Company. The balance in Surplus in Statement of Profit and Loss of Sterlite as at April 01, 2013 Rs. 3,069.67 Crore (after the alignment of the accounting policies of Sterlite in line with SGL accounting policies) has been included in Surplus in Statement of Profit and Loss of the Company.

III. Aluminium Division of Vedanta Aluminium Limited ("VAL-Aluminium") with the Company:

(a) Vedanta Aluminium Limited was engaged in the production of aluminium with associated captive power plants. "VAL-aluminium" consisting of 0.5 mtpa aluminium smelter at Jharsuguda and 1.0 mtpa alumina refinery at Lanjigarh in the State of Odisha.

(b) In accordance with the Scheme-1:

(i) VAL-Aluminium demerged from VAL and merged with the Company from appointed date April 01. 2011.

(ii) No shares have been issued and allotted by the Company to Vedanta Aluminium Limited for the demerger of the VAL-Aluminium and merger with the Company.

(iii) All assets, debts and liabilities of VAL- Aluminium have been deemed transferred to and vested in the Company with effect from April 01. 2011.

(iv) Vedanta Aluminium Limited carried on VAL- Aluminium business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme-1.

(c) The merger has been accounted as under :

(i) In accordance with the Scheme-1, the assets and liabilities of VAL-Aluminium as at April 01, 2011 along with subsequent addition/deletion up to March 31, 2013 have been recorded at their book values. Further, in accordance with the Scheme-1, excess of book values of assets over liabilities of VAL-Aluminium business amounting to Rs. 532.46 Crore has been credited to General Reserve of the Company.

(ii) In terms of the Scheme inter-company balances (payables, receivables, loans, advances, etc) between VAL-Aluminium and the Company (after giving effect of Sterlite amalgamation) as at appointed date have been cancelled.

(iii) The losses of VAL-Aluminium during the period April 01, 2011 to March 31, 2013 have been transferred to Surplus in Statement of Profit and Loss of the Company. The operations of VAL-Aluminium during the year have been accounted for in the current year''s Statement of Profit and Loss of the Company. The debit balance of Surplus in Statement of Profit and Loss of VAL-Aluminium as of April 01, 2013 Rs. 4,389.54 Crore (after the alignment of accounting policies of VAL-Aluminium in line with SGL accounting policies) has been included in Surplus in Statement of Profit and Loss of the Company.

(iv) In accordance with the Scheme-1, post the vesting of VAL-Aluminium business with the Company, shortfall of book values of assets over the liabilities of the aluminium business after adjusting the carrying value of equity share investment in VAL as on the effective date not representing by the net assets value of VAL as on effective date amounting to Rs. 1,471.63 Crore has been debited to General Reserve of the Company.

IV. Residual business of The Madras Aluminium Company Limited (''Malco-residual'') with the Company:

(a) The Madras Aluminium Company Limited was engaged in the production of aluminium and commercial power generation business in the State of Tamil Nadu.

(b) In accordance with the Scheme-1:

(i) In accordance with the Scheme-1, the power business of Malco consisting of 100 MW coal based power plant was sold at a consideration of Rs. 150.00 Crore to VAL with appointed date of April 01, 2012. Residual business of Malco merged with the Company from appointed date August 17, 2013 and Malco ceased to exist.

(ii) 78,724,989 number of equity shares have been issued to the equity shareholders of Malco in the ratio of 7 equity shares of face value of Re 1/- each in the Company for every 10 equity shares held in Malco.

(iii) All assets, liabilities and reserves of Malco- residual business were deemed transferred to and vested in the Company with effect from August 17, 2013.

(c) The amalgamation has been accounted under the ''Pooling of Interests'' method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006, whereby:

(i) The assets, liabilities and reserves of Malco- residual (except investment in the equity shares of Sterlite) as at appointed date have been recorded at their respective carrying values in the books of the Company. In accordance with the Scheme-1, the difference between the value of total assets (excluding investment in Sterlite), total liabilities, reserves and the face value of share capital allotted to the shareholders of Malco Rs. 14.62 Crore and credit balance in the General Reserve of Rs. 231.24 Crore has been credited to General Reserve of the Company.

(ii) In terms of the Scheme-1, as at appointed date the investment in the equity shares of Sterlite in the books of Malco-residual has been cancelled and resultant balance amount of Rs. 312.26 Crore has been debited to General Reserve of the Company.

(iii) In terms of the Scheme-1 inter-company balances (payables, receivables, loans, advances, etc) between Malco-residual and the Company as at the appointed date have been cancelled.

(iv) The balance in Surplus in Statement of Profit and Loss of Malco-residual as at August 17, 2013 Rs. 351.06 Crore (after the alignment of accounting policies of Malco-residual business in line with SGL accounting policies) has been included in Surplus in Statement of Profit and Loss of the Company.

(V) Amalgamation of Ekaterina Limited (Ekaterina) with the Company:

(a) The Honourable High Court of Judicature of Bombay at Goa, by an Order dated April 03, 2013, and The Honourable Supreme Court of Mauritius by an order dated August 24, 2012, approved the Scheme of Amalgamation (the "Scheme-2") of Ekaterina (holding 70.5% shareholding in Vedanta Aluminium Limited), with the Company effective from the appointed date April 01, 2012. The effective date of amalgamation is August 17, 2013.

(b) In accordance with the Scheme-2:

(i) 72,304,334 number of equity shares were issued to the equity shareholders of Ekaterina in the ratio of 1 equity share of face value Re 1 each in the Company for every 25 shares held in Ekaterina.

(ii) In accordance with the Scheme-2, the assets, liabilities and reserves of Ekaterina as at April 01, 2012 along with subsequent addition/ deletion up to March 31, 2013 have been recorded in the books of the Company at their respective book values.

(iii) Ekaterina stands dissolved without winding up with effect from April 01, 2012.

(iv) Ekaterina carried on the business for and behalf of the Company for the period from the appointed date to the effective date, in trust as per the Scheme-2.

(c) The amalgamation has been accounted under the ''Pooling of Interests'' method as envisaged in the Accounting Standard (AS) -14 on Accounting for Amalgamations specified in the Companies (Accounting Standard) Rules 2006, whereby:

(i) The assets, liabilities and reserves of Ekaterina as at appointed date have been recorded at their respective carrying values in the books of the Company. In accordance with the Scheme-2, difference between total assets, total liabilities, reserves and the face of value share capital allotted to the shareholders of EKTL amounting to Rs. 917.48 Crore credited to General Reserve of the Company.

(ii) In terms of the Scheme-2 inter-company balances (payables, receivables, loans, advances, etc) between Ekaterina and the Company as at the appointed date have been cancelled.

VI. Consequentto the above and utilising the carry forward unabsorbed tax losses of VAL-Aluminium and SEL, the Company has recognised a current tax credit of Rs. 1,755.09 Crore during the year.

VII. Subsequent to, the effectiveness of the Scheme, a Special Leave Petition challenging the order of the High Court of Judicature of Bombay at Goa has been filed by the income tax department, a creditor and a shareholder have challenged the Scheme in the High Court of Madras. The said petitions are pending for admission/hearing.

2. ACQUISITION OF VAL''S POWER BUSINESS THROUGH SLUMP SALE :

By way of Slump sale agreement dated August 19, 2013 between VAL and the Company, the power business consisting of 1,215 MW (9x135 MW) captive power plants situated at Jharsuguda and 300 MW co-generation facility (90MW operational and 210 MW under development) at Lanjigarh together with the assets and liabilities, has been purchased by the Company on a going concern basis at its carrying value at a consideration of Rs. 2,893 Crore.

3. ACQUISITION OF CAIRN INDIA LIMITED WITH ASSOCIATED DEBT :

Pursuant to the share purchase agreement, dated February 25, 2012 between Bloom Fountain Limited I''BFL), a wholly owned subsidiary of the Company and Vedanta Resources Holdings Limited (''VRHL), BFL acquired 38.68% shareholding in Cairn India Limited and associated debt of USD 5,998 million byway of acquisition of Twin Star Energy Holding Limited (TEHL), for a nominal cash consideration of USD 1. Consequently w.e.f. August 26, 2013, TEHL, Twin Star Mauritius Holdings Limited (''TMHL) and Cairn India Limited (including all its subsidiaries) have become subsidiaries of the Company.

4. The employees'' gratuity fund scheme (a defined benefit plan) is managed by Life Insurance Corporation of India (LIC) and ICICI Prudential Life Insurance Company Limited. The present value of obligation is determined based on actuarial valuation using projected unit credit method, which recognize each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for short term compensated absences is recognised on actual basis for the portion of accumulated leave which an employee can encash.

5. The Company (erstwhile Sterlite) entered into Joint venture agreement with Orissa Mining Corporation Limited (OMCL) and incorporated South West Orissa Bauxite Mining Private Limited (SWOBM) with equity contribution of Rs. 0.05 Crore in the ratio of 74 (the Company):26 (OMCL). SWOBM was incorporated on July 15, 2009 to carry on the business of raising and mining bauxite and alumina bearing ore from the bauxite mines in the State of Odisha. As per JV agreement dated October 05, 2004 and subsequent amendment thereto in 2009, The Company was to enter into raising contract agreement with OMCL, the lessee of Niyamgiri Mines to raise bauxite from said mines. Since Ministry of Environment & Forests (MoEF) has not granted approval for forest diversion, no mining activity has been undertaken and accordingly the raising contract agreement was not entered into.

6. In an appeal filed by the Company (erstwhile Sterlite] against the closure order of the Tuticorin Copper smelter by Tamilnadu Pollution Control Board ("TNPCB"), the appellate authority National Green Tribunal ("NGT"] passed an interim order on May 31, 2013 allowing the copper smelter to recommence operations and appointed an Expert Committee to submit a report on the plant operations. Post the interim order, the plant recommenced operations on June 23, 2013 and therefore the plant remained closed for the major duration of the first quarter of fiscal 2014 impacting the revenue and profits of the copper segment. The Expert Committee submitted a report on the operations of the plant stating that the plant'' semission were within prescribed standards and based on this report, NGT ruled on July 15, 2013 that the Copper smelter could continue its operations. The NGT also ordered that the recommendations made by the Expert Committee be implemented in a time bound manner. The Company has implemented all of the recommendations during the year. TNPCB has filed an appeal against the order of the NGT before the Supreme Court of India, which is yet to listed for hearing.

7. The Central Excise Department had, in June 2010, alleged violation of Advance license conditions for the period 2005-2009 on the Company (erstwhile Sterlite). No show cause notice in this regard has been served on the Company. The Company has obtained a Writ for stay on recoveries / further proceedings from the Honourable Madras High Court, Madurai Bench in this matter. The company has also been legally advised that the alleged charges are not legally sustainable and there is no financial liability on the Company.

8. The Company (erstwhile SEL) had entered into an EPC contract with SEPCO Electric Power Construction Corporation (SEPCO) for setting up 1,980 MW Independent Power Plant at Talwandi, Punjab. The said contract has been novated in the name of Talwandi Sabo Power Limited (TSPL) by virtue of a novation agreement dated November 17, 2009 between the company, TSPL and SEPCO and all rights and obligations of the Company have been assigned to TSPL by virtue of the novation agreement. The Company has guaranteed to SEPCO to discharge TSPLs obligation, including right of recourse to the Company under the guarantee, in case of failure of TSPL to perform its obligations under the EPC contract.

9. The Company (erstwhile SEL) has subscribed to the memorandum of association of M/s Rampia Coal Mines and Energy Private Limited, a joint venture company incorporated in India under the Companies Act, 1956 for the purpose of development of coal block. The Company has invested in Rs. 2.43 Crore equity shares of Rs. 1 each amounting to Rs. 2.43 Crore representing 17.39% of the total equity shares.

Following is the information pertaining to the Company''s interest in the above jointly controlled entity as extracted from the financial information of the jointly controlled entity.

10 a) Lanjigarh project - Niyamgiri mining lease:

In respect of the Niyamgiri mining lease of the Company (erstwhile VAL), the Hon''ble Supreme Court in its order dated April 18, 2013 directed the Government of Odisha ("GOO") to place any unresolved issues and claims of the local communities under the Forest Right Act and rules before the Gram Sabha. The GOO completed the process of conducting Gram Sabha meetings in 12 villages and submitted its report on the proceedings to the Ministry of Environment and Forests ("MOEF").

Further the MOEF based on the report submitted by the GOO rejected the grant of stage II forest clearance for the Niyamgiri project of Orissa Mining Corporation Limited, which is one of the sources of supply of bauxite to the alumina refinery at Lanjigarh. In terms of the Memorandum of Understanding with the GOO (through OMC), 150 million tonnes of bauxite is required to made available to the Company. The Company is also considering sourcing of bauxite from alternate sources to support the existing and the expanded refinery operations.

b) Expansion of Alumina Refinery:

With regard to the expansion project at Lanjigarh, the Company''s fresh application of environmental clearance is under consideration. In the meantime the expansion plans are on hold.

The above matters are critical to the planned operations of the aluminium business of the Company. The management expects that with timely support of relevant authorities, the above matters will be satisfactorily resolved.

11. In terms of the Mineral Concession Rules 1960 and Mineral Conservation and Development Rules (MCDR) 1988, the Company has provided a "financial assurance" in the form of a bank guarantee to the Regional Controller of Mines, towards its mine closure obligation. The Company has made a provision for expense to the extent of the bank guarantees provided.

12. A) Contingent liabilities

As at As at March 31, 2014 March 31, 2013

(a) Disputed liabilities in appeal:

(i) Income Tax demands principally in respect of depreciation 1,347.49 1,522.47 consequent to block assessment, disallowance of short term I capital loss, disallowance of commission on sales paid to non I resident, Section 14A, demurrage, Sectionl OB deduction and I additional depreciation on plant and machinery.

(ii) Sales Tax demands relating to tax on Freight and Entry Tax 498.46 - on imported goods

(iii) Excise Duty relating to disputes in respect of dutiability and 154.32 - availing of cenvat credit on certain capital goods and other I inputs.

(iv) Service Tax demands for certain services rendered 25.95 - (v) Custom duty relating to differential export duty on export 14.04 34.41 shipments

(vi) FERA/FEMA matters relating to disputes in respect of 59.90 - certain investments into the Company

(vii) Forest development tax levied by Government of Karnataka 297.80 195.36

(viii) Cess on transportation of Ore, coal and coke levied by 107.33 105.33 Government of Goa under the Goa Rural and Development and Welfare Cess Act, 2000 (Goa Act 29 of 2000)

(ix) Royalty demand in Karnataka 12.11 -

(x) Other matters principally related to Building Cess under 10.63 - Building and Construction Workers (RECS) Act, 1996 and corresponding Welfare Cess Act, 1996

(b) Claims against the company not acknowledged as debts principally 249.29 23.83 related to commercial and employment contracts, stacking charges, dead rent on deemed mining leases and royalty.

(c) Estimated cost of variation in copper and precious metals quantity due to adjustments done based on metal contents as per laboratory assessments pending receipt of final invoice amounts to Rs. 37.28 Crore (Previous year Nil).

(d) Shenzhen Shandong Nuclear Power Construction Co. Limited (''SSNP'') subsequent to terminating the EPC contract invoked arbitration as per the contract alleging non-payment of their dues towards construction of a 210 MW co-generation power plant for refinery expansion project, and filed a claim of Rs. 1,780.16 Crore. SSNP also filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court praying for interim relief. The Bombay High Court initially dismissed their petition, but on a further appeal by SSNP, the Division Bench of the Bombay High Court directed Jharsuguda aluminium to deposit a bank guarantee for an amount of Rs. 187.00 Crore as a security, being a prima facie representation of the claim, until arbitration proceedings are completed. Jharsuguda Aluminium has deposited a bank guarantee of equivalent amount. Management is of the opinion that this claim is not valid under the terms of the contract with SSNP and it is unlikely that SSNP can legally sustain the claim and accordingly, no provision is considered necessary.

(e) Future cash flows in respect of the above, if any, is determined only on receipt of judgement/decisions pending with relevant authorities. The Company does not expect the outcome of matters stated above to have a material adverse effect on the Company''s financials conditions, result of operations or cash flows.

13. (i) Karnataka mining:

The mining ban in Karnataka was lifted on April 18, 2013. The Company has complied with all conditions for the recommencement of operations, and mining operations resumed in December 2013 with a production 1.5 million tonnes during the year.

(ii) Goa mining:

Subsequent to the year end, the Honorable Supreme Court (Supreme Court) vide its judgment dated April 21, 2014 has lifted the ban on mining in the State of Goa, subject to certain conditions, including formulation of the state policy for mining leases and renewals. It has imposed an interim restriction on the maximum annual excavation from the mining leases in the State of Goa to 20 million tonnes subject to determination of final capacity by Expert Committee appointed by the Supreme Court. Further, in its order, the Supreme Court has held that all mining leases in the State of Goa, including those of Sesa Sterlite, have expired in 2007 and no mining operations can be carried out until renewal/execution of mining lease deeds by the State government. It has also directed that out of the sale proceeds of the e-auction of excavated ore Leaseholders to be paid average cost of excavation of iron ore, and the balance amounts are to be allocated amongst various affected stakeholders and unallocated amounts to be appropriated to the State Government. The Company is of the view that its carrying value of inventories aggregating Rs. 296.43 Crore as at the Balance Sheet date would not be less than the realisation proceeds in terms of the said judgement. In view of the above, the iron ore inventories as at the balance sheet date have been carried at cost. The Company is in the process of obtaining the necessary permissions for commencement of operations at the earliest.

14. In March 2010, ASARCO had filed a complaint against the Company (erstwhile Sterlite) and its subsidiary Sterlite (USA) Inc, in the Bankruptcy Court of the Southern District of Texas, for alleged breach of the Purchase and Sale agreement signed in May 2008. The Bankruptcy Court of the Southern District of Texas, heard the matter and vide its order dated final judgement of February 27, 2012, has ruled that ASARCO is entitled to a gross amount of US$ 132.75 million in incidental damages. This amount shall be reduced by US$ 50 million paid by the Company to ASARCO in December 2009, making ASARCO entitled for a net amount of US$ 82.75 million. The Company has recognised a liability of Rs. 497.33 Crore (US$ 82.75 million). The Company and its subsidiary have filed notice of appeal against this judgement, the hearing of which is scheduled on the July 30, 2014.

15. RELATED PARTY DISCLOSURES

List of related parties and relationships

A) Entities Controlling the Company (Holding Companies)

Volcan Investments Limited (Ultimate Holding Company)

Vedanta Resources Pic (Intermediate Holding Company)

Vedanta Resources Holdings Limited (Intermediate Holding Company)

Richter Holding Limited (Intermediate Holding Company)

Vedanta Resources Finance Limited (Intermediate Holding Company)

Vedanta Resources Cyprus Limited (Intermediate Holding Company)

Twin Star Holdings Limited (Intermediate Holding Company)

Finsider International Company Limited (Intermediate Holding Company)

Westglobe Limited (Intermediate Holding Company)

Welter Trading Limited (Intermediate Holding Company)

B) Fellow Subsidiaries

Konkola Copper Mines Pic

The Madras Aluminium Company Limited* (Fellow Subsidiary upto August 17, 2014)

Sterlite Technologies Limited

Sterlite Grid Limited

Sterlite Iron and Steel Company Limited

Sterlite Industries (India) Limited*

C) Associates

Gaurav Overseas Private Limited

Raykal Aluminium Company Private Limited

D) Subsidiaries

Hindustan Zinc Limited (Previous Year: Fellow Subsidiary)

Bharat Aluminium Company Limited (Previous Year: Fellow Subsidiary)

Malco Energy Limited (Earlier Vedanta Aluminium Limited) (Previous Year: Fellow Subsidiary]

Copper Mines of Tasmania Pty Limited (CMT)

Thalanga copper mines Pty Limited (TCM)

Sterlite Infra Limited (SIL)

Monte Cello B.V. (MOBV)

Talwandi Sabo Power Limited (TSPL) (Previous Year: Fellow Subsidiary]

Sesa Resources Limited (''SRL]

Sesa Mining Corporation Limited (''SMCL]

Goa Energy Limited

Bloom Fountain Limited 1''BFL]

Twin Star Energy Holdings Limited (TEHL] (Previous Year: Fellow Subsidiary]

Twin Star Mauritius Holdings Limited (TMHL] (Previous Year: Fellow Subsidiary]

Western Cluster Limited

Sterlite (USA) Inc.

Fujairah Gold FZC

THL Zinc Ventures Ltd

THL Zinc Ltd

THL Zinc Holding B.V.

THL Zinc Namibia Holdings (Proprietary] Limited

Skorpion Zinc (Proprietary) Limited

Skorpion Mining Company (Proprietary] Limited

Namzinc (Proprietary) Limited

Arnica Guesthouse (Proprietary) Limited

Rosh Pinah Health Care (Proprietary] Limited

Black Mountain Mining (Proprietary) Limited (Previous Year: Fellow Subsidiary)

Vedanta Lisheen Holdings Limited (earlier Vedanta Lisheen Finance Limited]

Vedanta Lisheen Mining Limited

Killoran Lisheen Mining Limited

Killoran Lisheen Finance Limited

Lisheen Milling Limited

Vedanta Exploration Ireland Limited (Date of Incorporation - May 16, 2013]

Sterlite Ports Limited

Maritime Ventures Private Limited

Sterlite Infraventures Limited

Pecvest 17 Proprietary Limited

Vizag General Cargo Berth Private Limited (Previous Year: Fellow Subsidiary]

Paradip Multi Cargo Berth Private Limited

Lakomasko B.V.

Cairn India Limited

Cairn India Holdings Limited

Cairn Energy Holdings Limited

Cairn Energy Hydrocarbons Ltd

Cairn Exploration (No. 7) Limited

Cairn Exploration (No. 6) Limited

Cairn Exploration (No. 2) Limited

Cairn Energy Gujarat Block 1 Limited

Cairn Energy Discovery Limited

Cairn Energy Cambay B.V.

Cairn Energy India West B.V.

Cairn Energy Gujarat B.V.

Cairn Energy Netherlands Holdings B.V.

Cairn Energy Australia Pty Limited

Cairn Energy India Pty Limited

CEH Australia Limited

CIG Mauritius Holdings Private Limited

CIG Mauritius Private Limited

Cairn Lanka Private Limited

Cairn South Africa Proprietary Limited

Cairn Energy Investments Australia Pty Limited

Wessington Investments Pty Limited

Sydney Oil Company Pty Limited

Cairn Exploration (No.4) Limited

Cairn Petroleum India Limited

Cairn Energy India Holdings B.V.

Cairn Energy Group Holdings B.V.

Cairn Energy Gujarat Holding B.V

Cairn Energy India West Holdings B.V.

Cairn Energy Cambay Holding B.V.

CEH Australia Pty Limited

Cairn Energy Asia Pty Limited

E) Key Management Personne

Mr. Anil Agarwal

Mr. Navin Agarwal

Mr. Tarun Jain

Mr. M.S. Mehta (Upto March 31,2014)

Mr. P. K. Mukherjee (Upto March 31,2014)

Mr. Amit Pradhan (resigned w.e.f. August 18, 2013)

Mr. Thomas Albanese $

Mr. D. D.Jalan#

F) Relatives of Key Management Personnel

Mr. Dwarka Prasad Agarwal

G) Others

Vedanta Foundation

Sesa Community Development Foundation

Public & Political Awareness Trust

Rampia Coal Mines & Energy Private Limited (Jointly Controlled Entity)

Goa Maritime Private Limited (Jointly Controlled Entity)

* Ceases to be related party for the Company pursuant to the Scheme of Amalgamation (Refer note no 31 ] (3 Subsidiary w.e.f. August 26, 2013 (Previous Year: Associate]

1 Dissolved during the year

$ Appointed as Chief Executive Officer w.e.f. April 1, 2014

# Appointed as Whole Time Director & Chief Financial Officer w.e.f. April 1, 2014

54 ln Accordance with Clause 32 of Listing Agreement, Advance(s) in the nature of Loan is/are as under : (As Certified by the Management]

(b) None of the loanee have made, per se, investment in the shares of the company.

(c) (i) Investments made by Sterlite Infra Limited in THL Zinc Ventures Limited- 1,00,001 Equity Shares and 70,00,000 Optionally Convertible Redeemable Preference Shares and in THL Zinc Holding B.V. - 37,38,000 Equity Shares & 55,00,000 Optionally Convertible Redeemable Preference Shares.

(ii) Investments made by Sterlite Ports Limited in Maritime Ventures Private Limited - 10,000 equity shares.

d) The above loans and advances to subsidiary fall under the category of loans and advances in the nature of loans where there is no repayment schedule and are repayable on demand and are free from interest except Loan to Sterlite Iron and Steel Company Limited which is repayable on May 12, 2014 with an interest rate of 10%

e) As per the Company''s policy, loan to employees are not considered in (a) above.

16. The company considers its investment in and loans to subsidiaries as strategic and long term in nature and accordingly, in the view of the management, any decline in the value of such long term investments in subsidiaries is considered as temporary in nature and hence no provision for dimunition in value is considered necessary.

17. The Board of Directors in its meeting held on April 29, 2014, has approved the merger of Goa Energy Limited and Sterlite Infra Limited with the Company. With effect from the appointed date of April 1, 2014, both Goa Energy Limited and Sterlite Infra Limited are wholly owned subsidiaries of the Company and accordingly no shares are proposed to be issued under the merger. The merger is subject to the approval of jurisdictional High Courts and other statutory authorities as may be applicable.

18. Consequent to the effectiveness of the Scheme of Amalgamation and Arrangement, and acquisition of VALs power business through slump sale (Refer note no 31 and 32), the current year''s figures are not comparable with the previous year''s figures. Previous year''s figures have been regrouped/reclassified wherever necessary to conform with the current year''s classification / disclosure.


Mar 31, 2013

1. corporate information

Sesa Goa Limited (''Sesa'' / ''the Company'') is a major producer and exporter of iron ore in the private sector in India and has been in operation for more than six decades. The Company is a majority owned and controlled subsidiary of Vedanta Resources plc, the London listed FTSE 100 diversified metals and mining major. Sesa has been involved in iron ore exploration, mining, beneficiation and exports. Sesa has iron ore mining operations in Goa and Karnataka. It has 100% stake in Western Cluster Limited, a Liberia based company engaged in developing the Western Cluster Iron Ore Deposits into a large integrated iron ore project. Sesa is also into manufacturing pig iron and metallurgical coke.

a. There has been no movement in the equity shares outstanding at the beginning and at the end of the year.

b. Rights, preferences and restrictions attached to equity shares

The Company has only one class of shares referred to as equity shares having a par value of Rs. 1 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend which is paid as and when declared by the Board. Repayment of capital, if any, will be in proportion to the number of equity shares held.

During the year ended March 31, 2010, the Company had issued 5,000 Foreign Currency Convertible Bonds (''FCCBs'') aggregating USD 500 million at a coupon rate of 5% (net to bondholder).

The bondholders have an option to convert these FCCBs into shares, at a conversion price of Rs. 346.88 per share and at a fixed rate of exchange on conversion of Rs. 48.00 per USD 1.00 at any time on or after December 9, 2009. The conversion price is subject to adjustment in certain circumstances. Unless previously converted, redeemed or repurchased and cancelled, the FCCBs fall due for redemption on October 31, 2014 at par.

Upto March 31, 2013, 2,832 FCCB''s have been converted into 39,188,159 equity shares. No conversion has been made during the year.

2. The Shareholders at the Court convened meeting held on June 19, 2012, have approved a Scheme of Amalgamation and Arrangement amongst Sterlite Industries (India) Limited, The Madras Aluminum Company Limited, Sterlite Energy Limited, Vedanta Aluminium Limited, and Sesa Goa Limited (''the Company'') and their respective shareholders and creditors (the ''Scheme'') and also a Concurrent Scheme of Amalgamation of Ekaterina Limited with the Company and their respective shareholders and creditors (the ''Concurrent Scheme''). The Scheme and the Concurrent Scheme are inter-conditional and the Concurrent Scheme coming into effect is a condition precedent to the effectiveness of the Scheme. Further, the name of the Company is proposed to be changed from Sesa Goa Limited to Sesa Sterlite Limited pursuant to the Scheme of Amalgamation and Arrangement.

The High Court of Bombay at Goa, based on the petitions filed by the Company, has approved the Scheme vide its Order dated April 3, 2013.The Scheme is also subject to approval of the Honourable High Court of Madras wherein the hearings have been completed and the order is awaited.

Pending the above Court approval and also pending Court approvals in respect of other entities involved in the Scheme, no accounting impact of the Scheme has been given in these financial statements.

3. During the year, the Company, through its wholly owned subsidiary, Bloom Fountain Limited has acquired the remaining 49% stake in Western Cluster Limited, Liberia (''WCL'') for a cash consideration of Rs. 183.68 crore. Post this acquisition, WCL has become a wholly owned subsidiary. WCL will develop the Western Cluster Iron Ore Project in Liberia which includes development of iron ore deposits, necessary transportation and shipping infrastructure for export of iron ore.

4. a) The Honourable Supreme Court of India has given clearance for resumption of mining operations for ''A'' and ''B'' category mines in Karnataka subject to statutory clearances, vide its Order dated April 18, 2013. The Company''s Karnataka mines fall under the ''B'' category of mines in Karnataka and is in process of securing the necessary statutory clearance to resume mining shortly.

b) The Government Authorities have ordered suspension of mining operations of all mining leases in the State of Goa, stoppage of mining transport across the State of Goa and suspension of environmental clearance in September, 2012. In October, 2012, the Supreme Court has ordered suspension of all mining operations and transportation of iron ore of the mines in the State. In view of the foregoing, operations at the Company''s mines in Goa remain suspended. The Company has filed an application before the Supreme Court seeking modification or vacation of the aforesaid Order. Based on the favourable verdict of the Supreme Court lifting the suspension of iron ore mining in the State of Karnataka and the affidavit filed by the Government of Goa in the matter of resumption of mining in Goa, the Company expects a favourable outcome in the matter.

5. Exceptional items for the current year pertain to expenditure in connection with the Company''s Voluntary Retirement Scheme and for the previous year pertain to advisory fees, taxes thereon and other expenses incurred for the strategic investment in Cairn India Limited.

6. The Company had acquired assets of Bellary Steel and Alloys Limited in 2010-11 for a consideration of Rs. 220 crore, on an ''As is where is'' basis.

The above acquisition has been challenged by JSW Limited in the Supreme Court. The Court has directed both the parties to maintain status quo till the matter is decided. In the meanwhile, freehold land at Rs. 121.12 crore continues to be included in fixed assets and balance Rs. 98.88 in capital work-in-progress.

7. CONTINGENT LIABILITIES:

i) Guarantees (excluding the liability for which provisions have been made) amounting to Rs. 20.38 crore (Previous year Rs. 23.22 crore) given by the bankers in favour of various parties.

ii) Letters of Credit opened by the banks in favour of suppliers amounting to Rs. 86.87 crore (Previous year Rs. 138.19 crore).

iii) Bonds executed in favour of customs authorities in respect of export of iron ore Rs. 2,807.75 crore (Previous year Rs. 2,474.82 crore).

iv) Claims by custom authorities (under dispute) relating to differential export duty on export shipments Rs. 34.41 crore (Previous year Rs. 34.41 crore). The said amount is also included under bonds executed detailed in (iii) above.

v) Bills discounted under letters of credit with banks Rs. 16.13 crore (Previous year Rs. 137.03 crore).

vi) There are disputed income tax demands lying at appellate authorities for assessment years 2004-05 to 2011-12, aggregating Rs. 1,522.47 crore (Previous year Rs. 245.38 crore) including interest Rs. 322.36 crore (Previous year Rs. 62.36 crore) and penalty Rs. 200 crore (Previous year Nil). The Company has received a favourable order in respect of assessment year 2009-10 from the Income Tax Appellate Tribunal (''ITAT'') allowing the claim of the company on all the major matters and with direction to the Assessing Officer (AO) to re-compute the taxable income.

Most of the pending assessment years have similar matters as covered in the aforesaid order.

vii) Disputed forest development tax amounting to Rs. 195.36 crore (Previous year Rs. 195.36 crore) levied by Government of Karnataka challenged by writ petition filed in the High Court of Karnataka. Hearing of writ petition before the High Court of Karnataka is pending. A bank guarantee amounting to Rs. 45.00 crore (Previous year Rs. 45.00 crore) has been furnished against this demand. Also, an amount of Rs. 40.23 crore (Previous year Rs. 40.23 crore) has been deposited against the aforesaid demand and same is included under Short term loans and advances.

viii) Cess on transportation of Ore, coal and coke within Goa levied by Government of Goa under the Goa Rural Development and Welfare Cess Act, 2000 (Goa Act 29 of 2000) amounting to Rs. 105.33 crore (Previous year Rs. 98.35 crore) challenged by way of writ petition in the High Court of Bombay, Panjim Bench.

ix) Guarantees issued to a bank in respect of facilities granted to a subsidiary Rs. 27.19 crore (Previous year Rs. Nil).

x) Other claims against the Company not acknowledged as debts:

a) Dead rent on deemed mining leases for the period from 20.12.1962 to 23.5.1987 amounting to Rs. 0.10 crore (Previous year Rs. 0.10 crore) and royalty for the period from 20.12.1961 to 30.9.1963 amounting to Rs. 0.12 crore (Previous year Rs. 0.12 crore) sought to be levied by the Government pursuant to the Goa, Daman & Diu Mining Concessions (Abolition & Declaration as Mining Leases) Act 1987, challenged by Special Leave Petition before Supreme Court of India.

b) Claims related to commercial and employment contracts Rs. 5.69 crore (Previous year Rs. 4.26 crore).

c) Demand from Railway authorities towards stacking charges amounting to Rs. 4.09 crore (Previous year Rs. 4.09 crore) appealed before Kolkata High court and stay obtained. A bank guarantee amounting to Rs. 4.09 crore (Previous year Rs. 4.09 crore) has been furnished against this demand.

d) Others Rs. 13.83 crore (Previous year Rs. 3.32 crore).

The above amounts are based on the demand notices or assessment orders or notification by the relevant authorities, as the case may be, and the Company is contesting these claims wih the respective authorities. Outflows, if any, arising out of these claims would depend on the outcome of the decisions of the appellate authorities and the Company''s rights for future appeals before the judiciary.

8. COMMITMENTS:

a) Estimated amount of contracts remaining to be executed on capital account Rs. 43.91 crore (Previous year Rs. 145.29 crore).

b) Letter of support issued to Bloom Fountain Limited, wholly owned subsidiary, to provide financial support in order to allow it to meet its liabilities as they fall due for a period of not less than one year.

9. EMPLOYEE BENEFITS PLANS:

Defined benefit plans:

The Company offers its employees defined benefit plans in the form of gratuity schemes. Gratuity Scheme covers all employees as statutorily required under the Payment of Gratuity Act 1972. The Company has three gratuity schemes for different categories of employees. The Company contributes funds to Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited, which are irrevocable. Commitments are actuarially determined at the year end. The actuarial valuation is done using ''Projected Unit Credit'' method. Gains and losses of changed actuarial assumptions are charged to the Statement of Profit and Loss.

Defined contribution plans:

The Company offers its employees benefits under defined contribution plans in the form of provident fund, family pension fund and annuity fund. Provident fund, family pension fund and annuity fund cover substantially all regular employees. Contributions are paid during the year into separate funds under certain statutory / fiduciary type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund and pension fund, the contribution to annuity fund are made only by the Company. The contributions are normally based on a certain proportion of the employee''s salary prescribed in the respective scheme.

The Company''s provident fund is exempted under section 17 of the Employees Provident Fund Act, 1952. Conditions for grant of exemption stipulates that the employer shall make good deficiency, if any, between the return guaranteed by the statute and actual earning of the Fund.

Based on a Guidance Note from The Institute of Actuaries - Valuation of Interest Guarantees on Exempt Provident Funds under AS 15 (Revised 2005) for actuarially ascertaining such interest liability, there is no interest shortfall that is required to be met by the Company as at March 31, 2013.

10. SEGMENT INFORMATION

As required by Accounting Standard No.17 on Segment Reporting

i) The Company is collectively organised into three main business segments namely:

- Iron ore

- Metallurgical coke

- Pig iron

Segments have been identified and reported taking into account the nature of the product and services, the organisation structure and internal financial reporting system.

11. RELATED PARTY INFORMATION:

Related party information as required by AS 18 is given below:

A. Names of the related parties and their relationships:

i) Ultimate holding company and its intermediaries

Ultimate Holding company

Vedanta Resources plc

Intermediaries

Finsider International Company Limited

Twin Star Holdings Limited

Westglobe Limited

ii) Subsidiaries

Sesa Resources Limited

Sesa Mining Corporation Limited

Bloom Fountain Limited

Western Cluster Limited

Goa Energy Limited

iii) Associate (and an indirect subsidiary of the ultimate holding company)

Cairn India Limited

iv) Jointly Controlled Entity:

Goa Maritime Private Limited

v) Fellow Subsidiaries:

(With whom transactions have taken place during the year)

Bharat Aluminium Company Limited

Hindustan Zinc Limited

Konkola Copper Mines

Sterlite Industries (India) Limited

Sterlite Iron and Steel Company Limited

Talwandi Sabo Private Limited

The Madras Aluminium Company Limited

Twin Star Mauritius Holdings Limited

Vedanta Aluminum Limited

Vizag General Cargo Berth Private Limited

vi) Details of Key Management Personnel

Mr. P.K. Mukherjee, Managing Director

Mr. A.K. Rai (Retired on July 31, 2011), Wholetime Director

Mr. A. Pradhan, Wholetime Director

vii) Enterprise in which significant influence is exercised by Key Management Personnel

Sesa Community Development Foundation

12. In terms of the Mineral Concession Rules 1960 and Mineral Conservation and Development Rules (MCDR) 1988, the Company has provided a ''financial assurance'' in the form of a bank guarantee to the Regional Controller of Mines, towards its mine closure obligation. The Company has made a provision for expense to the extent of the bank guarantees provided.

13. The Company offers equity-based award plans to its employees, officers and directors through its ultimate holding company, Vedanta Resources Plc., the Vedanta Resources Long- Term Incentive Plan (the ''LTIP'').

The LTIP is the primary arrangement under which share-based incentives are provided to the defined management group. The maximum value of shares that can be awarded to members of the defined management group is calculated by reference to the balance of basic salary and share-based remuneration consistent with local market practice. The performance condition attaching to outstanding awards under the LTIP is that of Vedanta''s performance, measured in terms of Total Shareholder Return (''TSR'') compared over a three year period with the performance of the companies as defined in the scheme from the date of grant.

Under this scheme, initial awards under the LTIP were granted in February 2004 and subsequently further awards were granted in the respective years. The awards are indexed to and settled by Vedanta shares. The awards provide for a fixed exercise price denominated in Vedanta''s functional currency at 10 US cents per share, the performance period of each award is three years and the same is exercisable within a period of six months from the date of vesting beyond which the option lapse. Under the scheme, Vedanta is obligated to issue the shares. During the year, Vedanta has granted a new LTIP tranche that shall vest based on the achievement of business performance in the performance period. The vesting schedule is staggered over a period of three years.

Further, in accordance with the terms of agreement between Vedanta and the Company, on the grant date, fair value of the awards is recovered by Vedanta from the Company.

Amount recovered by Vedanta and recognised by the Company in the Statement of Profit and Loss for the financial year ended March 31, 2013 is Rs. 11.87 crore (Previous year Rs. 10.61 crore).

The Company considers these amounts as not material and accordingly has not provided further disclosures.

14. Previous year''s figures have been regrouped / reclassified, to correspond with the current year''s classification/ disclosure.


Mar 31, 2012

1 CORPORATE INFORMATION

Sesa Goa Limited ("Sesa" / "the Company") is India's largest producer and exporter of iron ore in the private sector.

The Company is a majority owned and controlled subsidiary of Vedanta Resources plc, the London listed FTSE 100 diversified metals and mining major. For more than five decades, Sesa has been involved in iron ore exploration, mining, beneficiation and exports. Sesa has iron ore mining operations in Goa and Karnataka. It has recently acquired 51% stake in Western Cluster Limited, a Liberia based company engaged in developing the Western Cluster Iron Ore Deposits into a large integrated iron ore project. Sesa is also into manufacturing pig iron and metallurgical coke.

2. SHARE Capital (CoNTD.)

b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 1. The equity shares have rights, preferences and restrictions which are in accordance with the provisions of law, in particular the Companies Act,1956.

All the above entities are subsidiaries of Vedanta Resources Plc. Accordingly, Vedanta Resources Plc. is the ultimate holding company.

During the year ended March 31, 2010, the Company had issued 5,000 Foreign Currency Convertible Bonds ("FCCBs'') aggregating US$ 500 million at a coupon rate of 5% (net to bondholder).

The bondholders have an option to convert these FCCBs into shares, at a conversion price of Rs 346.88 per share and at a fixed rate of exchange on conversion of Rs 48.00 per U.S. $ 1.00 at any time on or after December 9, 2009.

The conversion price is subject to adjustment in certain circumstances. The FCCBs may be redeemed in whole, but not in part, on or after October 30, 2012, subject to certain conditions. Unless previously converted, redeemed or repurchased and cancelled, the FCCBs fall due for redemption on October 31, 2014 at par.

Upto March 31, 2012, 2,832 FCCB's have been converted into 39,188,159 equity shares.

A part of the FCCB proceeds aggregating Rs 1,040.86 crores (March 31, 2011 Rs 775.28 crores) has been utilised for the Company's capital projects.

3. During the year, the Company has made the following business acquisitions /strategic investments -

a) along with its subsidiary Sesa Resources Limited, an equity stake aggregating 20% for Rs 13,074.84 crores in the equity share capital of Cairn India Ltd ("CIL").

b) through its wholly owned subsidiary, Bloom Fountain Limited, a 51% stake in Western Cluster Limited, Liberia ("WCL'') for a cash consideration of Rs 411.20 crores. WCL will develop the western cluster Iron Ore Project in Liberia which includes development of iron ore deposits, necessary transportation and shipping infrastructure for export of iron ore; and

c) acquisition on March 2, 2012 of a 100% stake in the equity share capital of Goa Energy Private Limited ("GEPL'') for an enterprise value of Rs 104.18 crores on cash-free, debt-free basis including working capital of Rs 5.93 crores. GEPL owns a 30 MW power plant in Goa which utilises the waste heat gases from Sesa's coke making and pig iron facilities."

4. The Board of Directors at their meeting held on February 25, 2012, has approved a Scheme of Amalgamation and Arrangement amongst Sterlite Industries (India) Limited, The Madras Aluminium Company Limited, Sterlite Energy Limited, Vedanta Aluminium Limited, and Sesa Goa Limited ("the Company") and their respective shareholders and creditors (the "Scheme") and also a Concurrent Scheme of Amalgamation of Ekaterina Limited with the Company and their respective shareholders and creditors (the "Concurrent Scheme"). The Scheme and the Concurrent Scheme are inter-conditional and the Concurrent Scheme coming into effect is a condition precedent to the effectiveness of the Scheme. Further, the name of the Company is proposed to be changed from Sesa Goa Limited to Sesa Sterlite Limited. The schemes are subject to regulatory approvals.

5. Exceptional items pertains to advisory fees, taxes thereon and other expenses incurred for the strategic investment in Cairn India Limited.

6. During the previous year the Company had acquired assets of Bellary Steel and Alloys Limited for a consideration of Rs 220 crores, on an "As is where is" basis.

The above acquisition has been challenged by JSW Limited in the Supreme Court. The Court has directed both the parties to maintain status quo till the matter is decided. In the meanwhile, freehold land at Rs 121.12 crores continues to be included in fixed assets and balance Rs 98.88 in capital work-in-progress.

7. During the year ended March 31, 2010, the Company had issued 33,274,000 equity shares of Rs 1 each at a premium of Rs 160.46 per share for cash to Twin Star Holdings Limited on a preferential basis under the applicable provisions of The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (the "Guidelines"). Entire proceeds aggregating Rs 537.24 crores (Previous year to the extent of Rs 101.47 crores) has been utilized for the Company's capital projects.

8. CONTINGENT LIABILITIES:

i) Guarantees (excluding the liability for which provisions have been made) amounting to Rs 23.22 crores (Previous year Rs 7.83 crores) given by the bankers in favour of various parties.

ii) Letters of Credit opened by the banks in favour of suppliers amounting to Rs 138.19 crores (Previous year Rs 363.13 crores).

iii) Bonds executed in favour of customs authorities in respect of export of iron ore Rs 2,474.82 crores (Previous year Rs 1,627.71 crores).

iv) Claims by custom authorities (under dispute) relating to differential export duty on export shipments Rs 34.41 crores (Previous year Rs 49.13 crores). The said amount is also included under bonds executed detailed in (iii) above.

v) Bills discounted under letters of credit with banks Rs 137.03 crores (Previous year Rs 353.90 crores).

vi) Disputed income tax demands of Rs 245.38 crores (Previous year Rs 19.51 crores) including interest and penalty of Rs 62.36 crores (Previous year Rs 1.71 crores), where the Company is in appeal before Appellate Authority

vii) Disputed forest development tax amounting to Rs 195.36 crores (Previous year Rs 173.96 crores) levied by Government of Karnataka challenged by writ petition filed in the High Court of Karnataka. Hearing of writ petition before the High Court of Karnataka is pending. A bank guarantee amounting to Rs 45.00 crores (Previous year Rs 35.00 crores) has been furnished against this demand. Also, an amount of Rs40.23 crores (Previous year Rs 32.97 crores) has been deposited against the aforesaid demand and same is included under Short term loans and advances.

viii) Cess on transportation of Ore, coal and coke within Goa levied by Government of Goa under the Goa Rural Development and Welfare Cess Act, 2000 (Goa Act 29 of 2000) amounting to Rs 98.35 crores (Previous year Rs 73.16 crores) challenged by way of writ petition in the High Court of Bombay, Panjim Bench.

ix) Other claims against the Company not acknowledged as debts:

a) Dead rent on deemed mining leases for the period from 20.12.1962 to 23.5.1987 amounting to Rs 0.10 crores (Previous year Rs 0.10 crores) and royalty for the period from 20.12.1961 to 30.9.1963 amounting to Rs 0.12 crores (Previous year Rs 0.12 crores) sought to be levied by the Government pursuant to the Goa, Daman & Diu Mining Concessions (Abolition & Declaration as Mining Leases) Act 1987, challenged by Special Leave Petition before Supreme Court of India.

b) Claims related to commercial and employment contracts Rs 4.26 crores (Previous year Rs 7.40 crores).

c) Demand from Railway authorities towards stacking charges amounting to Rs 4.09 crores (Previous year Rs 4.09 crores) appealed before Kolkata High court and stay obtained. A bank guarantee amounting to Rs 4.09 crores (Previous year Rs 4.09 crores) has been furnished against this demand.

d) Others Rs 3.32 crores (Previous year Rs 3.32 crores).

The above amounts are based on the demand notices or assessment orders or notification by the relevant authorities, as the case may be, and the Company is contesting these claims wih the respective authorities. Outflows, if any, arising out of these claims would depend on the outcome of the decisions of the appellate authorities and the Company's rights for future appeals before the judiciary.

9. Commitments:

a) Estimated amount of contracts remaining to be executed on capital account Rs 145.29 crores (Previous year Rs 319.16 crores).

b) Letter of support issued to Bloom Fountain Limited, wholly owned subsidiary, to provide financial support in order to allow it to meet its liabilities as they fall due for a period of not less than one year.

10. EMPLoYEE Benefits PLANS:

Defined benefit plans:

The Company offers its employees defined benefit plans in the form of gratuity schemes. Gratuity Scheme covers all employees as statutorily required under Payment of Gratuity Act 1972. The Company has three gratuity schemes for different categories of employees. The Company contributes funds to Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited, which are irrevocable. Commitments are actuarially determined at the year end. The actuarial valuation is done based on the "Projected Unit Credit" method. Gains and losses of changed actuarial assumptions are charged to the Statement of Profit and Loss.

The Plan assets of the Company are managed by the Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited and the composition of the Investment relating to these assets is not available with the Company.

The estimates of future salary increases considered in the actuarial valuation, take account of inflation, seniority, promotion and other relevant factors on a long term basis.

Defined contribution plans:

The Company offers its employees benefits under defined contribution plans in the form of provident fund, family pension fund and annuity fund. Provident fund, family pension fund and annuity fund cover substantially all regular employees. Contributions are paid during the year into separate funds under certain statutory / fiduciary type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund and pension fund, the contribution to annuity fund are made only by the Company. The contributions are normally based on a certain proportion of the employee's salary prescribed in the respective scheme.

The Company's provident fund is exempted under section 17 of the Employees Provident Fund Act, 1952. Conditions for grant of exemption stipulates that the employer shall make good deficiency, if any, between the return guaranteed by the statute and actual earning of the Fund.

Based on a Guidance Note from The Institute of Actuaries - Valuation of Interest Guarantees on Exempt Provident Funds under AS 15 (Revised 2005) for actuarially ascertaining such interest liability, there is no interest shortfall that is required to be met by the Company as at March 31, 2011 and March 31, 2012.

11. segment information

As required by Accounting Standard No.17 on Segment Reporting

i) The Company is collectively organised into three main business segments namely:

- Iron ore

- Metallurgical coke

- Pig iron

Segments have been identified and reported taking into account the nature of the product and services, the organisation structure and internal financial reporting system.

12. RELATED PARTY INFORMATIoN:

Related party information as required by AS 18 is given below: A. Names of the related parties and their relationships:

i) Ultimate holding company and its intermediaries Ultimate Holding company Vedanta Resources Plc Intermediaries

Finsider International Company Limited Twin Star Holdings Limited

Westglobe Limited

ii) Subsidiaries

Sesa Resources Limited Sesa Mining Corporation Limited Bloom Fountain Limited Western Cluster Limited

Goa Energy Private Limited (from March 2, 2012)

iii) Associate (and an indirect subsidiary of the ultimate holding company)

Cairn India Limited

iv) Jointly Controlled Entity:

Goa Maritime Private Limited

v) Fellow Subsidiaries:

(With whom transactions have taken place during the year)

Bharat Aluminum Company Limited

Hindustan Zinc Limited

Konkola Copper Mines

Sterlite Industries (India) Limited

Sterlite Iron and Steel Company Limited

Sterlite Technologies Limited

Talwandi Sabo Private Limited

The Madras Aluminum Company Limited

Twin Star Mauritius Holdings Limited

Vedanta Aluminum Limited

Vizag General Berth Cargo Private Limited

vi) Details of Key Management Personnel

Mr. P.K. Mukherjee, Managing Director

Mr. A.K. Rai (Retired on July 31, 2011), Wholetime Director

Mr. A. Pradhan, Wholetime Director

vii) Enterprise in which significant influence is exercised by Key Management Personnel

Sesa Community Development Foundation

13. In terms of the Mineral Concession Rules 1960 and Mineral Conservation and Development Rules (MCDR) 1988, the Company has provided a "financial assurance" in the form of a bank guarantee to the Regional Controller of Mines, towards its mine closure obligation. The Company has made a provision for expense to the extent of the bank guarantees provided.

Footnote: Fx = Foreign currency; USD = US Dollar; JPY= Japanese Yen; GBP= Great Britain Pound; CNY= Chinese Yuan; SGD= Singapore Dollar;

14. The Company offers equity-based award plans to its employees, officers and directors through its ultimate holding company, Vedanta Resources Plc.,the Vedanta Resources Long-Term Incentive Plan (the "LTIP").

The LTIP is the primary arrangement under which share-based incentives are provided to the defined management group. The maximum value of shares that can be awarded to members of the defined management group is calculated by reference to the balance of basic salary and share-based remuneration consistent with local market practice. The performance condition attaching to outstanding awards under the LTIP is that of Vedanta's performance, measured in terms of Total Shareholder Return ("TSR") compared over a three year period with the performance of the companies as defined in the scheme from the date of grant.

Under this scheme, initial awards under the LTIP were granted in February 2004 and subsequently further awards were granted in the respective years. The awards are indexed to and settled by Vedanta shares. The awards provide for a fixed exercise price denominated in Vedanta's functional currency at 10 US cents per share, the performance period of each award is three years and the same is exercisable within a period of six months from the date of vesting beyond which the option lapse. Under the scheme, Vedanta is obligated to issue the shares. Further, in accordance with the terms of agreement between Vedanta and the Company, on the grant date, fair value of the awards is recovered by Vedanta from the Company.

Amount recovered by Vedanta and recognised by the Company in the Statement of Profit and Loss for the financial year ended March 31, 2012 is Rs 10.61 crores (Previous year Rs 5.86 crores) . The Company considers these amounts as not material and accordingly has not provided further disclosures.

15. The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have accordingly been regrouped / reclassified, to correspond with the current year's classification / disclosure.


Mar 31, 2011

1. Amalgamation of Sesa Industries Limited with the Company:

a) The Honourable Supreme Court of India, by an Order dated 7th February, 2011, approved the Scheme of Amalgamation (the “Scheme”) of Sesa Industries Limited (engaged in the manufacture and sale of Pig Iron and hereinafter referred to as SIL) (erstwhile subsidiary of Sesa Goa Limited) with the Company effective from the appointed date i.e. 1st April, 2005, by setting aside the Order dated 21st February, 2009, passed by the Division Bench of the High Court of Bombay at Goa not sanctioning the Scheme passed by the Single Bench of the Honourable High Court of Bombay, at Goa vide its Order dated 18th December, 2008. The Scheme has accordingly been given effect to in these financial statements. The effective date of amalgamation is 14th February, 2011.

b) In accordance with the Scheme approved by the Court:

i) SIL stands dissolved without winding up with effect from 1st April, 2005.

ii) All assets, debts and liabilities of SIL have been deemed transferred to and vested in the Company with effect from 1st April, 2005.

iii) 9,398,864 equity shares of Rs.1 each have been issued in the ratio of 20 fully paid equity shares of Rs.1 each (after adjustment for stock split and bonus shares) in the Company for 5 fully paid equity shares of Rs.10 each held by the shareholders of SIL except that 17,650,284 equity shares held by the Company in SIL stand cancelled.

iv) Dividend on the aforesaid 9,398,864 equity shares of Rs.1 each amounting to Rs.12.88 crore has been paid to the shareholders of erstwhile SIL for the financial years from 31st March, 2006 to 31st March, 2010 at the rates declared in the relevant years. The aforesaid amount of Rs.12.88 crore includes dividend tax of Rs. 1.83 crore.

c) The amalgamation has been accounted using the “Pooling of Interests” method whereby:

i) The assets, liabilities and reserves (excluding share premium) of SIL have been recorded at their book values. The excess of net assets over the face value of shares allotted after eliminating the carrying value of the investment held in erstwhile SIL has been credited to Amalgamation Reserve. Accordingly, the balance of share premium in erstwhile SIL also stands eliminated.

ii) The balance in the Profit and Loss account of SIL as of 1st April, 2005 Rs. 6.60 crore and the incremental balance of Rs. 276.88 crore until 31st March, 2010 being the profits for the period from 1st April, 2005 to 31st March, 2010 has been included in the balance in Profit and Loss Account.

d) In view of the above amalgamation, the figures for the current year are not comparable with those of the previous year.

3. The Company has proposed to acquire upto 20% of the equity share capital of Cairn India Ltd (“CIL”), subject to requisite approvals. For the said acquisition, the Company is acting as a Person in Concert with its ultimate holding company Vedanta Resources Plc ( “Vedanta”), and/or any of Vedanta’s subsidiaries for acquiring majority of equity shares of CIL. The Company has received clearance from Securities and Exchange Board of India (“SEBI”) to proceed with an open offer of up to 20% of the shares of CIL. The Company has launched the Open Offer from 11th April, 2011 at a price of Rs. 355 per share of CIL which will close on 30th April, 2011.

In April 2011, the Company acquired 200 million shares amounting to 10.4% stake in CIL from Petronas International Corporation Ltd. (“Petronas”) at a price of Rs. 331 per share. The acquisition is in addition to the Open Offer launched by the Company on 11th April, 2011.

4. The Company has acquired assets of the upcoming Steel Plant Unit of Bellary Steel and Alloys Ltd. (“BSAL”) for an all cash consideration of Rs. 220.00 crore. BSAL was in the process of putting up a 0.5 mtpa Steel Plant Project at Bellary. The properties of the under construction plant acquired are freehold land of ~700 acres, building and structures, plant and machinery and other assets of the Steel Plant. The Assets have been transferred on an “As is where is” basis to the Company as of 22nd March, 2011.

The above acquisition has been challenged by JSW Ltd. in the Supreme Court. The court has asked both the parties to maintain status quo till the matter is decided.

5. During the previous year 2009-10, the Company had issued 33,274,000 equity shares of Rs. 1 each at a premium of Rs. 160.46 per share for cash to Twin Star Holdings Limited on a preferential basis under the applicable provisions of The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (the “Guidelines”). A part of the proceeds aggregating Rs. 101.47 crore (Previous year Rs. 101.47 crore) has been utilised for the Company’s capital projects. The unutilised portion of the issue proceeds amounting to Rs. 435.77 crore (Previous year Rs. 435.77 crore) has been invested in Mutual Funds.

6. During the previous year 2009-10 the Company issued 5000 Foreign Currency Convertible Bonds (“FCCBs”) aggregating US$ 500 million at a coupon rate of 5% (net to bondholder). The bondholders have an option to convert these FCCBs into shares, at a conversion price of Rs. 346.88 per share at a fixed rate of exchange on conversion of Rs. 48.00 per US$ 1.00 at any time on or after 9th December, 2009. The conversion price is subject to adjustment in certain circumstances. The FCCBs may be redeemed in whole, but not in part, on or after 30th October, 2012, subject to certain conditions. Unless previously converted, redeemed or repurchased and cancelled, the FCCBs fall due for redemption on 31st October, 2014 at par. As at 31st March, 2011, 2,832 FCCB’s have been converted into 39,188,159 equity shares.

A part of the proceeds aggregating Rs. 775.28 crore (Previous year Rs. 21.70 crore) has been utilised for the Company’s capital projects, the construction of which is in progress. The unutilised portion of the FCCB proceeds aggregating Rs. 1,607.22 crore (Previous year Rs. 2,360.80 crore) have been placed in term deposits/ mutual funds/ current accounts with a scheduled bank, pending utilisation. Interest aggregating Rs. 4.72 crore (Previous year Rs. 0.17 crore) in respect of amounts utilised for the construction of capital projects has been capitalised and included as part of Capital Work in Progress. The balance interest amounting to Rs. 2786 crore (Previous year Rs. 45.36 crore) has been charged to the Profit and Loss Account.

7. Contingent Liabilities:

i) Guarantees (excluding the liability for which provisions have been made) amounting to Rs. 783 crore (Previous year Rs. 9.04 crore) given by the Bankers in favour of various parties - none invoked.

ii) Letters of Credit opened by the banks in favour of suppliers amounting to Rs. 363.13 crore (Previous year Rs. 174.52 crore).

iii) Bonds executed in favour of customs authorities in respect of export of iron ore Rs. 1,627.71 crore (Previous year Rs. 1,003.23 crore).

iv) Claims by custom authorities (under dispute) relating to differential export duty on export shipments Rs. 49.13 crore (Previous year Rs. 49.13 crore). The said amount is also included under bonds executed detailed in point 7 (iii) above.

v) Bills discounted under letters of credit with banks Rs. 353.90 crore. (Previous year Rs. 471.08 crore).

vi) Provisions have also not been made in the accounts in respect of the following liabilities not acknowledged as debts for the reasons stated against them:

a) Dead rent on deemed mining leases for the period from 20.12.1962 to 23.5.1987 amounting to Rs. 0.10 crore (Previous year Rs. 0.10 crore) and royalty for the period from 20.12.1961 to 30.9.1963 amounting to Rs. 0.12 crore (Previous year Rs.0.12 crore) sought to be levied by the Government pursuant to the Goa, Daman & Diu Mining Concessions (Abolition & Declaration as Mining Leases) Act, 1987, challenged by Special Leave Petition before Supreme Court of India.

b) Claims related to commercial and employment contracts Rs. 740 crore (Previous year Rs. 706 crore).

c) A civil suit claiming a damage of a minimum amount of Rs. 3750 crore (Previous year Rs. 3750 crore) towards infringement of patent has been filed against the Company.

d) Disputed sales tax demand of Rs. 0.45 crore (Previous year Rs. 0.45 crore) including interest and penalty of Rs. 0.09 crore (Previous year Rs. 0.09 crore) appealed before Appellate Authority.

e) Disputed income tax demand of Rs. 19.51 crore (Previous year Rs. 9.24 crore) including interest and penalty of Rs. 1.71 crore (Previous year Rs. 0.56 crore), appealed before Appellate Authority.

f) Disputed demand from customs authorities towards fine and penalty of Rs. 0.35 crore (Previous year Rs. 0.35 crore) for improper documentation of equipment loaded/unloaded to/from the company’s vessel M.V. Orissa and its improper use.

g) Disputed demand from customs authorities of Rs. 1.60 crore including penalty of Rs. 0.80 crore, for transferring imported metallurgical coke at concessional rate of duty under the provisions of Customs (Import of Goods at Concessional rate of Duty for manufacture of Excisable Goods) Rules 1996 to the erstwhile M/s. Sesa Kembla Coke Company Limited, appealed before the Appellate Authority.

h) Disputed forest development tax amounting to Rs. 173.96 crore (Previous year Rs. 164.12 crore) levied by Government of Karnataka challenged by writ petition filed in the High Court of Karnataka. Hearing of writ petition before the High Court of Karnataka is pending. A bank guarantee amounting to Rs. 35.00 crore (Previous year Rs. 74.00 crore) has been furnished against this demand. Also an amount of Rs. 32.97 crore (Previous year Rs. 5.00 crore) has been deposited against aforesaid demand and same is included under Loans and Advances

i) A Notice issued by the Deputy Conservator of Forest, Chitradurga, demanding registration of a supplemental forest lease agreement by payment of stamp duty calculated on the net present value which has been challenged in the High Court of Karnataka. Estimated liability is Rs. 0.92 crore (Previous year Rs.0.92 crore). A bank guarantee amounting to Rs. 0.45 crore (Previous year Rs. 0.45 crore) has been furnished against this demand.

j) Cess on transportation of Ore, coal and coke within Goa levied by Government of Goa under the Goa Rural Development and Welfare Cess Act, 2000 (Goa Act, 29 of 2000) amounting to Rs. 73.16 crore (Previous year Rs. 49.31 crore) challenged by way of writ petition in the High Court of Bombay, Panjim Bench.

k) A demand from Railway authorities towards stacking charges amounting to Rs. 4.09 crore appealed before Kolkata High Court and stay obtained. A bank guarantee amounting to Rs. 4.09 crore has been furnished against this demand.

The Company does not expect devolvement of any liability in respect of the above.

8. Estimated amount of contracts (net of advances) remaining to be executed on capital account Rs. 319.16 crore (Previous year Rs. 402.21 crore).

The above information has been compiled in respect of parties to the extent to which they could be identified as micro or small enterprises on the basis of intimation received from the “suppliers” regarding their status under the Micro Small and Medium Enterprises Development Act, 2006.

14. Research and development expenditure of Rs. 0.29 crore (Previous year Rs. 0.29 crore) has been charged to Profit and Loss Account under specific heads of accounts, while Rs. Nil (Previous year Rs. Nil) has been incurred as capital cost for research and development.

15. Employee benefits obligations:

Defined benefit plans:

The Company offers its employees defined benefit plans in the form of gratuity schemes. Gratuity Scheme covers all employees as statutorily required under Payment of Gratuity Act, 1972. The Company has three gratuity schemes for different categories of employees. The Company contributes funds to Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited, which are irrevocable. Commitments are actuarially determined at the year end. The actuarial valuation is done based on the “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the Profit and Loss Account under the head ‘Personnel’.

The contributions expected to be made by the Company during the financial year 2011-12 are Rs. 5.19 crore.

The above information is actuarially determined.

Defined Contribution Plans:

The Company offers its employees benefits under defined contribution plans in the form of provident fund, family pension fund and annuity fund. Provident fund, family pension fund and annuity fund cover substantially all regular employees. Contributions are paid during the year into separate funds under certain statutory / fiduciary type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund and pension fund, the contribution to annuity fund are made only by the Company. The contributions are normally based on a certain proportion of the employee’s salary.

Footnotes:

1. Net of processing and handling loss on ore handled and processed/reprocessed during the year.

2. The closing stock of ore excludes 0.053 million metric ton (Previous year 0.081 million metric ton) received on loan basis.

3. Figures in brackets relate to previous year.

4. Quantities are in dry metric tons (DMT).

5. Hitherto, the quantities were stated in wet metric tons (WMT); accordingly the quantities in respect of previous year have been restated in DMT to conform to current year’s measurement.

Footnotes:

1. Excludes 0.312 million metric ton of Iron Ore used for captive consumption.

2. Figures in brackets relate to previous year.

3. Quantities are in dry metric tons (DMT).

4. Hitherto, the quantities were stated in wet metric tons (WMT); accordingly the quantities in respect of previous year have been restated in DMT to conform to current years measurement.

iii) Services rendered to third parties towards repair of barges and machinery etc. amount to Rs. 13.04 crore (Previous year Rs. 23.76 crore)

19. Segment Information As required by Accounting Standard No. 17 on Segment Reporting

i) The Company is collectively organised into three main business segments namely:

- Iron Ore

- Metallurgical coke

- Pig iron

Segments have been identified and reported taking into account the nature of the product and services, the organisation structure and internal financial reporting system.

21. Foreign Currency Exposures:

The year end foreign currency exposures that were not hedged by a derivative instrument or otherwise are given below.

26. Related party information:

Related party information as required by AS 18 is given below:

A. Names of the related parties and their relationships:

i) Holding Companies:

- Finsider International Company Limited Holding Company

- Richter Holding Limited Holding Companies of Finsider International Company Limited - Westglobe Limited

- Vedanta Resources Plc Ultimate Holding Company

ii) Subsidiaries of the Company:

- Sesa Industries Limited (amalgamated during the year, Refer Note No. 2)

- Sesa Resources Limited (formerly V. S. Dempo & Co. Limited)

- Sesa Mining Corporation Limited (formerly Dempo Mining Corporation Limited)

iii) Fellow Subsidiaries:

With whom transactions have taken place during the year

- Bharat Aluminium Company Limited

- Hindustan Zinc Limited

- Konkola Copper Mines

- The Madras Aluminium Company Limited

- Sterlite Industries (India) Limited

- Sterlite Iron and Steel Company Limited

- Sterlite Technologies Limited

- Twin Star Holdings Limited

- Vedanta Aluminium Limited

- Vizag General Berth Cargo Private Limited

iv) Jointly Controlled Entity:

- Goa Maritime Private Limited

v) Details of Key Management Personnel

Executive directors

- Mr. P. K. Mukherjee

- Mr. A. K. Rai

- Mr. A. Pradhan

- Mr. H. P. U. K. Nair (Retired on 01.10.2009)

- Mr. M. D. Phal (Retired on 30.04.2009)

vi) Enterprise in which significant influence is exercised by Key Management Personnel

- Sesa Community Development Foundation

* Inter-corporate deposits have been placed at an interest rate of 8% from April 2010 to September 2010, 9% from October 2010 to December 2010 and 11% p.a. from January 2011 to March 2011 and are secured against a corporate guarantee from Vedanta Resources Plc., the ultimate holding company. As no cash and cash equivalents were involved in the roll-over of this Inter-corporate deposit, the same has been excluded from the Cash Flow Statement.

** Inter-corporate deposits have been placed at an interest rate of 8%.

27. The ultimate holding company viz, Vedanta Resources Plc, (“Vedanta”) offers equity-based award plans to its employees, officers and directors based on the performance conditions as set out in the scheme, duly approved by the board of directors and by the shareholders of Vedanta on 24th December, 2003 and 20th January, 2004 respectively. The performance condition attached to outstanding awards under the Long Term Incentive Plan (LTIP) is that of Vedanta’s performance, measured in terms of Total Shareholder Return (“TSR”) compared over a three year period or such period as the Board of Vedanta may determine with the performance of the companies as defined in the scheme from the date of grant. Under this scheme, initial awards under the LTIP were granted in February 2004 with further awards being made in June 2004, November 2004, February 2006, November 2007, February 2009, August 2009 and January 2010.

The fair values were calculated using a Monte Carlo model with suitable modifications to allow for the specific performance conditions of the LTIP. The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends and the risk free rate of interest. A progressive dividend growth policy is assumed in all fair value calculations. Expected volatility has been calculated using historical share prices over the period to date of grant that is commensurate with the performance period of the option. The share prices of the mining companies in the Adapted Comparator Group have been modelled based on historical price movements over the period to date of grant which is also commensurate with the performance period for the option. The history of share prices is used to determine the volatility and correlation of share prices for the companies in the Adapted Comparator Group and is needed for the Monte Carlo simulation of their future TSR performance relative to the Company’s TSR performance. All options are assumed to be exercised six weeks after vesting.

The awards are indexed to and settled in Vedanta shares. The awards provide for a fixed exercise price denominated in Vedanta’s functional currency at 10 US cents per share. Vedanta is obligated to issue the shares. On the grant date, fair value of the awards is recovered by Vedanta from the Company to the extent the awardees have been deployed at the Company.

Accordingly, Vedanta, on the basis of fair value of options granted to such employees charged a proportionate cost to the Company in the amount of Rs. 5.86 crore (Previous year Rs. 5.34 crore) which is charged to the Profit and Loss Account under the head “Salaries, Wages, bonus and allowances” in Schedule 16 to the financial statements.

Vedanta has obtained an overall valuation of the options granted by it to the awardees. Information related to options granted to the eligible resources deployed at the Company is not readily available and accordingly the movements in options have not been disclosed.

28. “Other current assets” comprise interest accrued on term deposits.

29. Previous year’s figures have been regrouped and rearranged wherever necessary to conform to current year’s classification.


Mar 31, 2010

1. By Order dated 18th December, 2008 the Single Bench of the Honourable High Court of Bombay, at Goa, Panaji (Bombay High Court) had approved the Scheme of Amalgamation (the “Scheme”) of Sesa Industries Limited (SIL) with the Company effective from the appointed date i.e. 1st April 2005. Consequent to an appeal filed by an aggrieved shareholder the Order dated 18th December, 2008 was set aside by the Division Bench of the Bombay High Court vide order dated 21st February 2009. While SIL has filed an appeal against the Order of the Division Bench before the Honourable Supreme Court, the financial statements have been prepared on a standalone basis without considering the impact of the merger with SIL.

2. The Company has pursuant to a share purchase agreement dated 11th June 2009 acquired 1,250,000 equity shares of Rs. 10 each (being 100% of the issued and paid up share capital) of the V. S. Dempo & Company Private Limited (“VSD”). VSD in turn holds 1,150,000 equity shares of Rs. 100 each (being 100% of the issued and paid up share capital) of Dempo Mining Corporation Private Limited and also hold 5,000 equity shares of Rs. 10 each (being 50% of the issued and paid up share capital) of Goa Maritime Private Limited.

The cost of the Company’s investment in VSD i.e. Rs. 1,713.24 crores (including deferred and contingent components) is included as part of Investments in Schedule 7.

3. To meet its growth objectives, during the year, the Company issued 33,274,000 equity shares of Re. 1 each at a premium of Rs. 160.46 per share for cash to Twin Star Holdings Limited on a preferential basis under the applicable provisions of Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (the “Guidelines”). A part of the proceeds aggregating Rs 101.47 crore has been utilised for the Company’s capital projects. The unutilised portion of the issue proceeds amounting to Rs 435.77 crore has been invested in Mutual Funds.

4. During the year, the Company issued 5000 Foreign Currency Convertible Bonds (“FCCBs”) aggregating US$ 500 million (corresponding INR value Rs. 2,400.50 crores) at a coupon rate of 5% (net to bondholder) The bondholders have an option to convert these FCCBs into shares, at a conversion price of Rs. 346.88 per share at a fixed rate of exchange on conversion of Rs. 48.00 per U.S. $ 1.00 at any time on or after 9th December, 2009. The conversion price is subject to adjustment in certain circumstances. The FCCBs may be redeemed in whole, but not in part, on or after 30th October, 2012, subject to certain conditions. Unless previously converted, redeemed or repurchased and cancelled, the FCCBs fall due for redemption on 31st October, 2014 at par. As at 31st March, 2010, 755 FCCB’s have been converted into equity shares.

The expenses incurred on the issue of the FCCB’s aggregating Rs. 19.93 crores have been adjusted against the Share Premium Account of the Company.

The changes to the liability on account of foreign exchange rate fluctuation amounting to Rs. 121.91 crores have been credited to the Profit and Loss Account. A part of the proceeds aggregating Rs. 21.70 crore has been utilised for the Company’s capital projects, the construction of which is in progress. The unutilised portion of the FCCB proceeds aggregating Rs. 2,360.80 crore have been placed in term deposits/current accounts with a scheduled bank, pending utilization. Interest aggregating Rs.0.17 crores in respect of amounts utilised for the construction of capital projects has been capitalized and included as part of Capital Work in Progress. The balance interest amounting to Rs. 45.36 crores has been charged to the Profit and Loss Account.

5. Contingent liabilities:

i) Guarantees (excluding the liability for which provisions have been made) amounting to Rs. 9.04 crore (Previous year Rs. 13.31 crore) given by the Bankers in favour of various parties – none invoked.

ii) Letters of Credit opened by the banks in favour of suppliers amounting to Rs. 174.52 crore (Previous year Rs. 62.63 crore).

iii) Bonds executed in favour of customs authorities in respect of export of iron ore Rs. 1,003.23 crore (Previous year Rs. 1,281.97 crore).

iv) Claims by custom authorities (under dispute) relating to differential export duty on export shipments Rs. 49.13 crore (Previous year Rs. 49.13 crore). The said amount is also included under bonds executed detailed in point 6 (iii) above.

v) Bills discounted under letters of credit with banks Rs. 471.08 crore. (Previous year Rs. 269.68 crore)

vi) Provisions have also not been made in the accounts in respect of the following liabilities not acknowledged as debts for the reasons stated against them:

a) Dead rent on deemed mining leases for the period from 20.12.1962 to 23.5.1987 amounting to Rs. 0.10 crore (Previous year Rs. 0.10 crore) and royalty for the period from 20.12.1961 to 30.9.1963 amounting to Rs. 0.12 crore (Previous year Rs. 0.12 crore) sought to be levied by the Government pursuant to the Goa, Daman & Diu Mining Concessions (Abolition & Declaration as Mining Leases) Act 1987, challenged by Special Leave Petition before Supreme Court of India.

b) Claims related to commercial and employment contracts Rs. 7.06 crore (Previous year Rs. 6.08 crore.)

c) Claims by Chennai Port Trust related to shortfall of throughput from Chennai Port Rs. 1.13 crore (previous year Rs. 1.13 crore).

d) A civil suit claiming a damage of a minimum amount of Rs. 37.50 crore (Previous year Rs. 37.50 crore) towards infringement of patent has been filed against the Company.

e) Disputed sales tax demand of Rs. 0.45 crore (Previous year Rs. 0.98 crore) including interest and penalty of Rs. 0.09 crore (Previous year Rs. 0.14 crore) appealed before

Appellate Authority.

f) Disputed income tax demand of Rs. 9.24 crore (Previous year Rs. 3.85 crore) including interest of Rs. 0.56 crore (Previous year including interest and penalty of Rs. 0.01 crore), appealed before Appellate Authority.

g) Disputed demand from customs authorities towards fine and penalty of Rs. 0.35 crore (previous year Rs. 0.35 crore) for improper documentation of equipments loaded/unloaded to/from the company’s vessel M.V. Orissa and its improper use.

h) Disputed forest development tax amounting to Rs. 164.12 crore (Previous year Rs. 29.88 crore) levied by Government of Karnataka challenged by writ petition filed in the High Court of Karnataka. Hearing of writ petition before the High Court of Karnataka is pending.

i) A Notice issued by the Deputy Conservator of Forest, Chitradurga, demanding registration of a supplemental forest lease agreement by payment of stamp duty calculated on the net present value which has been challenged in the High Court of Karnataka. Estimated liability is Rs. 0.92 crore (Previous year Rs. 0.92 crore).

j) Cess on transportation of Ore, coal and coke within Goa levied by Government of Goa under the Goa Rural Development and Welfare Cess Act, 2000 (Goa Act 29 of 2000) amounting to Rs. 49.31 crore (Previous year Rs. 21.17 crore) challenged by way of writ petition in the High Court of Bombay, Panjim Bench.

k) Claim for non performance of contract of affreightment amounting to Rs. 3.74 crore (Previous year Rs. 12.74 crore) under arbitration.

The Company does not expect devolvement of any liability in respect of the above.

6. Estimated amount of contracts (net of advances) remaining to be executed on capital account Rs. 402.21 crore (Previous year Rs. 19.14 crore).

7. In terms of the Mineral Concession Rules 1960 and Mineral Conservation and Development Rules (MCDR) 1988, the Company has provided a “financial assurance” in the form of a bank guarantee to the Regional Controller of Mines, towards its mine closure obligation. The Company has made a provision for expense to the extent of the bank guarantees provided.

8. Research and development expenditure of Rs. 0.29 crore (Previous year Rs. 1.95 crore) has been charged to Profit and Loss Account under specific heads of accounts, while Rs. Nil (Previous year Rs. 0.65 crore) has been incurred as capital cost for research and development.

9. Employee benefits obligations:

Defined benefit plans:

The Company offers its employees defined benefit plans in the form of gratuity schemes. Gratuity Scheme covers all employees as statutorily required under Payment of Gratuity Act 1972. The Company has three gratuity schemes for different categories of employees. The Company contributes funds to Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited, which are irrevocable. Commitments are actuarially determined at the year end. The actuarial valuation is done based on the “Projected Unit Credit” method. Gains and losses of changed actuarial assumptions are charged to the Profit and Loss Account under the head ‘Personnel’.

Defined Contribution Plans:

The Company offers its employees benefits under defined contribution plans in the form of provident fund, family pension fund and annuity fund. Provident fund, family pension fund and annuity fund cover substantially all regular employees. Contributions are paid during the year into separate funds under certain statutory/fiduciary type arrangements. While both the employees and the Company pay predetermined contributions into the provident fund and pension fund, the contribution to annuity fund are made only by the Company. The contributions are normally based on a certain proportion of the employee’s salary.

10. Segment Information

As required by Accounting Standard No.17 on Segment Reporting

i) The Company is collectively organised into two main business segments namely:

– Iron Ore

– Metallurgical Coke

Segments have been identified and reported taking into account the nature of the product and services, the organisation structure and internal financial reporting system.

11. Related party information:

Related party information as required by AS 18 is given below:

A. Names of the related parties and their relationships:

i) Holding Companies:

– Finsider International Company Limited Holding Company

– Richter Holding Limited Holding Companies of Finsider International Company Limited

– Westglobe Limited

– Vedanta Resources Plc Ultimate Holding Company

ii) Subsidiaries of the Company Sesa Industries Limited V. S. Dempo Limited w.e.f. 11-Jun-2009 Dempo Mining Corporation Limited w.e.f. 11-Jun-2009

iii) Fellow Subsidiaries:

With whom transactions have taken place during the year

– Sterlite Industries (India) Limited

– The Madras Aluminum Company Limited

– Vedanta Aluminum Limited

– Hindustan Zinc Limited

– Talwandi Sabo Power Limited

– Sterlite Technologies Limited

– Twin Star Holdings Limited

iv) Jointly Controlled Entity: Goa Maritime Private Limited

v) Details of Key Management Personnel

Executive directors

– Mr. P.K. Mukherjee

– Mr. A.K. Rai

– Mr. A. Pradhan

– Mr. H.P.U.K. Nair (Retired from 01.10.2009)

– Mr. M.D. Phal (Retired from 01.05.2009)

vi) Enterprise in which significant influence is exercised by Key Management Personnel – Sesa Community Development Foundation

12. The ultimate holding company viz, Vedanta Resources Plc, (“Vedanta”) offers equity-based award plans to its employees, officers and directors based on the performance conditions as set out in the scheme, duly approved by the board of directors and by the shareholders of Vedanta on 24th December 2003 and 20th January 2004 respectively. The performance condition attached to outstanding awards under the Long Term Incentive Plan (LTIP) is that of Vedanta’s performance, measured in terms of Total Shareholder Return (“TSR”) compared over a three year period or such period as the Board of Vedanta may determine with the performance of the companies as defined in the scheme from the date of grant. Under this scheme, initial awards under the LTIP were granted in February 2004 with further awards being made in June 2004, November 2004, February 2006, November 2007, February 2009, August 2009 and January 2010.

The fair values were calculated using a Monte Carlo model with suitable modifications to allow for the specific performance conditions of the LTIP. The inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends and the risk free rate of interest. A progressive dividend growth policy is assumed in all fair value calculations. Expected volatility has been calculated using historical share prices over the period to date of grant that is commensurate with the performance period of the option. The share prices of the mining companies in the Adapted Comparator Group have been modeled based on historical price movements over the period to date of grant which is also commensurate with the performance period for the option. The history of share prices is used to determine the volatility and correlation of share prices for the companies in the Adapted Comparator Group and is needed for the Monte Carlo simulation of their future TSR performance relative to the Company’s TSR performance. All options are assumed to be exercised six weeks after vesting.

The awards are indexed to and settled in Vedanta shares. The awards provide for a fixed exercise price denominated in Vedanta’s functional currency at 10 US cents per share. Vedanta is obligated to issue the shares. On the grant date, fair value of the awards is recovered by Vedanta from the Company to the extent the awardees have been deployed at the Company.

Accordingly, Vedanta, on the basis of fair value of options granted to such employees charged a proportionate cost to the Company in the amount of Rs. 5.34 Crore (Previous year Rs. 2.37 Crore) which is charged to the Profit & Loss Account under the head “Salaries, Wages, bonus and allowances” in Schedule 16 to the financial statements.

Vedanta has obtained an overall valuation of the options granted by it to the awardees. Information related to options granted to the eligible resources deployed at the Company is not readily available and accordingly the movements in options have not been disclosed.

13. “Other current assets” comprise interest accrued on term deposits.

14. Previous year’s figures have been regrouped and rearranged wherever necessary to conform to current year’s classification.

Find IFSC