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Notes to Accounts of Vedanta Ltd.

Mar 31, 2021

Notes

a) Plant and equipment include refineries, smelters, power plants, railway sidings, ships, aircraft, river fleet and related facilities.

b) During the year ended 31 March 2021, interest capitalised was ''233 Crore (31 March 2020: ''673 crore).

c) Certain property, plant and equipment are pledged as collateral against borrowings, the details related to which have been described in Note 17 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., 01 April 2016.

Accordingly, foreign currency exchange differences arising on translation/settlement of long-term foreign currency monetary items acquired before 01 April 2016 pertaining to the acquisition of a depreciable asset amounting to ''40 Crore loss (31 March 2020: ''13 crore loss) is adjusted to the cost of respective item of property, plant and equipment.

e) Property, Plant and Equipment, Capital work-in-progress and exploration and evaluation assets net block includes share ofjointly owned assets with the joint venture partners ''6,510 Crore (31 March 2020: ''6,229 Crore).

g) Freehold Land includes ''144 Crore (31 March 2020: ''146 Crore), accumulated amortization of ''127 Crore (31 March 2020: ''127 Crore), which is available for use during the lifetime of the Production Sharing Contract of the respective Oil and Gas blocks and the title deed for the same is in the name of the licensee of the block.

h) A parcel of land aggregating to ''349 Crore relating to Iron Ore business was reclassified during the previous year, due to existence of litigation, to Financial Assets and later impaired (Refer note 32) and during the year ''1 Crore (31 March 2020: ''1 Crore) was transferred to intangible assets from Capital Work in Progress.

a. Carrying value of investment in equity shares of Hindustan Zinc Limited (HZL) is at deemed cost and for all other subsidiaries, it is at the cost of acquisition.

b. Pursuant to the Government of India’s policy of disvestment, the Company in April 2002 acquired 26% equity interest in 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 also acquired an additional 20% of the equity capital in HZL through an open offer. The Company exercised the first call option on 29 August 2003 and acquired an additional 18.9% of HZL’s issued

share capital, 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 on 21 July 2009.

The Government of India disputed the validity of the call option and has 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 to be notified. The Government of India without prejudice to the 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. Meanwhile, the

Supreme Court has, in January 2016, directed status quo pertaining to disinvestment of Government of India’s residual shareholding while hearing the public interest petition filed. The Company has filed an early hearing application in Supreme Court which is currently pending and is sub-judice. The hearings in the matter have started and will now be listed for further arguments in due course.

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 has 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 has contested the valuation and validity of the option and contended that the clauses of the SHA violate the (Indian) 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 grounds 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 erstwhile Companies Act, 1956 and are not enforceable. The Company has challenged the validity of the majority award in the Hon''ble 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 matter is currently scheduled for hearing by the Delhi High Court. Meanwhile, the

B) Current Investment

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 ''15,492 Crore and ''1,782 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.

In 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. Reduction pursuant to merger of Cairn India Limited with Vedanta Limited accounted for in the year ended 31 March 2017.

d. During the year, 15 lakh 0.1% compulsorily convertible debentures of ''1,000 each held by the Company have been fully converted into 1.5 Crore equity shares of Vizag General Cargo Berth Private Limited of face value of ''10 each at a premium of ''90 per share.

(a) The credit period given to customers ranges from zero to 90 days. Also refer note 20(C)(d).

(b) For amounts due and terms and conditions relating to related party receivables see note 37.

(c) As at 31 March 2021, trade receivables amounting to ''1,323 Crore (31 March 2020: '' 1,349 Crore) withheld by GRIDCO (''GRIDCO’ or ''the Customer’) on account of certain disputes relating to computation of power tariffs pending adjudication by Appellate Tribunal for Electricity (APTEL), which the Company is confident of recovering fully. The Customer has also raised claims of ''413 Crore on the Company in respect of short supply of power for which a provision of ''218 Crore has been made. Various minutes of meetings were signed with the Customer for computing the short supply claims, which were subject to approval of Odisha State Electricity Regulatory Commission (''OERC’). On 22 June 2020 OERC pronounced its order on computation methodology for short supply claims, basis which both the parties had to recompute the amount of claim and settle the matter in two months from the date of the order. On initial impact assessment of the said Order by the Company, it believes that no further provisioning is required in this regard.

Further, the Company filed an appeal before APTEL against the OERC Order. The matter is now listed before registrar court on 14 July 2021. The Customer has also sought review of the OERC Order. The matter has been posted for order by OERC in due course. In the meanwhile, power supply to GRIDCO has resumed and GRIDCO has been making regular payments against monthly energy invoices.

(d) The total trade receivables as at 01 April 2019 were ''3,214 Crore (net of provision for expected credit loss).

(a) Site restoration asset earns interest at fixed rate based on respective deposit rate.

(b) A parcel of land amounting to ''349 Crore relating to Iron Ore business has been reclassified during the previous year, due to existing litigation, from Property, plant and equipment and was later provided for (Refer note 32).

(c) Bank deposits include margin money of ''4 Crore (31 March 2020: Nil).

(a) Includes ''30 Crore (31 March 2020: ''30 Crore), being Company''s share of gross amount of ''86 Crore (31 March 2019: ''86 Crore) paid under protest on account of Education Cess and Secondary Higher Education Cess for the financial year 2013-14.

(b) Others include claim receivables, advance recoverable (oil and gas business), prepaid expenses and export incentive receivables. This also includes amounts receivable from KCM (Refer note 32).

(c) During the previous year, an impairment charge of ''196 Crore has been recognised relating to copper business. Refer note 32(b).

(a) Includes ''633 Crore (31 March 2020: ''256 Crore) on lien with banks and margin money ''12 Crore (31 March 2020: ''12 Crore).

(b) Restricted funds of ''460 Crore (31 March 2020: Nil) held as interest reserve created against interest payment on loans from banks and ''21 Crore (31 March 2020: Nil) on lien with Others.

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

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

(e) Earmarked escrow account is restricted in use as it relates to unclaimed redeemable preference shares.

* The % of holding has been calculated on the issued and subscribed share capital as at the respective balance sheet date.

(1) All the above entities are subsidiaries of Volcan Investments Limited, the ultimate holding Company.

(2) Represented by 2,48,23,177 American Depository Shares ("ADS") which got coverted to equity shares in FY 20-21.

(3) Vedanta Holdings Mauritius II Limited (part of Promoter Group of Vedanta Limited) had purchased 185,000,000 equity shares aggregating to 4.98% of equity share capital of Vedanta Limited, on 24 December 2020 via bulk deal on stock exchange.

As per the records of the Company, including its register of shareholders/members, the above shareholding represents legal ownership of shares.

F. Other disclosures

(i) The Company has one class of equity shares having a par value of ''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.

(ii) 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 at 31 March 2021 -16,09,03,244 equity shares were held in the form of 4,02,25,811 ADS (31 March 2020: 26,17,80,208 equity shares were held in the form of 6,54,45,052 ADS).

(iii) In terms of Scheme of Arrangement as approved by the Hon''ble High Court of Judicature at Mumbai, vide its order dated 19 April 2002, the erstwhile Sterlite Industries (India) Limited (merged with the Company during 2013-14) during 2002-2003 reduced its paid up share capital by ''10 Crore.

There are 2,01,296 equity shares (31 March 2020: 2,01,711 equity shares) of ''1 each pending clearance from NSDL. The Company has filed an 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 06 September 2002 restrained any transaction with respect to subject shares.

15 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 reserves 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: As per the

earlier provision under the Indian Companies Act, companies that issue debentures were required to create 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 utilized except to redeem debentures.The MCA vide its Notification dated 16 August 2019, had amended the Companies (Share Capital and Debenture) Rules, 2014, wherein the requirement of creation of Debenture Redemption Reserve has been exempted for certain class of companies, hence, in view of the same, Vedanta Limited is not required to create Debenture Redemption Reserve.

c) Preference share redemption reserve: The

Companies Act, 2013 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. 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.

d) Capital reserve: The balance in capital reserve has mainly arisen consequent to merger of Cairn India Limited with the Company.

16 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 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.

(a) The constituents of ''total cash’ for the purpose of capital management disclosure to include only those amounts of restricted funds that are corresponding to liabilities (e.g. margin money deposits). Consequently, restricted funds amounting to ''76 Crore (As at 31 March 2021: ''559 Crore) have been excluded from ''total cash’ in the capital management disclosures for the comparative year ended 31 March 2020 (Refer note 13(b),13(d) and 13(e)).

c) The Company facilities are subject to certain financial and non- financial covenants. The primary covenants which must be complied with include interest service coverage ratio, 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.

18B Operational Buyers'' /Suppliers'' Credit is availed in foreign currency from offshore branches of Indian banks or foreign banks at an interest rate ranging from 0.4% to 3.5% per annum and in rupee from domestic banks at interest rate ranging from 4.25-6.65% per annum. These trade credits are largely repayable within 180 days from the date of draw down. Operational Buyers'' credit availed in foreign currency is backed by Standby Letter of Credit issued under working capital facilities sanctioned by domestic banks. Part of these facilities are secured by first pari passu charge over the present and future current assets of the Company.

(b) Does not include any amounts, due and outstanding, to be credited to Investor Education and Protection Fund except ''0.10 Crore (31 March 2020: ''0.10 Crore) which is held in abeyance due to a pending legal case.

(c) Matured deposits of ''0.01 Crore (March 31,2020: ''0.01 Crore) due for transfer to Investor Education and Protection Fund have not been transferred in view of pending litigation between the beneficiaries.

(d) Includes revenue received in excess of entitlement interest of ''737 Crore (31 March 2020: ''765 Crore), reimbursement of expenses, provision for expenses, liabilities related to compensation/claim etc.

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 31 March 2021 and 31 March 2020 measured at fair value:

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).

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

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; 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

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.

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.

Derivative financial assets/liabilities: The Company enters into derivative financial instruments with various counterparties. 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 the forward pricing and swap models, using present value calculations. The models incorporate various inputs including 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.).

For all other financial instruments, the carrying amount is either the fair value, or approximates the fair value.

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 31 March 2021 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 significant 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 policies act as an effective tool in mitigating the various financial risks to which the businesses are exposed in the course of their daily operations. The risk management policies cover areas such as liquidity risk, commodity price risk, foreign exchange risk, interest rate risk, counterparty credit risk and capital management. Risks are identified at both the corporate and individual subsidiary level

with active involvement of senior management. Each operating subsidiary in the Company 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 other Committees of the Board including 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 periodic meetings of the 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 business units are managed by their respective finance teams within the framework of the overall Group treasury policies. Long-term fund raising including strategic treasury initiatives are managed jointly by the business treasury team and the central team at corporate treasury while short-term funding for routine working capital requirements is delegated to business units. A monthly reporting system exists to inform senior management of the Company’s investments and debt position, exposure to currency, commodity and interest rate risk and their mitigants including the derivative position. The Company has a strong system of internal control which enables effective monitoring of adherence to Company’s policies. The internal control measures are effectively supplemented by regular internal audits.

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 businesses. As a general policy, the Company aims to sell the products at prevailing market prices. The commodity price risk in imported input commodity such as of Alumina, anodes, etc., for our aluminium and copper business respectively, 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 LM E price movements because of a variety of reasons such as uneven sales during the year and timing of shipments.

The Company is also exposed to the movement of international crude oil price and the discount in the price of Rajasthan crude oil to Brent price.

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

Aluminium

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 refining copper operations at Silvassa is benefitted by a natural hedge except to the extent of a possible mismatch in quotational periods between the purchase of anodes / blisters and the sale of finished copper. The Company’s policy on custom smelting is to generate margins from Refining Charges or "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 anodes / blisters and sales of finished products, both of which are linked to the LME price.

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

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).

Provisionally priced financial instruments

On 31 March 2021, the value of net financial liabilities linked to commodities (excluding derivatives) accounted for on provisional prices was ''394 Crore (31 March 2020: liabilities of ''334 Crore). These instruments are subject to

price movements at the time of final settlement and the final price of these instruments will be determined in the financial year beginning 01 April 2021.

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 statements.

The impact on pre-tax profit/(loss) mentioned above includes the impact of a 10% increase in closing copper LME for provisionally priced copper concentrate purchased at Copper division custom smelting operations in India of ''87 Crore loss (31 March 2020: ''79 Crore loss), which is pass through in nature and as such will not have any impact on the profitability.

Financial risk

The Company’s Board approved financial risk policies include monitoring, measuring and mitigating the 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 longterm. 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.

Set out below is the impact of 10% increase in LME prices on pre-tax profit/ (loss) for the year and pre-tax total equity as a result of changes in value of the Company’s commodity financial instruments:

CRISIL affirmed our rating for the Company’s long-term bank facilities and its Non-Convertible Debentures (NCD) programme to CRISIL AA / Stable during the year. India Ratings has revised the outlook on Vedanta Limited’s ratings to IND AA / Negative from IND AA/ Stable on account of delay in deleveraging due to sharp fall in commodity prices and delay in volume ramp-up in key business segments. Vedanta Limited has the highest short term rating on its working capital and Commercial Paper Programme at A1 from CRISIL and India Ratings.

During FY2020, Moodys downgraded Corporate Family Rating of Vedanta Resources from Ba3 to B1 (and the rating of senior unsecured notes from B2 to B3) and subsequently placed the rating under review for downgrade in March 2020 on account of expectation of weaker credit metrics in low commodity price environment in wake of Covid-19. On 28 July 2020, Moody’s confirmed Vedanta Resources Limited’s B1 Corporate Family Rating and B3 rating on the senior unsecured notes of the company and changed the outlook on the rating to negative from ratings under review for downgrade. The confirmation of the ratings is driven by Moody’s expectation of stretched credit profile in fiscal year 2021 in wake of Covid 19 pandemic and recovery in credit metrics appropriate for current rating in fiscal year 2022. The negative outlook takes into account heightened refinancing risk in challenging market conditions. Further to the downgrade of VRL by S&P to B / Stable in November 2019, S&P downgraded the ratings to B- with stable outlook in March 2020 on account of weakened liquidity and increased refinancing risk due to volatility in commodity prices.

Anticipated future cash flows, together with undrawn fund based committed facilities of ''1,084 Crore, and

cash, bank and current investments of ''2,994 Crore as at 31 March 2021, are expected to be sufficient to meet the liquidity requirement of the Company in the near future.

The Company remains committed to maintaining a healthy liquidity, a low gearing ratio, deleveraging and strengthening its balance sheet. The maturity profile of the Company’s financial liabilities based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual undiscounted cash obligation of the Company.

Exposures on foreign currency loans are managed through the Company wide hedging policy, which is reviewed periodically to ensure that the results from fluctuating currency exchange rates are appropriately managed. The Company strives to achieve asset liability offset of foreign currency exposures and only the net position is hedged.

The Company’s presentation currency is the Indian Rupee (INR). The assets are located in India and the Indian Rupee is the functional currency except for Oil and Gas business operations which have a dual functional currency. Natural hedges available in the business are identified at each entity level and hedges are placed only for the net exposure. Short-term net exposures are hedged progressively based on their maturity. A more conservative approach has been adopted for project expenditures to avoid budget overruns, where cost of the project is calculated taking into account the hedge cost. The hedge mechanisms are reviewed periodically to ensure that the risk from fluctuating currency exchange rates is appropriately managed.

The following analysis is based on the gross exposure as at the reporting date which could affect the statement of profit and loss. The exposure is mitigated by some of the derivative contracts entered into by the Company as disclosed under the section on "Derivative financial instruments”.

The Company’s exposure to foreign currency arises where an entity holds monetary assets and liabilities denominated in a currency different to the functional currency of the respective business, with US dollar being the major nonfunctional currency.

The foreign exchange rate sensitivity is calculated by the aggregation of the net foreign exchange rate exposure with a simultaneous parallel foreign exchange rates shift in the foreign currencies by 10% against the functional currency of the respective businesses.

Set out below is the impact of a 10% strengthening in the functional currencies of the respective businesses on pretax profit/(loss) and pre-tax equity arising as a result of the revaluation of the Company’s foreign currency monetary financial assets/liabilities:

Collateral

The Company has pledged financial instruments with carrying amount of ''13,147 Crore (31 March 2020: ''11,069 Crore) and inventories with carrying amount of ''5,555 Crore (31 March 2020: ''5,689 Crore) as per the requirements specified in various financial facilities in place. The counterparties have an obligation to release the securities to the Company when financial facilities are surrendered.

(b) Foreign exchange risk

Fluctuations in foreign currency exchange rates may have an impact on the statement of profit and loss, the statement of changes in equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.

The table below illustrates the impact of a 0.5% to 2.0% movement in interest rates on floating rate financial assets/ liabilities (net) on profit/(loss) and equity assuming that the changes occur at the reporting date and has been calculated based on risk exposure

An equivalent reduction in interest rates would have an equal and opposite effect on the Company’s financial statements.

(d) Counterparty and concentration of credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

The Company is exposed to credit risk from trade receivables, contract assets, investments, loans, other financial assets, and derivative financial instruments.

Credit risk on receivables is limited as almost all credit sales are against letters of credit and guarantees of banks of national standing.

Moreover, given the diverse nature of the Company’s businesses trade receivables are spread over a number of customers with no significant concentration of credit risk. The history of trade receivables shows a negligible provision for bad and doubtful debts. Therefore, the Company does not expect any material risk on account of non-performance by any of the Company’s counterparties.

A 10% weakening of functional currencies of the respective businesses would have an equal and opposite effect on the Company’s financial statements.

(c) Interest rate risk

At 31 March 2021, the Company’s net debt of ''26,314 Crore (31 March 2020: ''33,985 Crore) comprises debt of ''32,166 Crore (31 March 2020: ''38,937 Crore) offset by cash, bank and investments of ''5,852 Crore (31 March 2020: ''4,952 Crore).

The Company is exposed to interest rate risk on short-term and long-term floating rate instruments and on the refinancing of fixed rate debt. The Company’s policy is to maintain a balance of fixed and floating interest rate borrowings and the proportion of fixed and floating rate debt is determined by current market interest rates. The borrowings of the Company are principally denominated in Indian Rupees and US dollars with mix of fixed and floating rates of interest. The USD floating rate debt is linked to US dollar LIBOR and INR Floating rate debt to Bank’s base rate. The Company has a policy of selectively using interest rate swaps, option contracts and other derivative instruments to manage its exposure to interest rate movements. These exposures are reviewed by appropriate levels of management on a monthly basis. The Company invests cash and liquid investments in short-term deposits and debt mutual funds, some of which generate a tax-free return, to achieve the Company’s goal of maintaining liquidity, carrying manageable risk and achieving satisfactory returns.

Floating rate financial assets are largely mutual fund investments which have debt securities as underlying assets. The returns from these financial assets are linked to market interest rate movements; however the counterparty invests in the agreed securities with known maturity tenure and return and hence has manageable risk.

outstanding as of that date. The year end balances are not necessarily representative of the average debt outstanding during the year. This analysis also assumes that all other variables, in particular foreign currency rates, remain constant.

The Company has clearly defined policies to mitigate counterparty risks. For current investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. This, therefore, results in diversification of credit risk for our mutual fund and bond investments. For derivative and financial instruments, the Company attempts to limit the credit risk by only dealing with reputable banks and financial institutions.

The carrying value of the financial assets represents the maximum credit exposure. The Company’s maximum exposure to credit risk is ''16,063 Crore and ''14,410 Crore as at 31 March 2021 and 31 March 2020 respectively.

The maximum credit exposure on financial guarantees given by the Company for various financial facilities is described in Note 36 on "Commitments, contingencies, and guarantees”.

None of the Company’s cash equivalents, including time deposits with banks, are past due or impaired. Regarding trade receivables, loans and other financial assets (both current and non-current), there were no indications as at 31 March 2021, that defaults in payment obligations will occur except as described in Note 7 and 9 on allowance for impairment of trade receivables and other financial assets.

Considering the net debt position as at 31 March 2021 and the investment in bank deposits, corporate bonds and debt mutual funds, any increase in interest rates would result in a net loss and any decrease in interest rates would result in a net gain. The sensitivity analysis below has been determined based on the exposure to interest rates for financial instruments at the balance sheet date.

Receivables are deemed to be past due or impaired with reference to the Company’s normal terms and conditions of business. These terms and conditions are determined on a case to case basis with reference to the customer’s credit quality and prevailing market conditions. Receivables that are classified as ''past due’ in the above tables are those that have not been settled within the terms and conditions that have been agreed with that

customer. The Company based on past experiences does not expect any material loss on its receivables.

The credit quality of the Company’s customers is monitored on an ongoing basis. Where receivables have been impaired, the Group actively seeks to recover the amounts in question and enforce compliance with credit terms.

commodity price contracts for hedging the commodity price risk of highly probable forecast transactions.

The cash flows related to above are expected to occur during the year ended 31 March 2022 and consequently may impact profit or loss for that year depending upon the change in the commodity prices and foreign exchange rates movements. For cash flow hedges regarded as basis adjustments to initial carrying value of the property, plant and equipment, the depreciation on the basis adjustments made is expected to affect profit or loss over the expected useful life of the property, plant and equipment.

(ii) Fair value hedge

The fair value hedges relate to forward covers taken to hedge currency exposure and commodity price risks.

The Company’s sales are on a quotational period basis, generally one month to three months after the date of delivery at a customer’s facility. The Company enters into forward contracts for the respective quotational period

to hedge its commodity price risk based on average LME prices. Gains and losses on these hedge transactions are substantially offset by the amount of gains or losses on the underlying sales. Net gains and losses are recognized in the statement of profit and loss.

The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions. Fair value changes on such forward contracts are recognized in the statement of profit and loss.

(iii) Non- designated economic hedge

The Company enters into derivative contracts which are not designated as hedges for accounting purposes, but provide an economic hedge of a particular transaction risk or a risk component of a transaction. Hedging instruments include copper, aluminium future contracts on the LME and certain other derivative instruments.

Fair value changes on such derivative instruments are recognized in the statement of profit and loss.

D. Derivative financial instruments

The Company uses derivative instruments as part of its management of exposure to fluctuations 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 and these are subject to the Company guidelines and policies.

The fair values of all derivatives are separately recorded in the balance sheet within current and non-current assets and liabilities. Derivatives that are designated as hedges are classified as current or non-current depending on the maturity of the derivative.

The use of derivatives can give rise to credit and market risk. The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management.

The limits, authorities and monitoring systems are periodically reviewed by management and the Board.

The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.

(i) Cash flow hedges

The Company enters into forward exchange and commodity price contracts for hedging highly probable forecast transaction and account for them as cash flow hedges and states them at fair value. Subsequent changes in fair value are recognized in equity through OCI until the hedged transaction occurs, at which time, the respective gain or losses are reclassified to profit or loss. These hedges have been effective for the year ended 31 March 2021.

The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions. The Company hedged part of its foreign currency exposure on capital commitments during the year ended 2020. Fair value changes on such forward contracts are recognized in other comprehensive income.

The majority of cash flow hedges taken out by the Company during the year comprise non-derivative hedging instruments for hedging the foreign exchange rate of highly probable forecast transactions and

c) Restoration, rehabilitation and environmental costs

The provisions for restoration, rehabilitation and environmental liabilities represent the management''s best estimate of the costs which will be incurred in the future to meet the Company''s obligations under existing Indian law and the terms of the Company''s exploration and other licences and contractual arrangements.

The principal restoration and rehabilitation provisions are recorded within oil & gas business where a legal obligation exists relating to the oil and gas fields, where costs are expected to be incurred in restoring the site of production facilities at the end of the producing life of an oil field. The Company recognises the full cost of site restoration as a liability when the obligation to rectify environmental damage arises.

These amounts are calculated by considering discount rates within the range of 2% to 3%, and become payable

at the end of the producing life of an oil field and are expected to be incurred over a period of twenty one years.

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production from a producing field.

23 EMPLOYEE BENEFIT PLANS

The Company participates in defined contribution and benefit plans, the assets of which are held (where funded) in separately administered funds.

For defined contribution plans the amount charged to the statement of profit and loss is the total amount of contributions payable in the year.

For defined benefit plans, the cost of providing benefits under the plans is determined by actuarial valuation separately each year for each plan using the projected unit credit method by independent qualified actuaries as at the year end. Remeasurement gains and losses arising in the year are recognised in full in other comprehensive income for the year.

Central recognised provident fund

In accordance with the ''The Employee''s Provident Funds and Miscellaneous Provisions 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 the year ended 31 March 2020 and 31 March 2019) 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.

Family pension fund

The Pension Fund was established in 1995 and is managed by the Government of India. The employee makes no contribution to this fund but the employer makes a contribution of 8.33% of salary each month subject to a specified ceiling per employee. This is provided for every permanent employee on the payroll.

At the age of superannuation, contributions ceases and the individual receives a monthly payment based on the level of contributions through the years, and on their salary scale at the time they retire, subject to a maximum ceiling of salary level. The Government funds these payments, thus the Company has no additional liability beyond the contributions that it makes, regardless of whether the central fund is in surplus or deficit.

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 year they are incurred.

National Pension Scheme

National Pension Scheme is a retirement savings account for social security and welfare applicable for executives covered under the superannuation benefit of Vedanta Limited, on a choice basis. It was introduced to enable employees to select the treatment of superannuation component of their fixed salaries and avail the benefits offered by National Pension Scheme launched by Government of India. Vedanta Limited holds a corporate account with one of the pension fund managers authorized by the Government of India to which the Company contributes a fixed amount relating to superannuation and the pension annuity will be met by the fund manager as per rules of National Pension Scheme. 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 year they are incurred.

ii) Defined benefit plans

(a) Contribution to provident fund trust (the "trust")

The provident fund of the Iron Ore division is exempted under Section 17 of The Employee''s Provident Funds 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 31 March 2021 and 31 March 2020. Having

(b) Gratuity plan

In accordance with the Payment of Gratuity Act, 1972, the Company contributes to a defined benefit plan (the "Gratuity Plan”) covering certain categories of employees. 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 using the projected unit credit method, a provision is recognised in full for the benefit obligation over and above the funds held in the Gratuity Plan.

The iron ore and oil & gas division of the Company have constituted a trust recognised by Indian Income Tax Authorities for gratuity to employees, contributions to the trust are funded with Life Insurance Corporation of India (LIC) and ICICI Prudential Life Insurance Company Limited.

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

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

Investment risk

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

The present value of the defined benefit plan obligation 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.

Interest risk

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

Longevity risk / Life expectancy

The present value of the defined benefit plan obligation is calculated by reference to the best estimate of the mortality of plan participants both during and at the e


Mar 31, 2019

1. COMPANY OVERVIEW:

Vedanta Limited ("the Company”) is a diversified natural resource company engaged in exploring, extracting and processing minerals and oil and gas. The Company engages in the exploration, production and sale of oil and gas, aluminium, copper, iron ore and power.

The Company was incorporated on September 08, 1975 under the laws of the Republic of India. The registered office of the Company is situated at 1st Floor, ''C'' wing, Unit 103, Corporate Avenue, Atul Projects, Chakala, Andheri (East), Mumbai-400092, Maharashtra. The Company''s shares are listed on National Stock Exchange and Bombay Stock Exchange in India. In June 2007, the Company completed its initial public offering of American Depositary Shares, or ADS, each representing four equity shares, and listed its ADSs on the New York Stock Exchange. In July 2009, the Company completed its follow-on offering of an additional 131,906,011 ADSs, each currently representing four equity shares, which are listed on the New York Stock Exchange.

The Company is majority owned by Twin Star Holdings Limited ("Twin Star”), Finsider International Company Limited ("Finsider”), West Globe Limited ("West Globe”) and Welter Trading Limited ("Welter”) which are in turn wholly-owned subsidiaries of Vedanta Resources PLC ("VRPLC”), which was a public limited company incorporated in the United Kingdom and listed on the London Stock Exchange (VRPLC has been delisted from London Stock Exchange on October 01, 2018 and is renamed as "Vedanta Resources Limited” ("VRL”) with effect from October 29, 2018). Twin Star, Finsider, West Globe and Welter held 37.1%, 10.8%, 1.2% and 1.0% respectively of the Company''s equity as at March 31, 2019.

Details of Company''s various businesses are as follows:

- The Company''s oil and gas business (prior to merger was owned and operated by erstwhile Cairn India Limited) is engaged in business of exploration and development and production of oil and gas.

- The Company''s iron ore business consists of iron ore exploration, mining and processing of iron ore, pig iron and metallurgical coke. The Company has iron ore mining operations in the States of Goa and Karnataka. Pursuant to Honourable Supreme Court of India order, operations in the state of Goa are currently suspended.

- The Company''s copper business is principally one of custom smelting and includes captive power plants at Tuticorin in Southern India. The Company''s copper business at Tuticorin has received an order from the Tamil Nadu Pollution Control Board ("TNPCB”) on April 09, 2018, rejecting the Company''s application for renewal of consent to operate under the Air and Water Acts for the 400,000 tpa copper smelter plant in Tuticorin for want of further clarification and consequently the operations were suspended. The Company has filed an appeal with TNPCB Appellate authority against the said order. During the pendency of the appeal, TNPCB through its order dated May 23, 2018 ordered for disconnection of electricity supply and closure of copper smelter plant. Post such order, the state government on May 28, 2018 ordered the permanent closure of the plant. (Refer note3(c)(A)(x)).

- The Company''s aluminium business include a refinery and captive power plant at Lanjigarh and a smelter and captive power plants at Jharsuguda both situated in the State of Odisha in India.

- The Company''s power operations include a thermal coal-based commercial power facility of 600 MW at Jharsuguda in the State of Odisha in Eastern India.

Besides the above the Company has business interest in zinc, lead, silver, iron ore, steel and other products and services through its subsidiaries in India and overseas.

These are the Company''s separate financial statements.

The details of Company''s material subsidiaries, associates and joint ventures is given in note 38.

2. BASIS OF PREPARATION AND BASIS OF MEASUREMENT OF FINANCIAL STATEMENTS

(a) Basis of preparation

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Companies Act, 2013 (the Act) (as amended from time to time) and Guidance Note on Accounting for Oil and Gas Producing Activities issued by the Institute of Chartered Accountants of India.

These financial statements have been prepared in accordance with the accounting policies, set out below and were consistently applied to all periods presented unless otherwise stated.

These financial statements are approved for issue by the Board of Directors on May 07, 2019.

Certain comparative figures appearing in these financial statements have been regrouped and/or reclassified to better reflect the nature of those items.

All financial information presented in Indian Rupee has been rounded off to the nearest Crore. Amounts less than Rs. 0.50 Crore have been presented as "0”.

(b) Reclassification/Restatement

(i) The Company has revised the presentation of forward premium relating to derivative instruments to present it along with the mark-to-market gain/loss on these instruments, as these more appropriately reflect the substance of the forward premiums on derivative transactions. As a result of the change, forward premium expense amounting to Rs. 547 Crore (year ended March 31, 2019: Rs. 244 Crore) has been reclassified from ''Finance cost'' to other income/ other expense'' for the comparative year ended March 31, 2018. Similarly, net cash flows from operating activities in the statement of cash flows has reduced by an equivalent amount with corresponding effect on the net cash used in financing activities.

(ii) The classification of export incentives from government has also been revised to present it under other operating income'', as the revised classification is more appropriate. As a result of the change, export incentives amounting to Rs. 263 Crore has been reclassified from ''revenue'' to other operating income'' for the comparative year ended March 31, 2018. Similarily, scrap sales and miscellaneous income amounting to Rs. 100 Crore and Rs. 115 Crore respectively have also been reclassified from ''revenue'' to other operating income'' for the comparative year ended March 31, 2018.

(c) Basis of measurement

The financial statements have been prepared on a going concern basis using historical cost convention and on an accrual method of accounting, except for certain financial assets and liabilities which are measured at fair value as explained in the accounting policies below.

a) Export incentive has been reclassified from ''segment revenue'' to ''other operating income''. Refer note 2(b).

b) EBITDA is a non-GAAP measure

c) Amorisation of duty benefits relating to assets recognised as government grant.

d) Total Capital expenditure includes capital expenditure of Rs. 3 Crore not allocable to any segment.

e) Total of Impairment reversal/(charge) - net / provision includes net impairment reversal on investment in subsidiaries of Rs.4 Crore not allocable to any segment.

a) Export incentive has been reclassified from ''segment revenue'' to ''other operating income''. Refer note 2(b).

b) EBITDA is a non-GAAP measure

c) Amorisation of duty benefits relating to assets recognised as government grant.

d) Depreciation, depletion and amortisation expense excludes and unallocated income is net of unallocated deprection of Rs. 7 Crore.

e) Total Capital expenditure includes capital expenditure of Rs. 11 Crore not allocable to any segment.

f) Total of Impairment reversal/(charge) - net / provision includes impairment reversal on investment in subsidiaries of Rs. 2,710 Crore not allocable to any segment.

II) Geographical segment analysis

The following table provides an analysis of the Company''s sales by region in which the customer is located, irrespective of the origin of the goods.

Information about major customers

Revenue from one customer amounted to Rs. 5,077 Crore (March 31, 2018 : Rs. 1,687 Crore), arising from sales made in the Aluminium and Copper segment.

Disaggregation of revenue

Below table summarises the disaggregated revenue from contract with customers :

Notes

a) Plant and equipment include refineries, smelters, power plants, railway sidings, ships, aircrafts, river fleet and related facilities.

b) During the year ended March 31, 2019, interest capitalised was Rs. 567 Crore (March 31, 2018: Rs. 349 Crore).

c) Certain property, plant and equipment are pledged as collateral against borrowings, the details related to which have been described in Note 17 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.

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. 2 Crore loss (March 31, 2018: Rs. 1 Crore gain) is adjusted to the cost of respective item of property, plant and equipment.

Capital work-in-progress includes foreign currency exchange loss of Nil incurred during the year (March 31, 2018: Rs. 17 Crore loss) on such long term foreign currency monetary liabilities.

e) Property,Plant and Equipment, Capital work-in-progress and exploration and evaluation assets net block includes share of jointly owned assets with the joint venture partners Rs. 12,211 Crore (March 31, 2018: Rs. 11,151 Crore). Refer note 3(c)(A)(xi) for reasons for transfer of exploration and evaluation assets to property, plant and equipment and capital work-in-progress.

g) Freehold Land includes gross block of Rs. 129 Crore (March 31, 2018: Rs. 119 Crore), accumulated amortisation of Rs. 112 Crore (March 31, 2018: '' 95 Crore), which is available for use during the lifetime of the Production Sharing Contract of the respective Oil and Gas blocks.

a. Carrying value of investment in equity shares of Hindustan Zinc Limited is at deemed cost and for all other subsidiaries, it is at the cost of acquisition.

b. 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 provides 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 to be notified. The Government of India without prejudice to the 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. Meanwhile, the Supreme Court has, in January 2016, directed status quo pertaining to disinvestment of Government of India''s residual shareholding in a public interest petition filed which is currently pending and sub-judice.

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 "tag along” 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 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 August 02, 2019. 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 Crore and Rs. 1,782 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.

In 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. Reduction pursuant to merger of Cairn India Limited with Vedanta Limited accounted for in the year ended March 31, 2017.

d. During the previous year, the Company made an investment of Rs. 11.30 Lacs in 1.13 Lacs equity shares having face value of Rs. 10/- each in Gaurav Overseas Private Limited.

e. During the previous year, the maturity of investments in compulsorily convertible debentures of Vizag General Cargo Berth Private Limited has been extended by 2 years 10 months till January 28, 2021.

f. During the previous year, the Company made an investment in 1,70,418 Compulsory convertible debentures of MALCO energy limited (MEL) having face value of Rs. 100/- each at an premium of '' 900/- each.

g. On April 23, 2018, Vedanta Star Limited was incorporated as a 100% subsidiary of the Company. The Company has made an investment of Rs. 1,770 Crore in 1,77,50,000 equity shares having face value of Rs. 10 each including 6 shares held by nominees. Further during the year, 18,67,256 shares were issued as bonus shares. Vedanta Star Limited in turn has acquired the controlling stake in Electrosteel Steels Limited.

(a) The interest free credit period given to customers is upto 90 days. Also refer note 20(C)(d)

(b) For amounts due and terms and conditions relating to related party receivables see note 36.

(c) Additionally, as at March 31, 2018, Rs. 767 Crore was outstanding on account of certain disputes relating to computation of tariffs and differential revenues recognised with respect to tariffs pending finalisation by the Odisha State Regulatory Commission. During the current year the said disputes were settled. However, the customer has raised certain claims on the Company in respect of short supply of power for which a provision of Rs. 218 Crore has been made. A Minutes of Meeting (MOM) has been signed with the customer and subsequently the Company has received payment of Rs. 55 Crore in March 2019. Pending ratification of MOM by Odisha Electricity Regulatory Commission (OERC) and adjudication on certain issues related to the claim, the customer has withheld Rs. 1,248 Crore, which the Company is confident of recovering.

(a) Includes Rs. 30 Crore (March 31, 2018: Rs. 30 Crore), being Company''s share of gross amount of Rs.86 Crore (March 31, 2018: Rs. 86 Crore) paid under protest on account of Education Cess and Secondary Higher Education Cess for the FY 2014.

(b) Includes Rs.9 Crore (March 31, 2018: Rs.48 Crore), being Company''s share of gross amount of Rs. 26 Crore (March 31, 2018: Rs. 139 Crore), of excess oil cess paid under Oil Industry (Development) Act.

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

(d) Others include claim receivables, advance recoverable (oil and gas business), prepaid expenses and export incentive receivables.

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

(b) Includes Nil Crore (March 31, 2018 : Rs. 8 Crore) on lien with banks.

(c) Includes Rs. 591 Crore (March 31, 2018 : Rs. 193 Crore) on lien with banks and margin money Rs. 11 Crore (March 31, 2018 : Rs. 39 Crore).

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

(e) Earmarked escrow account is restricted in use as it relates to unclaimed redeemable preference shares.

(a) Redeemable preference shares of Rs. 3,010 Crore were redeemed on October 27, 2018 i.e. 18 months from the date of allotment as per the scheme of amalgamation of Cairn India Limited with Vedanta Limited. An equivalent amount of Rs. 3,010 Crore has been transferred from general reserve to preference share redemption reserve.

(b) Includes 3,08,232 (March 31, 2018: 3,08,232) equity shares kept in abeyance. These shares are not part of listed equity capital and pending allotment as they are sub-judice.

(c) Includes 1,49,98,702 (March 31, 2018: 92,33,871) equity shares held by Vedanta Limited ESOS Trust (Refer note 25).

F. Other disclosures

(i) 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.

(ii) The Company had 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 prioirty to any payment of capital on the equity shares out of the surplus of Vedanta Limited.

(iii) 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 at March 31, 2019 - 24,87,79,452 equity shares were held in the form of 6,21,94,863 ADS (March 31, 2018- 24,84,24,696 equity shares in form of 6,21,06,174 ADS).

(iv) 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 (merged with the Company during 2013-14) during 2002-2003 reduced its paid up share capital by Rs. 10 Crore. There are 2,01,305 equity shares (March 31, 2018: 204,525 equity shares) of Rs. 1 each pending clearance from NSDL/CDSL. The Company has filed an 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. 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. During the year, on redemption of preference share, Rs. 3,010 Crore has been transferred from general reserve to preference share redemption reserve.

d) Capital reserve: The balance in capital reserve has mainly arisen consequent to merger of Cairn India Limited with the Company.

4. 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 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.

c) The Company facilities are subject to certain financial and non- financial covenants. The primary covenants which must be complied with include interest service coverage ratio, 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.

Other non-cash changes comprises of amortisation of borrowing costs, foreign exchange difference on borrowings and reclassification between borrowings due within one year and borrowings due after one year. Additionally non-cash changes for the year ended March 31, 2018 includes preference shares issued on merger of Cairn India Limited with Vedanta Limited.

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

(b) For terms and conditions relating to related party payables, see note 36.

(c) Operational Buyers'' Credit and Suppliers'' Credit is availed in foreign currency from offshore branches of Indian banks or foreign banks at an interest rate ranging from 2.5% to 4% per annum and in rupee from domestic banks at interest rate ranging from 8%-9%. These trade credits are largely repayable within 180 days from the date of draw down. Operational Buyer''s credit availed in foreign currency is backed by Standby Letter of Credit issued under working capital facilities sanctioned by domestic banks. Part of these facilities are secured by first pari passu charge over the present and future current assets of the Company.

(b) Does not include any amounts, due and outstanding, to be credited to Investor Education and Protection Fund except Rs. 0.11 Crore (March 31, 2018: Rs. 0.07 Crore) which is held in abeyance due to a pending legal case.

(c) Matured deposits of Rs. 0.01 Crore (March 31,2018: Rs. 0.01 Crore) due for transfer to Investor Education and Protection Fund have not been transferred in view of pending litigation between the beneficiaries.

(d) Includes revenue received in excess of entitlement interest of Rs. 1,439 Crore (March 31, 2018: Rs.648 Crore), reimbursement of expenses, provision for expenses, liabilities related to compensation/claim etc.

5. FINANCIAL INSTRUMENTS

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, 2019 and March 31, 2018 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; 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).

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

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.

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.

Derivative financial assets/liabilities: The Company enters into derivative financial instruments with various counterparties. 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 the forward pricing and swap models, using present value calculations. The models incorporate various inputs including 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.).

For all other financial instruments, the carrying amount is either the fair value, or approximates the fair value.

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, 2019 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 significant 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 policies act as an effective tool in mitigating the various financial risks to which the businesses are exposed in the course of their daily operations. The risk management policies cover areas such as liquidity risk, commodity price risk, foreign exchange risk, interest rate risk, counterparty credit risk and capital management. Risks are identified at both the corporate and individual subsidiary level with active involvement of senior management. Each operating subsidiary in the Company 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 other Committees of the Board including 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 periodic meetings of the 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 business units are managed by their respective finance teams within the framework of the overall Group treasury policies. Long-term fund raising including strategic treasury initiatives are managed jointly by the business treasury team and the central team at corporate treasury while short-term funding for routine working capital requirements is delegated to business units. A monthly reporting system exists to inform senior management of the Company''s investments and debt position, exposure to currency, commodity and interest rate risk and their mitigants including the derivative position.

The Company has a strong system of internal control which enables effective monitoring of adherence to Company''s policies. The internal control measures are effectively supplemented by regular internal audits.

The investment portfolio at the Company is independently reviewed by CRISIL Limited and Company portfolio has been rated as Tier I or "Very Good” meaning highest safety.

The investments are made keeping in mind safety, liquidity and yield maximization.

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 businesses. As a general policy, the Company aims to sell the products at prevailing market prices. The commodity price risk in import input commodity such as of Copper Concentrate & Alumina, for our copper and aluminium business respectively, 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.

The Company is also exposed to the movement of international crude oil price and the discount in the price of Rajasthan crude oil to Brent price.

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

Aluminium

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).

Provisionally priced financial instruments

On March 31, 2019, the value of net financial assets linked to commodities (excluding derivatives) accounted for on provisional prices was Rs. 15 Crore (March 31, 2018: liability of Rs. 3,335 Crore). These instruments are subject to price movements at the time of final settlement and the final price of these instruments will be determined in the financial year beginning April 01, 2019.

Set out below is the impact of 10% increase in LME prices on pre-tax profit/ (loss) for the year and pre-tax total equity as a result of changes in value of the Company''s commodity financial instruments:

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 statements.

The impact on pre-tax profit/(loss) mentioned above includes the impact of a 10% increase in closing copper LME for provisionally priced copper concentrate purchased at Copper division custom smelting operations in India of Rs. 74 Crore (March 31, 2018: Rs. 368 Crore), which is pass through in nature and as such will not have any impact on the profitability.

Financial risk

The Company''s Board approved financial risk policies include monitoring, measuring and mitigating the 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 changed the outlook for the Company''s long-term bank facilities and its Non-Convertible Debentures (NCD) programme to CRISIL AA / Stable from CRISIL AA /Positive during the year on account of delay in deleveraging amid weaker commodity prices. India Ratings has revised the outlook on Vedanta Limited''s ratings to IND AA / Stable from IND AA/ Positive on account of weaker profitability resulting in delay in deleveraging. Vedanta Limited has the highest short term rating on its working capital and Commercial Paper Programme at A1 from CRISIL and India Ratings.

Anticipated future cash flows, together with undrawn fund based committed facilities of Rs. 3 ,205 Crore, and cash, bank and current investments of Rs. 8,269 Crore as at March 31, 2019, are expected to be sufficient to meet the liquidity requirement of the Company in the near future.

The Company remains committed to maintaining a healthy liquidity, a low gearing ratio, deleveraging and strengthening our balance sheet. The maturity profile of the Company''s financial liabilities based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual undiscounted cash obligation of the Company.

Collateral

The Company has pledged financial instruments with carrying amount of Rs. 13,030 Crore and inventories with carrying amount of Rs. 7,657 Crore as per the requirements specified in various financial facilities in place. The counterparties have an obligation to release the securities to the Company when financial facilities are surrendered.

(b) Foreign exchange risk

Fluctuations in foreign currency exchange rates may have an impact on the statement of profit and loss, the statement of changes in equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.

Exposures on foreign currency loans are managed through the Company wide hedging policy, which is reviewed periodically to ensure that the results from fluctuating currency exchange rates are appropriately managed. The Company strives to achieve asset liability offset of foreign currency exposures and only the net position is hedged.

The Company''s presentation currency is the Indian Rupee (INR). The assets are located in India and the Indian Rupee is the functional currency except for Oil and Gas business operations which have a dual functional currency. Natural hedges available in the business are identified at each entity level and hedges are placed only for the net exposure. Short-term net exposures are hedged progressively based on their maturity. A more conservative approach has been adopted for project expenditures to avoid budget overruns, where cost of the project is calculated taking into account the hedge cost. The hedge mechanisms are reviewed periodically to ensure that the risk from fluctuating currency exchange rates is appropriately managed.

The following analysis is based on the gross exposure as at the reporting date which could affect the statement of profit and loss. The exposure is mitigated by some of the derivative contracts entered into by the Company as disclosed under the section on "Derivative financial instruments”.

The carrying amount of the Company''s financial assets and liabilities in different currencies are as follows

The Company''s exposure to foreign currency arises where an entity holds monetary assets and liabilities denominated in a currency different to the functional currency of the respective business, with US dollar being the major non-functional currency.

The foreign exchange rate sensitivity is calculated by the aggregation of the net foreign exchange rate exposure with a simultaneous parallel foreign exchange rates shift in the foreign currencies by 10% against the functional currency of the respective businesses.

Set out below is the impact of a 10% strengthening in the functional currencies of the respective businesses on pre-tax profit/(loss) and pre-tax equity arising as a result of the revaluation of the Company''s foreign currency monetary financial assets/liabilities:

(c) Interest rate risk

At March 31, 2019, the Company''s net debt of Rs.33,935 Crore (March 31, 2018: Rs. 33,582 Crore) comprises cash, bank and investments of Rs. 8,269 Crore (March 31, 2018: Rs. 7,131 Crore) offset by debt of Rs. 42,204 Crore (March 31, 2018: Rs.40,713 Crore).

The Company is exposed to interest rate risk on short-term and long-term floating rate instruments and on the refinancing of fixed rate debt. The Company''s policy is to maintain a balance of fixed and floating interest rate borrowings and the proportion of fixed and floating rate debt is determined by current market interest rates. The borrowings of the Company are principally denominated in Indian Rupees and US dollars with mix of fixed and floating rates of interest.

The USD floating rate debt is linked to US dollar LIBOR and INR Floating rate debt to Bank''s base rate. The Company has a policy of selectively using interest rate swaps, option contracts and other derivative instruments to manage its exposure to interest rate movements. These exposures are reviewed by appropriate levels of management on a monthly basis. The Company invests cash and liquid investments in short-term deposits and debt mutual funds, some of which generate a tax-free return, to achieve the Company''s goal of maintaining liquidity, carrying manageable risk and achieving satisfactory returns.

Floating rate financial assets are largely mutual fund investments which have debt securities as underlying assets. The returns from these financial assets are linked to market interest rate movements; however the counterparty invests in the agreed securities with known maturity tenure and return and hence has manageable risk.

Considering the net debt position as at March 31, 2019 and the investment in bank deposits, corporate bonds and debt mutual funds, any increase in interest rates would result in a net loss and any decrease in interest rates would result in a net gain.

The sensitivity analysis below has been determined based on the exposure to interest rates for financial instruments at the balance sheet date.

The table below illustrates the impact of a 0.5% to 2.0% movement in interest rates on floating rate financial assets/ liabilities (net) on profit/(loss) and equity assuming that the changes occur at the reporting date and has been calculated based on risk exposure outstanding as of date. The year end balances are not necessarily representative of the average debt outstanding during the year. This analysis also assumes that all other variables, in particular foreign currency rates, remain constant.

An equivalent reduction in interest rates would have an equal and opposite effect on the Company''s financial statements.

d) Counterparty and concentration of credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

The Company is exposed to credit risk for trade receivables, contract assets, investments, loans, other financial assets, and derivative financial instruments.

Credit risk on receivables is limited as almost all credit sales are against letters of credit and guarantees of banks of national standing.

Moreover, given the diverse nature of the Company''s businesses trade receivables are spread over a number of customers with no significant concentration of credit risk.

The history of trade receivables shows a negligible provision for bad and doubtful debts. Therefore, the Company does not expect any material risk on account of non-performance by any of the Company''s counterparties.

The Company has clearly defined policies to mitigate counterparty risks. For current investments, counterparty limits are in place to limit the amount of credit exposure to any one counterparty. This, therefore, results in diversification of credit risk for our mutual fund and bond investments. For derivative and financial instruments, the Company attempts to limit the credit risk by only dealing with reputable banks and financial institutions.

The carrying value of the financial assets represents the maximum credit exposure. The Company''s maximum exposure to credit risk is Rs. 15,208 Crore and Rs. 13,292 Crore as at March 31, 2019 and March 31, 2018 respectively.

The maximum credit exposure on financial guarantees given by the Company for various financial facilities is described in Note 35 on "Commitments, contingencies, and guarantees”.

None of the Company''s cash equivalents, including time deposits with banks, are past due or impaired.

Regarding trade receivables, loans and other financial assets (both current and non-current), there were no indications as at March 31, 2019, that defaults in payment obligations will occur except as described in Note 7 and 9 on allowance for impairment of trade receivables and other financial assets.

Of the year end trade receivables, loans and other financial assets (excluding bank deposits, site restoration fund and derivatives) balance the following, though overdue, are expected to be realised in the normal course of business and hence, are not considered impaired as at March 31, 2019 and March 31, 2018:

Receivables are deemed to be past due or impaired with reference to the Company''s normal terms and conditions of business. These terms and conditions are determined on a case to case basis with reference to the customer''s credit quality and prevailing market conditions. Receivables that are classified as ''past due'' in the above tables are those that have not been settled within the terms and conditions that have been agreed with that customer. The Company based on past experiences does not expect any material loss on its receivables.

The credit quality of the Company''s customers is monitored on an ongoing basis and assessed for impairment where indicators of such impairment exist. The Company uses simplified approach for impairment of financial assets. If credit risk has not increased significantly, 12-month expected credit loss is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime expected credit loss is used. The solvency of the debtor and their ability to repay the receivable is considered in assessing receivables for impairment. Where receivables have been impaired, the Company actively seeks to recover the amounts in question and enforce compliance with credit terms.

D. Derivative financial instruments

The Company uses derivative instruments as part of its management of exposure to fluctuations 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 and these are subject to the Company guidelines and policies.

The fair values of all derivatives are separately recorded in the balance sheet within current and non-current assets and liabilities. Derivatives that are designated as hedges are classified as current or non-current depending on the maturity of the derivative.

The use of derivatives can give rise to credit and market risk. The Company tries to control credit risk as far as possible by only entering into contracts with reputable banks and financial institutions. The use of derivative instruments is subject to limits, authorities and regular monitoring by appropriate levels of management. The limits, authorities and monitoring systems are periodically reviewed by management and the Board. The market risk on derivatives is mitigated by changes in the valuation of the underlying assets, liabilities or transactions, as derivatives are used only for risk management purposes.

(i) Cash flow hedges

The Company enters into forward exchange and commodity price contracts for hedging highly probable forecast transaction and account for them as cash flow hedges and states them at fair value. Subsequent changes in fair value are recognized in equity though OCI until the hedged transaction occurs, at which time, the respective gain or losses are reclassified to profit or loss. These hedges have been effective for the year ended March 31, 2019.

The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions. The Company hedged part of its foreign currency exposure on capital commitments during the year ended 2019. Fair value changes on such forward contracts are recognized in comprehensive income.

The majority of cash flow hedges taken out by the Company during the year comprise non-derivative hedging instruments for hedging the foreign exchange rate of highly probable forecast transactions and commodity price contracts for hedging the commodity price risk of highly probable forecast transactions.

The cash flows related to above are expected to occur during the year ended March 31, 2020 and consequently may impact profit or loss for that year depending upon the change in the commodity prices and foreign exchange rates movements.

For cash flow hedges regarded as basis adjustments to initial carrying value of the property, plant and equipment, the depreciation on the basis adjustments made is expected to affect profit or loss over the expected useful life of the property, plant and equipment.

(ii) Fair value hedge

The fair value hedges relate to forward covers taken to hedge currency exposure and commodity price risks.

The Company''s sales are on a quotational period basis, generally one month to three months after the date of delivery at a customer''s facility. The Company enters into forward contracts for the respective quotational period to hedge its commodity price risk based on average LME prices. Gains and losses on these hedge transactions are substantially offset by the amount of gains or losses on the underlying sales.

Net gains and losses are recognized in the statement of profit and loss.

The Company uses foreign exchange contracts from time to time to optimize currency risk exposure on its foreign currency transactions. Fair value changes on such forward contracts are recognized in the statement of profit and loss.

(iii) Non- designated economic hedge

The Company enters into derivative contracts which are not designated as hedges for accounting purposes, but provide an economic hedge of a particular transaction risk or a risk component of a transaction. Hedging instruments include copper, aluminium future contracts on the LME and certain other derivative instruments. Fair value changes on such derivative instruments are recognized in the statement of profit and loss.

(a) Other statutory liabilities mainly includes contribution to PF, ESIC, withholding taxes, goods & service tax, VAT etc.

(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.

(c) Advance from customers are contract liabilities and include amounts received under long term supply agreements.

The advance payment plus a fixed rate of return/ discount will be settled by supplying respective commodity over a period up to twenty four months under an agreed delivery schedule as per the terms of the respective agreements. As these are contracts that the Company expects, and has the ability, to fulfil through delivery of a non-financial item, these are recognised as advance from customers and will be recognised as revenue as and when control of respective commodities is transferred to customer under the agreements. The portion of the advance that is expected to be settled within the next 12 months has been classified as a current liability.

c) Restoration, rehabilitation and environmental costs

The provisions for restoration, rehabilitation and environmental liabilities represent the management''s best estimate of the costs which will be incurred in the future to meet the Company''s obligations under existing Indian law and the terms of the Company''s exploration and other licences and contractual arrangements.

The principal restoration and rehabilitation provisions are recorded within oil & gas division where a legal obligation exists relating to the oil and gas fields, where costs are expected to be incurred in restoring the site of production facilities at the end of the producing life of an oil field. The Company recognises the full cost of site restoration as a liability when the obligation to rectify environmental damage arises.

These amounts are calculated by considering discount rates within the range of 2% to 3%, and become payable at the end of the producing life of an oil field and are expected to be incurred over a period of twenty two years.

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is caused by the development or ongoing production from a producing field.

6. EMPLOYEE BENEFIT PLANS

The Company participates in defined contribution and benefit plans, the assets of which are held (where funded) in separately administered funds.

For defined contribution plans the amount charged to the statement of profit and loss is the total amount of contributions payable in the year.

For defined benefit plans, the cost of providing benefits under the plans is determined by actuarial valuation separately each year for each plan using the projected unit credit method by independent qualified actuaries as at the year end. Remeasurement gains and losses arising in the year are recognised in full in other comprehensive income for the year.

Central recognised provident fund

In accordance with the ''The Employees Provident and Miscellaneous Provisions 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 the year ended March 31, 2019 and March 31, 2018) 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.

Family pension fund

The Pension Fund was established in 1995 and is managed by the Government of India. The employee makes no contribution to this fund but the employer makes a contribution of 8.33% of salary each month subject to a specified ceiling per employee. This is provided for every permanent employee on the payroll.

At the age of superannuation, contributions ceases and the individual receives a monthly payment based on the level of contributions through the years, and on their salary scale at the time they retire, subject to a maximum ceiling of salary level. The Government funds these payments, thus the Company has no additional liability beyond the contributions that it makes, regardless of whether the central fund is in surplus or deficit.

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 year they are incurred.

ii) Defined benefit plans

(a) Contribution to provident fund trust (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 Actuari


Mar 31, 2018

2 Significant Judgments

a) Revenue recognition and receivable recovery in relation to the power business

In certain cases, the Company’s power customers are disputing various contractual provisions of Power Purchase Agreements (PPA). Significant judgments is required in both assessing the tariff to be charged under the PPA in accordance with Ind AS 18 and to assess the recoverability of withheld revenue currently accounted for as receivables.

In assessing this critical judgment, management considered favorable external legal opinions the Company has obtained in relation to such claims. In addition the fact that the contracts are with government owned companies implies the credit risk is low (Refer note 11 (iv))

b) Contingencies

In the normal course of business, contingent liabilities may arise from litigation, taxation and other claims against the Company. A tax provision is recognized when the Company has a present obligation as a result of a past event, it is probable that the Company will be required to settle that obligation.

Where it is management’s assessment that the outcome cannot be reliably quantified or is uncertain, the claims are disclosed as contingent liabilities unless the likelihood of an adverse outcome is remote. Such liabilities are disclosed in the notes but are not provided for in the financial statements.

When considering the classification of a legal or tax cases as probable, possible or remote, there is judgments involved. This pertains to the application of the legislation, which in certain cases is based upon management’s interpretation of country specific applicable law, in particular India, and the likelihood of settlement. Management uses in-house and external legal professionals to make informed decision.

Although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the Company’s financial position or profitability. The liabilities which are assessed as possible and hence are not recognized in these financial statements are disclosed in note 49.

c) Exceptional items:

Exceptional items are those items that management considers, by virtue of their size or incidence (including but not limited to impairment charges and acquisition and restructuring related costs), should be disclosed separately to ensure that the financial information allows an understanding of the underlying performance of the business in the year, so as to facilitate comparison with prior periods. Also tax charges related to exceptional items and certain one-time tax effects are considered Exceptional. Such items are material by nature or amount to the year’s result and require separate disclosure in accordance with Ind AS.

The determination as to which items should be disclosed separately requires a degree of judgments. These are set out in note 34.

(z) Recently issued accounting pronouncements

The following standards/amendment to standards have been issued but are not yet effective up to the date of issuance of the Company’s financial statements. Except specifically disclosed below, the Company is evaluating the requirements of these standards, improvements and amendments and has not yet determined the impact on the financial statements.

- Ind AS 115: Revenue from Contracts with Customers

This standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The standard replaces most of the current revenue recognition guidance. The core principle of the new standard is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively including service revenues and contract modifications and improve guidance for multiple element arrangements. The new Standard comes into effect for the annual reporting periods beginning on or after April 1, 2018.

In order to identify the potential impact of the standard on the Company’s financial statements, the Company has analyzed contracts of the relevant revenue streams of the Company. The work done is focused on evaluating the contractual arrangements across the Company’s principal revenue streams, particularly key terms and conditions which may impact revenue recognition and measurement of revenue.

Based on the work carried out, the areas of impact in implementing Ind AS 115, on the Company results is detailed below.

The Company has products which are provisionally priced at the date revenue is recognized. Revenue in respect of such contracts will be recognized when control passes to the customer and will be measured at the amount the entity expects to be entitled - being the estimate of the price expected to be received at the end of the measurement period. Post transfer of control of goods, provisional pricing features will be accounted in accordance with Ind AS 109 “Financial Instruments” rather than Ind AS 115 and therefore the Ind AS 115 rules on variable consideration do not apply. These ‘provisional pricing’ adjustments i.e. the consideration received post transfer of control will continue to be included in the revenue on the face of the statement of profit and loss, and these would be disclosed by way of note to the financial statements.

On the basis of the analysis conducted, the new standard would result in identification of freight and insurance services as a separate performance obligation implying segregation of revenue on account of sale of goods and sale of services. The revenue on account of these services is required to be deferred and recognized over time as this obligation is fulfilled.

The overall effect of implementation of Ind AS 115 is not material on the recognition and measurement of revenues, though there would be significant additional disclosure requirements for the Company to comply with.

The Company will adopt the modified transitional approach to implementation where any transitional adjustment is recognized in retained earnings at April 01, 2018 without adjustment of comparatives and the new standard will only be applied to contracts that remain in force at that date.

4 Merger of Cairn India Limited with Vedanta Limited

(i) Vedanta Limited and Cairn India Limited (Cairn), had initially announced a scheme of merger between the two companies on June 14, 2015, terms whereof were amended on July 22, 2016 (“Scheme”). As per the terms of the Scheme, Cairn India Limited was to merge into Vedanta Limited and upon the merger becoming effective:

a) Non-controlling shareholders of Cairn India Limited were to receive one equity share in Vedanta Limited of face value '' 1 each and four 7.5% Redeemable Preference Shares (redeemable after 18 months from issuance) in Vedanta Limited with a face value of '' 10 each for each equity share held in Cairn India Limited.

b) No shares were to be issued to Vedanta Limited or any of its subsidiaries for their shareholding in Cairn India Limited.

c) The employees of Cairn India Limited who were holding stock options in Cairn India Limited were to be compensated either in cash or through issuance of stock options of Vedanta Limited.

d) The authorized share capital of Cairn India Limited aggregating to '' 2,250 Crore was to be assumed by the Company, resulting in an increase in its authorized share capital from Rs, 5,162 Crore (divided into 5,127 Crore equity shares of Rs, 1 each and 3.50 Crore preference shares of Rs, 10 each) to Rs, 7,412 Crore (divided into 4,402 Crore equity shares of Rs, 1 each and 301 Crore preference shares of Rs, 10 each).

All substantive approvals for effecting the merger of Cairn India Limited with Vedanta Limited were received by March 27, 2017 and therefore the same was accounted for in the previous financial year ended March 31, 2017. The Board of Directors of both the companies made the merger operative on April 11, 2017, where after Cairn India Limited ceased to exist.

(ii) Since the amalgamating entity, Cairn India Limited, was a subsidiary of the Company and both have in turn been controlled by a common parent Vedanta Resources Plc, the transaction has been accounted for in accordance with the Appendix C to Ind AS 103 “Common Control Business Combination”, which requires retroactive accounting of the merger from the date common control was established. Accordingly, financial information as on April 1, 2015, being the earliest period presented in the annual standalone financial statements of the Company, and all periods thereafter, were restated to give effect of the merger.

(iii) The accounting effects arising out of merger are explained below:

a) Equity shares aggregating to Rs, 75 Crore required to be issued to the non-controlling shareholders of Cairn, has been accounted for as an item of equity on April 1, 2015, as equity shares proposed to be issued.

b) Upon the merger being substantively completed in March 2017, the liability towards issuance of preference shares of Rs, 3,010 Crore has been accounted for as a financial liability.

c) The carrying value of the assets, liabilities and reserves of Cairn India Limited as appearing in the consolidated financial statements of the Company have been recognized in the standalone financial statements of the Company. The said values relating to Cairn India Limited in the consolidated financial statements of the Company prior to the merger, were computed by restating past business combinations as permitted by Ind AS 101.

d) Sesa Resources Limited (‘SRL’), a wholly owned subsidiary of the Company, held investments in Cairn having a fair value of Rs, 956 Crore, which have been cancelled without any consideration. Accordingly, the said fair value, has been reduced from the carrying value of investments in SRL with a corresponding reduction in the value of Reserves and Surplus. As per the provisions of the Scheme necessary adjustment in the Reserves and Surplus has been carried through the Securities premium account.

e) Twin Star Mauritius Holdings Limited (‘TMHL’), an indirect wholly owned subsidiary, also held investments in Cairn and had corresponding liabilities which it had incurred to fund the purchase of investments in Cairn. As per the terms of the Scheme, the investments held by TMHL have been cancelled and accordingly, its liabilities have been reflected in the financial statements of the Company.

The net effects of Rs, 28,906 Crore arising out of the above adjustments have been recognized as a capital reserve on December 8, 2011, being the date of initial common control.

(iv) All changes to the liabilities arising on account of interest and exchange differences post December 8, 2011, of Rs, 11,311 Crore, have been recognized directly in retained earnings as of April 1, 2015 and net charge of Rs, 623 Crore in the statement of profit and loss as an “Exceptional item” for the financial year ended March 31, 2017.

(v) All the direct subsidiaries of Cairn India Limited, viz., Cairn India Holdings Limited (‘CIHL’) and CIG Mauritius Holding Private Limited have become the direct subsidiaries of the Company.

(vi) Further, some of the wholly owned subsidiaries of the Company had advanced monies to TMHL, either directly or through some other wholly owned subsidiaries. Pursuant to the merger being effective, the amounts recoverable from TMHL have been impaired by the said subsidiaries as TMHL’s investments in Cairn has been cancelled. This has had the effect of discharging the obligation reflected in the financial statements of the Company (refer ‘(iii)e’ above) with a corresponding reduction in the value of the Company’s investments in its direct subsidiaries. The net excess of liability being discharged over the carrying value of such investments of Rs, 1,993 Crore has been recognized as an exceptional gain in the statement of profit and loss during the previous year. During the current year, CIHL discharged the balance obligation Rs, 6,762 Crore which resulted in a further reduction in the carrying value of the said subsidiary by an equivalent amount.

a) Additions includes deferred stripping cost of Rs, Nil Crore (March 31, 2017 Rs, 4 Crore).

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

c) 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 recognized 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.

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, 1 crore gain (March 31, 2017 Rs, 4 crore loss) is adjusted to the cost of respective item of property, plant and equipment.

Capital work-in-progress includes foreign currency exchange loss of Rs, 17 crore incurred during the year (March 31, 2017 Rs, 27 crore gain) on such long term foreign currency monetary liabilities.

d) Gross block of property, plant and equipment includes Rs, 32,694 Crore (March 31, 2017 Rs, 31,967 Crore) representing Company’s share of assets co-owned with the joint venture partners. Accumulated depreciation, depletion and impairment on these assets is Rs, 30,487 Crore (March 31, 2017 Rs, 29,790 Crore) and net book value is Rs, 2,207 Crore (March 31, 2017 Rs, 2,177 Crore).

Capital work-in-progress includes Rs, 994 Crore (March 31, 2017 Rs, 1,001 Crore) jointly owned with the joint venture partners.

Exploration intangible assets under development includes Rs, 7,950 Crore (March 31, 2017 Rs, 5,028 Crore) jointly owned with the joint venture partners.

1. Financial Assets- Non Current : Investments continued

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 on November 24, 2018.

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 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 3, 2018.

On January 9, 2012, the Company offered to acquire the Government of India’s interests in HZL and BALCO for Rs, 15,492 Crore and Rs, 1,782 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.

In 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 recognized in the financial statements.

c. During the the previous year, the Company made an investment of Rs, 14,730 Crore in 220 Crore equity shares of US$ 1 each in Bloom Fountain Limited.

d. During the current year, the Company made an investment of Rs, 11.30 Lacs in 1.13 Lacs equity shares having face value of Rs, 10/- each in Gaurav Overseas Private Limited .

e. During the current year, the maturity of investments in compulsorily convertible debentures of Vizag General Cargo Berth Private has been extented has been extented by 2 years 10 months till January 28, 2021.

f. During the current year, the Company made an investment in 1,70,418 Compulsory convertible debentures of Malco energy limited (MEL) having face value of Rs, 100/- each at a premium of Rs, 900/- each.

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

(ii) Bank deposits includes site restoration fund amounting to Rs, 318 Crore (March 31, 2017: Rs, 275 Crore)

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

(b) Includes Rs, 30 Crore (March 31, 2017: Rs, 30 Crore), being CompanyRs,s share of gross amount of Rs, 86 Crore (March 31, 2017: Rs, 86 Crore) paid under protest on account of Education Cess and Secondary Higher Education Cess for the year ended 2013-14.

(c) Includes Rs, 48 Crore (March 31, 2017: Rs, 46 Crores), being Company’s share of gross amount of Rs, 139 Crore (March 31, 2017: Rs, 131 Crores), of excess oil cess paid under Oil Industry (Development) Act.

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

(ii) Inventories with a carrying amount of Rs, 7,961 Crore (March 31, 2017 : Rs, 5,125 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, 90 Crore (March 31, 2017 : Rs, 2 Crore).

(iv) The write down of inventories amounting to Rs, 42 Crore (March 31, 2017: Rs, Nil Crore) has been charged to the statement of profit and loss.

(i) The interest free credit period given to customers is upto 90 days. Also refer note 48c(d).

(ii) Trade receivables with a carrying value of Rs, 2,429 Crore (March 31, 2017 : Rs, 1,917 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 51.

(iv) Current & Non-current trade receivables (net of provisions) includes Rs, 767 Crores as at March 31, 2018 (March 31, 2017: Rs, 893 Crores) relating to amounts held back by a customer in the power segment, owing to certain disputes relating to computation of tariffs and differential revenue recognized with respect to tariffs pending finalisation by the state electricity regulatory commission. Basis legal advice received on the matter, the management considers these to be fully recoverable as there is a high probability of success.

(v) There are no outstanding debts due from directors or other officers of the Company.

(a) Includes Nil Crore (March 31, 2017 Rs, 115 Crores) on lien with banks.

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

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

a Includes Rs, 8 Crore (March 31, 2017 : Rs, 1 Crore) on lien with banks.

b Includes Rs, 193 Crore (March 31, 2017 : Rs, 195 Crore) on lien with banks and margin money Rs, 39 Crore (March 31, 2017 : Rs, 40 Crore) c Earmarked unpaid dividend accounts are restricted in use as it relates to unclaimed or unpaid dividend.

(a) During the year, 7.5% preference share capital of Rs, 3,010 Crore comprising of 301 Crore shares of Rs, 10/- each have been issued and the same are disclosed under borrowings (Refer note 19).

(b) Includes 308,232 (March 31, 2017: 310,632) equity shares kept in abeyance. These shares are not part of listed equity capital.

(c) Includes 92,33,871 (March 31, 2017: 39,84,256) equity shares held by Vedanta Limited ESOS Trust (Refer note 38).

(d) Voting rights exercisable upon issuance.

* The % of holding has been calculated on the issued and subscribed share capital as at respective balance sheet date.

(1) All the above entities are subsidiaries of Volcan Investments Limited, the ultimate holding Company.

(2) Represented by 2,48,23,177 American Depository Shares (“ADS”).

E. Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date

* The % of holding has been calculated on the issued and subscribed share capital as at respective balance sheet date.

# 2,48,23,177 ADS, held by CITI Bank N.A. New York as a depository.

As per the records of the Company, including its register of shareholders/members, the above shareholding represents legal ownership of shares.

2. Share capital continued G. 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) 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 prioirty to any payment of capital on the equity shares out of the surplus of Vedanta Limited.

(3) 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, 2018 - 24,84,24,696 equity shares were held in the form of 6,21,06,174 ADS (March 31, 2017- 21,70,19,900 equity shares in form of 5,42,54,975 ADS).

(4) 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 (merged with the Company during 2013-14) during 2002-2003 reduced its paid up share capital by '' 10 Crore. There are 204,525 equity shares (March 31, 2017: 199,026 equity shares) of '' 1 each pending clearance from NSDL/CDSL. The Company has filed an 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. 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 utilized 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.

d) Capital reserve: The balance in capital reserve has mainly arisen consequent to merger of Cairn India Limited with the Company in the previous year as described in note 4.

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.

* The NCDs have been pre-paid during the year

** 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:

Vedanta Limited has taken borrowings 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 -

a. 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 amortized over the useful life of such assets.

* Refer note 19 for borrowing details

The Company has discounted trade receivables on recourse basis of '' 65 Crore (March 31, 2017: '' 520 Crore). Accordingly, the monies received on this account are shown as borrowings as the trade receivables does not meet de-recognition criteria. The above borrowings pertaining to trade receivables discounted has been restated on account of foreign exchange fluctuation.

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

(b) Operational Buyer’s Credit is availed from offshore banks at an interest rate ranging from 1.5% to 3.5% 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.

(c) For amounts due and terms and conditions relating to related party payables see note 51.

(b) Does not include any amounts, due and outstanding, to be credited to Investor Education and Protection Fund except Rs, 38 Lacs (March 31, 2017: Rs, 38 Lacs) which is held in abeyance due to a pending legal case.

(c) Includes revenue received in excess of entitlement interest of Rs, 648 Crore (March 31, 2017 : Rs, 5 Crore), reimbursement of expenses, provision for expenses, liabilities related to compensation/claim etc.

a Statutory and other liabilities mainly includes contribution to PF, ESIC, withholding taxes, goods & service tax, excise duty, VAT, service tax etc. 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 scheme on purchase of property, plant and equipments accounted for as government grant and being amortized over the useful life of such assets.

a) Includes gratuity, compensated absences, deferred cash bonus etc.

a) With effect from July 01, 2017 Goods and Service Tax (GST) has been implemented which has replaced several indirect taxes including excise duty. While Ind-AS required excise duty to be included while computing revenues, GST is required to be excluded from revenue computation. Accordingly “Revenue from operation (net of excise duty)” has been additionally disclosed to enhance comparability of financial information.

a. Net of recoveries of Rs, 56 Crore ( March 31, 2017 : Rs, 70 Crore) from subsidiaries.

b. Includes Corporate social responsibility expenses of Rs, 45 Crore (March 31, 2017 : Rs, 49 Crore) as detailed in note 41.

c. Includes refund of Rs, 4.28 Crore being the donation given to a political party.

a) Includes Rs, 209 Crore (March 31, 2017 : Nil) on redeemable preference shares.

b) Net of interest cost of Rs, 349 Crore (March 31, 2017 : Rs, 556 Crore) capitalized during the year, relating to funds borrowed specifically to acquire/construct the qualifying assets. The capitalization rate of these borrowings is approximately 8.1% (March 31, 2017 : approximately 9%).

a. During the year ended March 31, 2018, the Company has recognized a loss of Rs, 251 Crore relating to certain items of capital work-in-progress at the aluminum operations, which are no longer expected to be used.

b. During the year ended March 31, 2017, the Company has recognized Rs, 201 Crore impairment charge relating to certain old items of capital work-in-progress at the Alumina refinery operations.

c. During the year ended March 31, 2018, the Company has recognized net impairment reversal of Rs, 3,513 Crore on its assets in the oil and gas segment comprising of:

i) reversal of previously recorded impairment charge of Rs, 3,622 Crore relating to Rajasthan oil and gas block (“CGU”) mainly following the progress on key growth projects expected to result in the enhanced recovery of resources in a commercially viable manner leading to a higher forecast of oil production and adoption of integrated development strategy for various projects leading to savings in cost. Of this reversal, Rs, 536 Crore reversal has been recorded against oil and gas producing facilities and Rs, 3,086 Crore reversal has been recorded against exploration intangible assets under development.

The recoverable amount of the Company’s share in Rajasthan Oil and Gas cash generating unit “RJ CGU” was determined to be Rs, 8,664 Crore (US $ 1,332 million) and Rs, 6,815 Crore (US $ 1,051 million) as at March 31, 2018 and March 31, 2017 respectively.

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 $ 62 per barrel for the next one year (March 31, 2017: US $ 58 per barrel) and scales upto long-term nominal price of US $ 65 per barrel three years thereafter (March 31, 2017: 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 10.1% (March 31, 2017: 10.2%) derived from the post-tax weighted average cost of capital after factoring in the risks ascribed to PSC extension including successful implementation of key growth projects. Based on the sensitivities carried out by the Company, change in crude price assumptions by US$ 1/bbl and changes to discount rate by 0.5% would lead to a change in recoverable value by Rs, 238 Crore (US $ 37 million) and Rs, 180 Crore (US $ 28 million) respectively.

ii) impairment charge of Rs, 109 Crore recorded against exploration intangible assets under development representing the carrying value of exploratory wells in Block PR-OSN-2004/1 which has been relinquished during the year.

During the year ended March 31, 2017, the Company has recognized net impairment reversal of Rs, 252 Crore relating to Rajasthan Oil and Gas block. Of this net reversal, Rs, 114 Crore charge has been recorded against cost of oil and gas producing facilities and Rs, 366 Crore reversal has been recorded against exploration intangible assets under development.

d. During the year ended March 31, 2018, the Company has recognized an impairment charge of Rs, 452 Crore as against the net carrying value of Rs, 1,048 Crore on its iron ore assets in Goa in the iron ore segment.

Pursuant to an order passed by the Hon’ble Supreme Court of India on February 7, 2018 the second renewal of the mining leases granted by the State of Goa to all miners including Vedanta were cancelled. Consequentially all mining operations stopped with effect from March 16, 2018 until fresh mining leases (not fresh renewals or other renewals) and fresh environmental clearances are granted in accordance with the provisions of the The Mines and Minerals (Development and Regulation) (MMDR) Act.

Significant uncertainty exists over the resumption of mining at Goa under the current leases. The Company has assessed the recoverable value of all its assets and liabilities associated with existing mining leases which led to a non-cash impairment charge. Upon consideration of past precedence, the provision for restoration and rehabilitation with respect to these mines has been assessed as Nil, as the Company believes that the same would be carried out by the future successful bidder at the time of mine closure.

e. Charge pursuant to unfavorable arbitration order- Rs, 113 Crore (Refer note 49 (b) - Contractor claims).

f. During the year ended March 31, 2018 and March 31, 2017 the Company has recognized net impairment reversal of Rs, 2,710 Crore and net impairment charge of Rs, 97 Crore respectively, on its investment in subsidiaries, comprising of:

(i) Cairn India Holding Limited (‘CIHL’) holds 35% share in Rajasthan oil and gas block through its step down subsidiary Cairn Energy Hydrocarbons Limited. The recoverable value of investment in CIHL was determined to be Rs, 13,754 Crore (US $ 2,115 million) and Rs, 17,157 Crore (US $ 2,646 million) as at March 31, 2018 and March 31, 2017 respectively, represented by CIHL’s share of discounted cash flows in RJ CGU held through its subsidiary and net fair value of its other assets. (Refer note (c)(i) above).

(ii) The net recoverable value of investment in Sesa Resources Limited (‘SRL’) was determined to be Rs, 109 Crore. The Supreme Court judgement relating to iron ore mining in Goa resulted in impairment. The recoverable value is represented by the estimated selling price of the underlying assets of SRL. (Refer note (d) above).

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:

The location based exemption: SEZ Operations

In order to boost industrial development and exports, provided certain conditions are met, profits of undertaking located in Special Economic Zone (‘SEZ’) may benefit from a tax holiday. Such a tax holiday works to exempt 100% of the profits for the first five years from the commencement of the tax holiday, 50% of profits for five years thereafter and 50% of the profits for further five years provided the amount allowable in respect of deduction is credited to Special Economic Zone Re-Investment Reserve account. However, such undertaking would continue to be subject to the Minimum Alternative tax (‘MAT’).

The Company has setup SEZ Operations in its aluminum division (where no benefit has been drawn).

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 years period following commencement of the power plant’s operation. However, such undertakings generating power would continue to be subject to the MAT provisions.

The total effect of such tax holidays and exemptions was Rs,8 crore for the year ended March 31,2018 (March 31,2017: Rs,524 crore).

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 was available up to financial year ended 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 balance sheet are as follows :

a) The above does not include dividend and tax thereon paid by erstwhile Cairn India Limited to its fellow subsidiaries.

b) The Board of Directors of the Company declared an interim dividend of Rs, 6,580 Crore on March 30, 2017 which has been paid during the current year.

c) Tax on interim and final dividend (net of dividend from subsidiary) u/s 115O of the Income Tax Act, 1961.

d) Dividend @ 7.5% p.a. on the redeemable preference shares of face value of Rs, 10/- per preference share as per their terms of issuance was declared during the year ended March 31, 2018. The same has been accounted for as a interest cost and has been recorded in the statement of profit and loss. (Refer note 33)

4. Share Based Payments

The Company offers equity based option plans to its employees, officers and directors through the Company’s stock option plan introduced in the previous year, Cairn India’s stock option plan now administered by the Company pursuant to merger with the Company and Vedanta Resources Plc plans [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 ‘VR PLC ESOP’ scheme.

The Vedanta Limited Employee Stock Option Scheme (ESOS) 2016

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 subsidiary companies. The ESOS scheme includes both tenure based and performance based on stock option options. The maximum value of options that can be awarded to members of the wider management group is calculated by reference to the grade average cost-to-company (“CTC”) and individual grade of the employee. The performance conditions attached to the option 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 option vests will depend on the Company’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 options 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 Nomination and Remuneration Committee (the Committee) is provided by the Company’s advisers. The Committee considers that this performance condition, which requires that the Company’s total return has outperformed a group of industry peers, provides a reasonable alignment of the interests of participants with those of the shareholders.

38 Share Based Payments continued

Initial options under the ESOS were granted on 15 December 2016. Further during the year, new options were granted in September 2017, October 2017 and November 2017. However, in the scheme launched during the year, business performance (“EBIDTA”) set against business plan for the financial year is included as an additional condition. The exercise price of the options is '' 1 per share and the performance period is three years, with no re-testing being allowed.

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

The fair values were calculated using the Black-Scholes Model for tenure based and EBIDTA based options and Monte Carlo simulation model for TSR based options. 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 option. 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, 47 Crore (March 31, 2017 Rs, 7 Crore) related to above equity settled share-based payment transactions in the year ended March 31, 2018 out of which Rs, 18 Crore (March 31, 2017 Rs, 3 Crore) was recovered from group companies.

CIPOP plan

Options will vest (i.e., become exercisable) at the end of a “performance period” which has been set by the Nomination 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

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.

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 options are indexed to and settled by Parent’s shares (Vedanta Resources Plc shares as defined in the scheme). The options have a fixed exercise price denominated in Parent’s functional currency (10 US cents per share), the performance period of each option 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 for year ended March 31, 2018 is Rs, 29 Crore (March 31, 2017: Rs, 33 Crore). The Company considers these amounts as not material and accordingly has not provided further disclosures.

Out of the total expense of Rs, 58 Crore pertaining to equity settled options for the year ended March 31, 2018, the Group has capitalized Rs, 2 Crore expense for the year ended March 31, 2018.

39 Employee Benefit Plans a) Defined contribution plans

The Company contributed a total of Rs, 59 crore for the year ended March 31, 2018 and Rs, 54 Crore for the year ended March 31, 2017 to the following defined contribution plans.

Central provident fund and family pension fund

In accordance with The Employees Provident Funds and Miscellaneous Provisions 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 2018 and 2017) 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. There is no shortfall in the actual return for independently managed funds for the year ended March 31, 2018 and March 31, 2017. Having regard to the assets of the fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

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 year they are incurred.

5. Employee Benefit Plans continued

b) Defined benefit plans

Contribution to provident fund trust (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, 2018 and March 31, 2017. Having regard to the assets of the Fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future.

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 recognized funds in India.

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

The above plan assets have been invested in the qualified insurance policies.

The actual return on plan assets was Rs, 8 Crore for the year ended March 31, 2018 and Rs, 8 Crore for the year ended March 31, 2017.

The weighted average duration of the defined benefit obligation is 16.75 years and 16.60 years as at March 31, 2018 and March 31, 2017 respectively.

.6 Employee Benefit Plans continued

The Company expects to contribute Rs, 20 Crore to the funded defined benefit plans in fiscal year 2019.

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 benefit plans and, management’s estimation of the impact of these risks are as follows:

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.

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.

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.

7. 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.

* Includes probable oil reserves of 22.69 mmstb (of which 15.05 mmstb is developed) and probable gas reserves of 18.31 bscf (of which 5.02 bscf is developed)

** Includes probable oil reserves of 20.36 mmstb (of which 11.73 mmstb is developed) and probable gas reserves of 22.69 bscf (of which 4.75 bscf is developed)

*** Includes probable oil reserves of 15.43 mmstb (of which 2.97 mmstb is developed) and probable gas reserves of 14.51 bscf (of which 3.91 bscf is developed)

mmboe = million barrels of oil equivalent

mmstb = million stock tank barrels

bscf = billion standard cubic feet

1 million metric tonnes = 7.4 mmstb

1 standard cubic meter =35.315 standard cubic feet

MBA = Mangala, Bhagyam & Aishwarya

EOR = Enhanced Oil Recovery

8. 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 H’onable 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.

9. 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(h)) 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 51.

Refer below for details of the financial guarantees issued:

Lease payments recognized as expenses on non-cancellable lease during the year is Rs, 1 Crore (March 31, 2017: Rs, 28Crore)

10. 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 recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2 and Note 3.

* Investment in note 6 also includes investments (in equity and preference shares) in subsidiaries, associates and joint ventures which are carried at cost and hence are not required to be disclosed as per Ind AS 107 “Financial Instruments Disclosures”. Hence, the same have been excluded from the above table.

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 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; 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).

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.

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.

Derivative financial assets/liabilities: The Company enters into derivative financial instruments with various counterparties. 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 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 value


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.

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